The Greiner Model of Organizational Growth

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Table of Contents

Greiner model explained
Market analysis and strategies
Product and services
Financial Plan
Reference List

Greiner model explained

The Greiner model of organizational growth is a model which tries to explain the crisis of leadership during the lifetime of an organization. This is especially true for business companies who have to struggle to find new ways of growth and revenue streams in modern day globalized markets. The Greiner model explains that organizations pass through a series of phases during these attempts to find is positioning in the market. The phases are represented in the figure below.

The first phase is that of the leadership crisis. This phase analyses the growth stage of an organization. Growth is the first and most important stage for an organization especially during its first years of life. This is the phase where the business leader, the owner, is quite busy handling the important functions of the business and most of the communication is informal. Since the environment is rapid and the number of employees is lower than the needs, there is a lack of efficiency in output. At least, lack of efficiency that the potential. One major problem is that the compensation for extra efforts put in by employees is mainly not given in the form of cash but in the form of stock options or profit sharing. But as the organization grows the number of employees rises so it becomes necessary that communications should be formal. This is precisely what will be implemented during the growth stage of BX-14. Most of the time leadership crisis arises in this stage so it is necessary that the management should hire someone professional in order to eliminate this problem.

The second phase is the one after the growth situation is stabilized. The company has reached a good level of growth and does not need any more strict control from its owner. Autonomy is the key word for this stage. In relation to BX-14, this is the stage after the product has achieved a good market positioning and the organization has passed the emergency growth stage. This is the stage where BX-14 could possible face autonomy crisis. It would be necessary that the power should be distributed among the members of the organization in order to make sure the smooth sunning of the business.

Well, after the autonomy stage the next phase is the crisis that could arise from the failure of these autonomous managers to identify new opportunities and growth strategies. The imperative of centralized management decision rises again. In order to save BX-14 form this sort of control crisis it is necessary that all the different and separate parts of the business should work together.

In phase four we find the unorganized products of the business reorganize them into product group or services. Here there an increased amount of bureaucracy in the company. This bureaucratic increase causes the work to submerge. And as a result of it the growth of the company becomes slow or almost very slow.

At this stage the BX-14 management should end the red tape crisis so that a new culture for the organization can be developed if any such problems are identified in the company.

At this last stage reemerges the problem of collaboration among different groups of employees within the company. Thus, in this stage the growth of the company takes place through collaboration people are working in teams and the rewards are given according to the performance given by the teams. Most of the times there are crisis of internal growth at this stage the BX-14 can only achieve the target of future growth by developing important partnerships with the other complementary organizations.

Market analysis and strategies

The original idea of developing BXIV as a product came from the analysis of the market. The management team analyzed the industry segment and the brands presently found. From the analysis came out that brands were offering these products for very higher amount that middle class cannot afford. That was the main reason that the management team put many efforts in developing this business. They conducted different surveys and researches for analyzing the market and the technological industry and interviewed different people from different classes. The reason behind this was to get to know different pay scales of people, keeping in mind the average pay scales of people and the amount people want to spend on buying different products the company would be offering. This is how they set the price of our products. The most popular used mode of advertising within cities is the billboard. That is what they selected.

Besides that the secondary promotion tool which attracts a lot of consumer is media, like TV ads, radio, and print media for the promotion of the brand. They also got to know by interviewing and giving people questionnaire that the innovation in a product is the thing that a product carries and forces people to go for shopping so we are also using this marketing strategy as promotion of our brand. For distribution purpose the team would target the economic hubs of the city over there we would open our franchises and market our product from those particular areas of the city.

Target analysis

The BX brand focuses mainly on business people from the corporate sector. The present operations are launch and managed from Mainland China. Thus, currently the management team is focusing on the business sector of the country. But BX-14 is only currently focusing on the business people as in the near future it will expand. Its main target market will become students, workers and so on. The brand identified the need of a portable device which has facilities of Bluetooth, scan, multilingual dictionary, remote output, voice input etc. So in order to carter that need of the people basically business man we decided to create out product which has all the facilities that they needed from the portable device. This is the right product which offers all of the above mentioned facilities which make our product distinct from all the other similar sort of products. Some of the characteristics of this product are:

Blue Tooth, Scan, Multilingual Dictionary, Remote Output, Voice Input, Microphone and Memory Card, these are some of the characteristics that we are offering through our product to our target market which is basically the business man or in short the corporate world and look to offer it to everyone in the future.

Segmentation analysis

From the above written, it is clear what segments of the market is the management team focused for the present and its plans for the future. In itself, market segmentation is one of the strategic marketing tools designed solely for the purpose of defining markets and allocating resources to the people who are in need of it. The company has divided its potential customer groups on the basis that which segment of the population is in the most need of our product. The management team analyzed that the business people in the corporate sector is in the most need of our product and we would be catering them initially.

Marketing strategies

The major objective is to occupy 20% to 30% share of the multi-function products’ Market. It is expected that this situation will generate considerable profits of the company (Probably 1,000,000 to 2,000,000 pounds), and a total market acceptance of the products. The secondary objective is to bring profit to the company on a yearly basis. Company has enough resources and tendency to produce the product as per demand

Constraints Analysis

The company will only be facing the constraint of being global. Going global is not an easy task to do.

