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Factors That Influence Growth

Every enterprise should plan for growth as growth is a precondition for survival in the competitive world. The major factors that influence growth are as follows:

(1)    Nature of Competition

Growth is greatly influenced by competition which could be both direct and indirect. Direct competition implies competition form other firms manufacturing the same product. For instance, there are a lot of toilet soaps in the market. To survive the competition the manufacturer of each brand has to constantly maintains competitive edge over of the brands. Indirect competition may be due to availability of cheaper product substitutes. For example, the manufacturers of jute product, faced a crisis when product substituted in the form of much cheater polythene and plastic emerged. Growth is thus greatly.

(2)    Technological Developments

Dynamic entrepreneurs invest in research and development activities to create new techniques and products, while others tend to acquire latest technology from the market. Latest technology gives an edge to the firm using it over the other firms continuing withhold technology. Modernization revitalizes the business and also ensures its further growth through exploitation of  new opportunities.

(3)    Economies of Scale

Growth of a firm upto a certain stage may led to the economies in production purchasing, marketing, financing, managing, etc. This will lead to low cost of production and higher margin of profit. This will also ensure full utilization of plant capacity.

(4)    Consumer Trends

The needs and tastes of consumers are not fixed; they keep on changing depending upon a number of factors like quality, price, style, fashion, utility, etc. For example, many entrepreneurs started producing T-shirts and jeans when the Indian urban youth showed preference for casual wear. Some have come out with new products to meet the special needs of the agreed. The manufactures of likes introduce new features and even new models quite frequently for the young people who crave for innovative features. Thus, it is essential to keep pace with the trends in the changing needs and tastes of consumers.

(5)    Self-Sufficiency

Some entrepreneurs take over suppliers of raw materials to become self-sufficient in raw material. They may also take over the marketing channels to have control over the supply of their finished products. Growth in either or both of these forms will reduce the dependency of the firm over other firms.

(6)    Creativity And Innovation

 An entrepreneur needs to creative and innovation to tap opportunities of growth. Creativity means creating and offering something new in the market. It may be a new product, process or even a new market. Creativity also implies bringing about improvements in already exist products or services. Innovation is a process that transforms a creative idea into something tangible. Bothe these factors influence growth. An organization that encourages creative thinking and innovative practices will get a constant flow of new ideas which can be capitalized by the entrepreneur.

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