Four dimensions of business growth

In the ecology of nature, every kind of organism lives in a certain space and time, and must obtain the resources on which it depends, and at the same time cannot avoid competition with similar or even other types.

The same is true in the process of enterprise growth. To obtain corresponding growth, it must also obtain certain resources in a certain space and time, and at the same time face competition with other enterprises. Therefore, we must fully consider the four very important dimensions of space, time, resources and competition when we study corporate growth.

1. Space
For biological growth in nature, space is the scope of its survival activities, while for business growth in business ecology, space is its market size, quality, etc. For biological growth, the quality of these spaces is manifested in climate, weather, temperature, humidity, vegetation, rainfall, etc., for corporate growth, it is manifested in politics, economy, culture, and technology.

Political space refers to the external political situation, national policies and changes in corporate marketing activities. Including policy guidance, such as the party and government’s guidelines and policies, stipulating the development direction and speed of the national economy, it is also directly related to the increase in social purchasing power and the growth and changes of market consumer demand.

Economic space refers to the external socio-economic conditions of corporate marketing activities, including consumer income levels, consumer spending patterns and consumption structure, consumer savings and credit, economic development level, industry development status, degree of urbanization and other factors.

The social and economic conditions faced by enterprises and their operating conditions, development trends, industrial structure, transportation, and resources are all important components of the economic space and are important factors restricting the growth of enterprises.

For example, the size of the market depends not only on the number of people, but also on effective purchasing power. The purchasing power is subject to the comprehensive influence of various factors in the economic environment. The economic space here also has three dimensions, namely the overall economic situation, the development of the industry in which the enterprise is located, and the proportion of the industry. The core element of space.

Cultural space includes social class, social and cultural characteristics, cultural trends and weather vanes, etc. People grow up in a specific society. The society shapes people’s basic beliefs and values, and the worldview that determines their relationship with the people around them is also formed. Cultural characteristics can influence marketing decisions. The cultural environment is made up of institutions and other forces, which affect the basic values, understanding, preferences, and behaviors of society.

The impact of technological space on business operations is manifold. The technological advancement of enterprises, especially the advancement of emerging technologies, will change the demand for the products or services of enterprises by society, thereby providing enterprises with favorable development opportunities and contributing to the growth of enterprises. Very significant effect.

Of course, in addition to political, economic, cultural, technological and other spaces, the impact of major events such as the sudden new crown pneumonia epidemic, lower-cost alternatives, and the rise and fall of industry cycles will also lead to changes in the growth space of enterprises.

Second, time
In nature, whether it is the seasons of spring, summer, autumn and winter, or the growth and death of organisms, all follow the law of time; in the business world, time is reflected in trends and opportunities. Enterprises must learn to seize opportunities and follow the trend to make good use of The time dimension has achieved multiplier growth with half the effort.

Population timing: As an emerging economy, China is facing an infinitely vast market, and enterprises are facing unprecedented opportunities and challenges. For example, the total population, demographic structure, and population distribution of our country are all good opportunities for us, making China the world’s largest market.

Industry timing: factors such as industry capacity, industry growth, market price trends, and market prices.

Consumption timing: For example, changes in consumption structure, improvement in consumption levels, changes in consumption habits and preferences, consumption needs and pain points, in-depth study of these opportunities may bring good opportunities for business growth. For example, the new generation of people has become the main force of social consumption and has come to the forefront of the market; they are leading the consumption trend, making relevant needs from scratch and from small to large. Without the rise of the “post-90s” and “post-00s” consumer groups, entertainment social products such as Douyin would not be able to expand so rapidly, nor would art forms such as rap and hip-hop be so popular.

3. Resources
Biology needs to constantly absorb water, food, space, etc. in order to maintain life, and occupy a place in the fierce ecological competition; enterprises also need to continuously obtain human, technology, market and other resources to maintain vitality, and occupy a favorable position in the stimulating business competition.

In the mid-1980s, some scholars abandoned the price equilibrium analysis methods of mainstream economics and put forward a resource-based corporate strategy theory based on the “Internal Growth Theory of Enterprises” advocated by Penrose. The main representatives are: Richard De Rumelt, Berg Wernerfeldt and other scholars.

