All systems and business follow a Growth curve.
here’s an example: http://en.wikipedia.org/wiki/Growth_curve
A growth curve flattens at its limit of growth. In companies the is called market maturity. In people it’s called Adulthood.
All corporation follow a growth curve as their expand. The limits to growth are a combination of market share and penetration of market. The final flattening phase of the growth curve is typical of an established company in a mature market, and is significant consequences for the company, its management, shareholders, employees and customers.
Growth. Continual growth is demanded by the investors. As can be seen for the growth curve, growth for a single product in a market is finite. There is an end to growth.
There are four things a company can do to keep revenues growing:
- Invent niche brands based on the product (For Example: MS Office for education, Home, Business, Uncle Tom Cobley, and All)
- If a multi product company, break up the company into individual products companies. This rarely happens, as the person getting fired is the CEO. The CEO likes running his empire.
- Acquire companies. This rarely works, because the companies that are acquired are either mature or too small to affect the acquiring company’s revenues.
- Continually innovate. This is rarely possible because small companies can have above average staff. Large companies have mediocre or less-than-average staff because some smart employees leave, and the smart ones left in the company become management and plan never to do productive work ever again. IBM in the ’80s was a clear example of this failure.
The are three things a company can do to grow profits when revenue growth slows:
- Cut costs. aka: Screw the Employees. Cut benefits for employees, cut pay, cut expenses. An example: Outsourcing to India.
- Screw their customers. Examples of these are the Banks and Phone companies. They love many complex fees.
- Commit fraud. GE for Example.
The US has too many large mature companies. These companies cannot grow the economy. In general they take the easy route, and screw their shareholders, employees, and customers.
The biological solution to the limit to growth is called reproduction. Reproduction is produced sexually with parents, or asexually by fission. How companies would reproduce sexually is beyond my imagination. Companies don’t practice fission because the CEO ends up with a smaller empire to rule.
All complex organisms die. That’s another topic.