The organizational life cycle (OLC) is a model which proposes that over the course of time, business firms move through a fairly predictable sequence of developmental stages. This model, which has been a subject of considerable study over the years, is linked to the study of organizational growth and development. It is based on a biological metaphor—that business firms resemble living organisms because they demonstrate a regular pattern of developmental process. Marketing experts acknowledge the existence of product-market life cycles. It seems reasonable to conclude that organizations also have life cycles. This paper examines the life cycle using four fundamental organizational life cycles: start-up, growth, maturity, and decline. I will also provide the challenges, advantages, and usefulness each provides during that phase. II. Body
Early theories and empirical studies have identified various organizational life cycles. Many authors who have addressed the topic of developmental phases have presented different models. As a result, when researching this topic one will find differentiations between the numbers of phases within an organization’s life span. Some analysts depict an organization’s life span as ten different stages (Adizes, 2007) while others have reduced it to as few as three stages. Most models, however, show the organizational life cycle as a period comprised of four or five stages that usually follow along the similar stages of start-up, growth, maturity, decline, and death (or revival). However, regardless of the number of life cycles, what we know is that these cycles are sequential in nature; occur as a hierarchical progression that is not easily reversed; and involve a broad range of organizational activities and structures (Gupta & Chin, 1994). This paper will use four fundamental organizational life cycles: start-up, growth, maturity, and decline.
Phase 1: Start-Up
In the start-up cycle an organization will typically have substantial limitations. For example, organizations during this phase will often have limited operational budgets, infrastructure and manpower. The internal structure will be comprised of a few members, if not just the founder in some cases. This non-bureaucratic environment contributes to other challenges which include: highly controlled decisions and information, as well as placing the overall ownership in the hands of one or few individuals. The decision-making process is placed in the hands of the one(s) who are focused on the development and existence of the organization (Lester, Parnell & Carraher, 2003). During this phase the organization will attempt to secure a competitive place in the marketplace through the use of long hours, informal structure and information, and centralization. Other challenges deal with the organization’s focus on production and quality while operating with limited resources (Beverland & Lockshin, 2001). These are just a few challenges management must consider during the start-up cycle.
Nonetheless, managers must work hard toward the implementation of business strategies which will enable the organization to progress into the next phase. For instance, although the organization may have limited resources (i.e., operational budget and staffing) these should not be perceived as limiting factors impacting the organization’s ability to move into the growth phase. Management will need to develop a plan that allows for adequate staffing and do so by thoroughly assessing the essential needs of the organization at that specific time. It is not uncommon for organizations in this phase to hire within their own social circles as a means of meeting budgetary constraints (Leung, 2003). One of the benefits provided during the...
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