The value of seeking strategic direction in ensuring a future pattern of “realistic” growth potential

Abstract

Purpose

By using the internet search engine Google™ as the primary example, this article illustrates: (1) that some high‐growth expectations are unsustainable over the short and medium term; and (2) that dependency on single revenue streams may provide growth over the short term, but may not be sustainable over the medium and longer terms, and may be a high‐risk scenario. An approach is presented that companies can undertake to critically evaluate current and future positions and consider such options as acquisition and integration as a means of building future growth potential.

Design/methodology/approach

Secondary research based on the analysis of published data.

Findings

Dependency on one revenue stream within a volatile market can impact upon growth expectations. Hyper‐growth expectations may be unsustainable, indeed unrealistic, over the medium term. Such growth expectations may be detrimental to the company. Companies who can spread the risk through acquisition and integration through strategic fit may have greater longer‐term growth potential, notwithstanding market and environmental dynamics.

Research limitations/implications

Future opportunities for research could include, among other areas, how Google™ and similar online companies could use currently free products to generate revenues.

Practical implications

Companies need to consider the volatility of the marketplace. Dependency on one revenue stream could be a high‐risk scenario, especially in relation to sustainable high growth expectations. Companies also need to consider various strategic options for sustainable longer‐term growth, and continually critically review both internal and external environments, as well as product ranges and revenue streams. Companies should take action to sustain growth, whether that is through new market development, acquisition or even divestment.

Originality/value

While being flexible companies need to consider a realistic strategic direction for the business. Companies also need to consider realistic growth rates as compared to hyper‐growth expectations that are unlikely to be sustainable over the medium and longer term.

Citation

Groucutt, J. (2007), "The value of seeking strategic direction in ensuring a future pattern of “realistic” growth potential", Business Strategy Series, Vol. 8 No. 1, pp. 78-88. https://doi.org/10.1108/17515630710686923