As businesses expand, they risk losing sight of their core strengths and strategic foundation, leading to a phenomenon known as the “growth trap.
The Growth Trap: A Threat to a Company’s Strategy
Growth can be a powerful driver of success, but it can also muddle a company’s strategy if not managed carefully.
The Origins of the Growth Trap
Michael Porter, a renowned business strategist, identified this phenomenon as the “growth trap.” In essence, companies often prioritize growth over preserving their unique strengths and competitive advantages. This can lead to investments or decisions that gradually erode their original strategic foundation.
How Companies Fall into the Growth Trap
When companies focus solely on expansion, they may overlook the importance of maintaining their core identity. As a result, they may:
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Dilute their brand’s unique selling proposition (USP)
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Compromise on quality to increase production and reduce costs
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Over-expand into new markets without conducting thorough market research
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Invest in initiatives that do not align with their core strengths
The Consequences of the Growth Trap
If left unchecked, the growth trap can have severe consequences for a company’s long-term success. These may include:
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Loss of competitiveness due to erosion of unique strengths
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Decreased brand value and reputation
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Inefficient resource allocation and waste
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Difficulty in adapting to changing market conditions
