Strategies for Growth

by Peter Gutmann



This article summarizes a study of fifty-three leading growth companies. These firms were eminently successful in achieving rapid expansion in sales and even more rapid expansion in total profits and profits per share, growth rates in sales ranged up to 76.6 per cent annually. The article is designed to determine, the strategies which were pursued by these companies on their route to rapid expansion, how the strategies contributed to growth in sales, what effect growth of sales had on growth of net earnings, growth of net earnings per share, and growth of ownership equity. The sample of fifty-three was selected from a list almost three times as large compiled by John S. Herold Inc. All companies were primarily in manufacturing since environmental data were confined to the manufacturing area. The growth companies in this sample expanded faster than their general environment. The smallest companies tended to show the highest average expansion in net margins. But there was no consistent relationship between increase in margins and company size extending through the complete size range, or between increase in margins and the product-market strategies examined, or between increase in margins and the presence or absence of acquisitions. This study of a sample of growth companies shows that growth firms succeed in their quest for rapid expansion by adopting certain business strategies.

California Management Review

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