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Growth of an organisation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Growth of an organisation

  • This topic has 2 replies, 3 voices, and was last updated 10 years ago by mrjonbain.
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  • November 11, 2014 at 2:29 pm #209126
    stacie395
    Participant
    • Topics: 39
    • Replies: 54
    • ☆☆

    I read from becker study material that growth of an organisation might adversely affect shareholder wealth. How do we justify this…?

    Thanx…

    November 12, 2014 at 11:34 am #209300
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Do Becker not justify it?

    I can only suggest it is a combination of how the growth is funded, and whether the rate of growth meets shareholders expectations.

    November 12, 2014 at 2:04 pm #209362
    mrjonbain
    Moderator
    • Topics: 6
    • Replies: 2484
    • ☆☆☆☆☆

    Hope I am not intruding on the thread.One possible example might be that studies have shown that about eighty per cent of acquisitions fail to deliver increased value to shareholders.Other possibilities I can think would relate to diseconomies of scale as organisations become more complex difficult to manage,decreasing returns on increased. market share past certain point and dangers of trying to leverage into new markets without adequate competencies in order to try to maintain growth (also related to management empire building)

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