Several researchers have carefully studied the progress of firms that appear to have the potential for rapid growth—emerging companies—in an attempt to identify some of the specific challenges that those firms and their managers can expect to encounter and the strategies that are most likely to be successful in overcoming those challenges. Some of the challenges are primarily related to the personal situations of the founders and the other members of the senior management team such as the lack of adequate management time, inadequacies in management skills, and conflicts within the management group. A shortage of necessary resources, such as qualified labor and/or suitable financing for expansion and credit facilities, was also often problematic. Interestingly, managers of growing firms apparently were relatively unconcerned about competition or lack of demand, both of which are consistently identified as significant challenges by managers of firms suffering through static or declining patterns. However, any new firm must anticipate that it will need to overcome certain barriers to entry and work hard to establish a reputation and track record.
Hendrickson and Psarouthakis identified the following eight issues that they believed must be managed in order for firms to realize growth-oriented objectives:
- Resource Acquisition: How does the firm acquire the necessary capital, human resources, assets, and information to launch and operate the business?
- Resource Allocation: How does the firm best deploy its accumulated resources?
- Work Flow: How are the required work activities of the business to be divided and organized to ensure efficiency and effective communications?
- Human Relations: How does the firm motivate and satisfy its human resources and encourage employees to understand and share a common vision?
- Technical Mastery: How does the firm achieve and maintain the necessary technical know-how to attain the highest levels of productivity and quality?
- Market Strategy: How does the firm identify its market niche and determine who its customers are and what they are looking for in making their purchasing decisions?
- Public Relations: What external groups, other than suppliers and customers, are important to the firm’s future and what strategies should be adopted for dealing with those groups?
- Financial Viability: Can the firm meet its financial obligations as they come due, grow its asset base, and operate profitably?
Achieving each of these objectives requires its own strategy and the day-to-day activities of managers and employees within the company can be understood as essential elements in pursuing each of those strategies. For example, recruitment of new employees is part of the company’s resource acquisition strategy and compensation and benefit planning is part of the company’s resource allocation strategy. The company’s work flow strategy will be impacted and defined by decisions on job design and descriptions. Communications with employees in the form of meetings, manuals, policies and newsletters are an integral part of the company’s human relations strategy. Training and development programs are important to several different issues. Training of sales and marketing personnel can advance market strategy, while technical training should improve the company’s technical mastery. In addition, training for managers should assist them in motivating employees (i.e., human relations) and smoothing work flow.