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Growing Pains, 5th Edition by Yvonne Randle, Eric G. Flamholtz

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Chapter 3Identifying and Surviving the First Four Stages of Organizational Growth

All organizations pass through various stages of development. These stages are, at least in part, determined by the organization's size, as measured by its annual revenues (or for nonprofits, in terms of annual budget). This chapter presents a framework for identifying and explaining the major stages through which all organizations grow and develop as they increase in size. It should be noted that this framework applies to a division of a large company, as well as to an independent organization.

First, we identify the seven stages of organizational growth comprising the entire life cycle and then, in this chapter, examine the first four stages from the inception of a new venture to organizational maturity. We identify the emphasis on each level in the Pyramid of Organizational Development that is required at each growth stage and explain the nature of the transitions to different stages. Throughout the discussion we will present selected examples to illustrate success and failure at each stage. Then, we discuss the differences between an entrepreneurship and a “professionally managed” organization and what must be done to make the transition between these major growth stages. Next, we present a case study of a company (99 Cents Only Stores) from its inception as a new venture through its transition to become an entrepreneurially oriented, professionally managed organization. Finally, we discuss ...

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