Customer Analysis

Business man and teachers and students are our customers, and according to their needs and wants we have designed our product

Competitor Analysis

Our product is so unique and distinctive that we are actually facing no competition in the market or we can say that we are entering in to the blue ocean market

Social, economic, technological & legal barrier

There is as such no technological and legal barrier with respect to our brand.

Product and services

Unique selling proposition

What the company offers:

The company is offering a pen named BX 14 with a lot of multipurpose functions and characteristics.

Product description. BX -14 is a multipurpose pen being offered by us. It caters the modern needs of the people which require mobility and multipurpose devices and instruments. Those multipurpose instruments include a lot of characteristics these characteristics are things like blue tooth, scan, multilingual dictionary, a remote input, a voice output, a microphone and a memory card. The pen also provides you with a facility to conduct conferences between individuals. This pen is currently targeted towards business a person that is the corporate world but its qualities are just not limited to them only this is a versatile product and in future we aim to carter other segments of population as well that is the students and workers etc. The product which has so many options usually have higher costs, the higher costs are usually because of the so many functions a small device is offering you. Because of the so many features of the product it results in higher manufacturing cost because of the usage of so many electronic parts. In the beginning the cost of the product will be higher but later on it will be lower as we will expand and target the other segments of the population. For e.g.: (A) Workers and (B) Students
Services (Return Policy & Exchange Policy):The defected products can be retuned back to us within 1 week of purchase of the product. Product can also be exchanged within only 1 week of purchase of the product. Any time after that product will neither be exchanged nor returned.
Pricing strategy. This is a high quality product because of its features and characteristics and the mobility of functions it offers with the pen. It is a solid brand. Therefore the price of the product would be a bit higher in the beginning because of the electronic parts that we would be using in it. Since electronic parts would be used so it adds up to the cost of manufacturing and increases the cost of our product. But we would only be offering the product with higher prices in the beginning later on it the prices would be lower as we would move on towards other people other than the business man such as the workers and the students.
Place. This brand is a high quality product as well as a highly unique one. So it will be a complete revolution in the market of multifunctional pens all around the world. It’s the right time to introduce our brand all around the world as it’s the era of innovations and technology. Our brand will be having its main center at Mainland China and will be having displacement centers all over the world. As we have been in the market for almost 10 years and have done great research about the multi-functional products so it’s the right time to enter in to the multifunctional pen markets as we see a lot of growth in this market as no such product like our brand has been introduced before.
Promotion. Promoting a product is the most difficult thing to do. It is necessary to know how to convince the customers to buy and have faith in the product. Similarly you should know the ways to persuade a customer towards a brand. Different companies use different way of promotion which includes the ATL activities (above the line) BTL activities (below the line and OTL (on the line) activities, as our main target market is business man and teachers and students, so we have to be very precise in selecting the promotion strategy, We will be having an ATL strategy to persuade the customers towards our brand, we will directly communicate to go with our targeted market through conferences and spokespersons.
People. People play the most important role in the success or failure of the brand. People are the one who actually make the marketer know where their brand stands and where their brand cans even faster grow. So understanding people and their needs determine the brand to perform in a certain level and way. Our brand focus on business mans and the teachers and students mainly. So we will be having different research methods to determine the needs & wants of these people.
Packaging. Packaging has to be the influencer at the point of purchase. It should play an important role to make the customer influence to buy the product. A packaging must have these characteristics in order to attract customers. We will be paying more attention on our product packaging by doing well in the following packaging characteristics. We will be having an eye catching appearance which typically youngsters respond positively to, we will be giving a lot of attention on the design shape and color of the packaging, it increases the posting and the packaging will be very communicative so it can communicate and gain customer attention.

Selling proposition

The selling proposition for this product is based on the uniqueness of the product which differentiates itself from other products in the same product category. This brand is totally a unique innovation itself. As there has not been any such product in the market yet. The multi functionality of our brand make it unique in the market and that our unique selling proposition.the multi functionality includes the features which are starting from a high tech blue tooth in the panthers a scanner in the pen, multi dictionary, a remote output, a voice input microphone and memory card. These features just make this pen so unique itself that itself it is a unique selling proposition.

Point of difference and parity

The point of difference is the concept that every product has something similar which full fills the need but have some point of differences which makes them different from those competing products in the same product category. Our point of difference is the features we are installing in our product.

Instead, a point of parity is the similarities between the products competing in the same product category. The point of parity is with the other products are the efficiency of the pen in writing and as like other pens it also fulfills the basic need of a person of writing. Leaving the other features behind and focusing on the writing features ,like all other pen it gives you a smooth and comfortable writing and makes your writing experience more delightful just as you will feel by using the other features of the pen.

Financial Plan

The first thing to be calculated on this plan will be the profitability ratios. For this reason the profit and loss statements, balance sheet and our cash flow statement, will be analyzed.

