Topic > Review of the article on When growth stops - 769

Review of the article on When growth stopsReview by: Olson, Matthew S., Van Bever, Derek ,Verry, Seth. 2008. When growth stops. Harvard Business Review, 51-62. The article raises the issue of stalled revenue growth affecting even the most successful companies. The article focuses on four main causes of the crisis. The first cause is premium position captivity, which is “a company's inability to respond effectively to new low-cost competitive challenges or to a significant change in customers' evaluation of product features” (p.54). The second reason is the breakdown of innovation management which is “a chronic problem in managing the internal business process for updating existing products and services and creating new ones” (p.56). The third reason is premature abandonment of the core, which means “the failure to fully exploit growth opportunities in the existing core business” and “acquisitions of growth initiatives in areas relatively distant from existing customers, products and channels” (p.56). Finally, the fourth cause is talent shortages, which is “a lack of leaders and staff with the skills and capabilities needed to execute the strategy” (p.58). The authors underline that these causes mainly fall within management control since they derive from "a choice on strategy or organizational design" (p.54). They point out that awareness and understanding of these causes helps companies avoid growth stalls. Additionally, the article discusses some practices used by some companies to predict and prevent the problem. The article provides examples of companies that have faced the crisis. For example, the reason for the captivity of the premium position was one of the main factors that caused Levi Strauss to lose market share. ... middle of paper ... when the company focused on further improvements of its pickups and SUVs instead of focusing on the innovations required by changing demand. If management had not been ignorant and had developed a solid strategy as soon as they noticed the change, the company would have avoided the crisis. However, the company recently adjusted its production plan and plans to continue realigning its production capacity, product mix, and reducing costs to resolve the situation ("Ford Adjusts Production"). References: Ford adjusts production plan but continues to lose money in North America. Weekly Automotive Digest. Retrieved June 4, 2008, from http://www.automotivedigest.com/weekly.shtml#6US auto sales decline in May as buyers reject trucks. CNBC. Retrieved June 4, 2008, from http://www.cnbc.com/id/24949794/site/14081545?__source=aol%7Cheadline%7Cquote%7Ctext%7C&par=aol