The theory believes that the reason why enterprises with administrative organizational structure are profitable is because they have scarce resources unique to the enterprise, and can produce products with significantly low cost or very high quality, that is, profitable products. This kind of resource depends on the internal organization of the enterprise, is intangible and knowledgeable, difficult to imitate, and is exclusive to the enterprise. Therefore, the competitive advantage of a company is not in the market Porter refers to, but within the company, which relies on the heterogeneity of the company, which is very difficult to imitate, and has high efficiency. The internal driving force of resources and maintaining a company’s competitive advantage lies in the continuous formation and use of these proprietary superior resources. It can be seen from this that competitive advantage is endogenous, and there is path dependence at the same time.

According to this theory, when a company implements a strategy, it first determines the company’s unique resources; then, determines the market in which these resources can obtain the best benefits; finally, confirms the method of implementation: whether to enter the field or sell These proprietary resources are given to related companies in the field. Therefore, when the theory is used to guide the expansion of enterprises, it is usually relevant and diversified.

In order to make up for the shortcomings of resource-based theory, Tiss and other scholars put forward the theory of motivation and ability. First of all, the theory believes that the resources of an enterprise can be divided into four levels:

The first level is the production factors purchased by the enterprise and the public knowledge (such as product production standards) acquired. These resources are the foundation of an enterprise, but because they are not proprietary to the enterprise, they cannot be used as a strategic element of the enterprise.

The second layer is the company’s proprietary assets. For example, trade secrets, production secrets and special production techniques are very difficult to copy and imitate due to the intangible knowledge of the enterprise.

The third layer is the ability of the enterprise, namely the organizational practices and management activities that organically integrate the production factors and proprietary assets of the enterprise. These are the proprietary activities formed and fixed by the enterprise in the long-term production and operation process. It is the key factor that the enterprise is more efficient than the market and can replace the market, so it has strong economic efficiency.

At the fourth level, in the current drastically changing external environment, capabilities must be continuously improved, and corporate motivation and capabilities have become the most critical elements. Emphasis on motivation and capability. To adapt to the ever-changing external environment, companies must constantly acquire, integrate, and reconfirm the internal and external administrative organization technology, resources, and functional capabilities.

Four, competition
The most important aspect of a company’s competition is its competitive advantage and competitiveness. Competitive advantage refers to the various favorable conditions that enterprises have in terms of output scale, organizational structure, labor efficiency, brand, product quality, reputation, new product development, and management and marketing techniques. The competitive advantage of an enterprise is a whole composed of these favorable conditions, and it is the basis and precondition for the formation of enterprise competitiveness. The competitiveness of enterprises referred to here refers to the comprehensive ability of enterprises to design, produce and sell products and services, and participate in market competition. This ability is mainly determined by the competitive advantage of the enterprise itself.

In the mid-1990s, Bauer, an American information technology strategist, summarized the competitive advantages of enterprises into five types: 1. Cost advantage. This advantage enables companies to provide products or services more cheaply. 2. Value-added advantages. This advantage enables companies to create more attractive products or services. 3. Focus on advantages. This advantage enables companies to more appropriately meet the needs of specific customer groups. 4. Speed ​​advantage. This advantage enables companies to meet customer needs in a more timely manner than competitors. 5. Mobile advantage. This advantage enables companies to adapt to changing needs faster than competitors.

The competitiveness of an enterprise is the organizational process that is conducive to the formation and maintenance of power and capabilities, the state of proprietary assets and the path to obtain these resources and capabilities. From a static point of view, the organization process is integration and coordination, reflecting the ability of an enterprise to repeat a certain task; from a dynamic point of view, it is the development of new resources or capabilities; from the perspective of transformation, it is reorganizing resources, that is, re-allocating within the enterprise according to changes in the environment And use internal and external resources. The proprietary assets of an enterprise include proprietary technology assets, financial assets, prestige assets, structural assets, institutional assets, market assets, and organizational boundaries. These are the basis for the competitiveness of an enterprise.

In the actual competition process, the competitiveness of an enterprise is manifested in the concentration of the market, whether it has become an industry leader, the barriers of market followers, how many potential players and alternative products, how many successful cases, and the completeness of the industry chain , The size of the industry value chain, the feasibility of the business model, the profitability of industry sales, and the relationship between industry supply and demand.

For companies, how to achieve corporate growth is often a problem that has to be faced and considered. Only by systematically thinking about these problems can correct actions be possible. Understanding the business ecology of an enterprise from the four dimensions of space, time, resources, and competition plays a vital role in guiding the enterprise’s sustainable growth by grasping the dimensions of enterprise growth, clarifying the internal logic of enterprise growth.