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When companies get too big
Filed in archive strategy by leon on May 13, 2008
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Can the biggest get bigger? Can companies get too big to grow? That's the interesting question raised in this Harvard Business Review piece that looks at research showing how companies get to a size where they hit a plateau and can't grow anymore.

The piece states two obvious solutions: keep the business units small enough and scout around for new business opportunities.

I would say one of the best examples of this quandary is Wal-Mart. The retail giant has filled up the United States and it would be hard to find new arenas of growth. Wal-Mart now accounts for 10 dollars out of every 100 that Americans spend in any store anywhere in the country and in a lot of towns, it accounts for 33 cents in every dollar spent on groceries.

True, Wal-Mart's been doing well in the wake of the subprime mortgage crisis as Americans rein in their spending, something that Slate writer explains in his excellent piece The Wal-Mart Puzzle.

But it's hard to see it owning more of the retail economy than it currently has.

Wal-Mart has been looking at new growth options. One is expanding overseas. The other is opening up so-called medical clinics run by what's called "Nurse practitioners", something the New York Times covered earlier this year.

It's not that Wal-Mart is in trouble. But it's unlikely to return to the era when it was growing at 12-20 per cent.



Permalink: When companies get too big
Tags: Harvard  Business  Review  Can  Companies  Get  Too  Big  to  Grow? 
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