Why do managers want their firms to grow?What do you think determines how fast a firm grows?
... it gets bigger. A small organisation is unlikely to be noticed by the majority of people, and may only serve customers over a small geographical area. However, a large organisation is likely to have advertising that is seen nationwide, if not internationally, and is also likely to serve customers nationally or internationally. Being known is likely to attract new customers as they will believe that they can put their trust in such a publicly acknowledged company. Being known will also reassure existing customers, who may be thinking of going elsewhere in the market place. Another important reason of managers wanting their firms to grow is that it will make the firms a lot harder to takeover. If a competitor wishes to takeover the firm, it will be a lot more expensive for them to do if the firm is large, as opposed to small. The speed at which a firm grows is determined by many things. One of the things that determines the speed at which a firm grows is whether the firm has the finance available to grow or not. Whether it be internal growth (increasing machinery or employment or something with the business), or external growth (buying new land), finance will be needed. If the firm doesn’t have the funds required available to it from retained profit or invested cash, then it will need to find a source of finance, such as a bank loan, and this will obviously reduce the speed at which the firm can grow. Another thing that determines how fast a firm grows is whether the firm is physically ready for the change. For example, if a firm is going to expand by buying a warehouse, does the firm have the machinery ready to go into the warehouse? If it doesn’t, or doesn’t have the employees, or anything else needed to successfully make use of the new land, then this will also effect the speed at which the ...