Increase/ Decrease is sales%= (S1-S0/S0)*100= (100,000-10,000/10,000)*100 = 900. It indicates that the sale in the current year has increased as compared to the least year. The rising trend in sales reveals that company product market share increased in one hand and on the other hand it reflects the satisfaction of customer over our product. Sales revenue of the company is treated as oxygen. The increase in sales also requires future investment and expansion of business activities.
Gross Profit to sales%= (GP/Sales)*100= 75% gross profit margin on the sales depicts the trading profit earned by the company out of sales but before meeting operating expenses ,interest, tax. It should be more than 30%. It also indicates that the difference between sale price and purchase cost or manufacturing cost.
Cost of Goods to Sales% = (GP/ Sales)*100= 25% it shows the cost of goods sold in relationship to sales. The management should try to control it in order to increase or maintain the gross profit margin out of sales.
Operating Expense%= (Op.Exp/Sales)*100= 14.23% it indicates the amount spend today on business operation for generating revenue. The increase in expense can only be justified if there is an increase in sales. The management should control the operating expense in order to earn reasonable profit/EBIT. Because operating expense in one of the important factors that the company should maintain in order to get higher levels of revenue from their earnings.
Sell distribution and marketing expense to sales %= (selling exp/ sales)*100= 1.92%. Selling expense directly relates with sales revenue and marketing operation. An efficient marketing operation based on strategic market plan yield increase sales revenue, sales promotion activities help in survival of company’s product in the market and maintaining its shares.
Admin Exp to Sales% = (Admin Exp/ Sales)*100= 3.84%. It basically measures the relationship between administrative expense and sales. Administration staff provides support services for managing the business activities. Administration Expense are also covered from sales revenue in order to have an effective, efficient office system admin Expense are incurred.
Net Profitability to sales%= (Net Profit/Sales)*100= 10.769%. net Profit to Sales ration Indicates the profit available for ordinary shareholders who are the real owner of the company.
Return on Asset= NP/ Total Asset=22.4%. It shows the rate of return on total amount invested in assets as per balance sheet. It is compared with market rate of return.
Return on Owner’s Equity= NP/OE=it measures the rate of return on total owner’s equity is equal to shares capital+ reserves+ retained earnings.

Know moving on to the next part of analysis of you cash flow, balance sheet and profit and loss account. The second stage includes the analysis of our liquidity ratios. These are very important form a company’s point of view and important steps should be taken in order to make sure that the proper ratio is maintained.

Current Ratio= CA/CL= 1.07. It measures the financial ability of the company to meet its shorter obligation and failing due on maturity immediately.
Working Capital= CA-CL=5000. Working capital in a business is treated as blood running in the veins of people. It insures the smooth running of business operations without any hurdles or bottle necks. If the working capital is not enough to support the business operation than sales cannot be achieved.
Asset Turnover= Sales/total Assets= 2.08. It measures the utilization of resources for generating sales revenue. The utilization of resources depends on management ability/ skills/ expertise/ planning, controlling, decision making. In order to generate maximum revenue management should use the resources in most efficient and economic ways. The management performance is measured on the basis of assets turnover.

The next ratio that we would be discussing is the debt ratio which also basically helps a lot to the company in decision making process and maintaining the creditability of the company.

Debt Ratio= (total liabilities/ total assets)*100= 100. It measures thee claim of creditors on total assets. It also indicates the amount invested by the creditors in total asset of thee firm.

A company achieves its breakeven point when the total of it sales or revenue is equal to its total expenses or its cost. At breakeven point neither the company is making any profit and nor incurring any losses, so whenever a company is in this sort of a situation than it is said to be in a break even position. The calculation of the breakeven point is critical for any business because it is the lower limit for profit margins. There are many types of cost that has to be taken into consideration while calculating thee break even analysis, these costs are very important and must be considered when calculating the break even.

The break even analysis of our company can be done by taking into consideration the total revenue that is being generated from the sales of our product and the total cost that is being incurred in the manufacturing of our product. Currently the total revenue generated by sales of our product is 262,000 and total cost in generating it is 232,000. So currently we are in a surplus situation at the moment we have surpassed are breakeven point and currently we are earning profit from the business. It is because the total revenue we are generating from the sales of our product BX-14 is quite more than the cost that is being incurred in its production.

Cash Flow Statement

Initially the capital that was invested in BX-14 was 200,000 and the 1^st year sales are projected for 10,000. This makes our total revenue of 210,000 for the 1st year of the cash flow. If we include the total fixed assets and the other expenses of our business it accounts for only 105,000. With makes a cash surplus of 105,000 with the company within the 1^st year of doing business. This is a very positive sign for the company. Having profits just in the 1^st year of doing business indicates that the business is very profitable and will be showing greater profits in the coming years. This is evident from the cash surplus of the next 2 years that is 145,000 and the 3^rd year is 235,000. Having surplus cash gives the company an opportunity to expand their businesses into territories and target markets which were not being catered previously. If these current cash flows hold true in the long term than the company is not open to any external danger.

Reference List

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