Management constraints on business growth impact analysis

Abstract: Industrial organization theory suggests that the long term management of enterprises will face growing constraints, and performance of the "Penrose effect", that business is primarily a management organization, within the framework of the company's decision to the company's growth. "Management constraints" as theory, analysis of Haci Group from the decline of the reasons for success and finally concluded on the basis of Haci failure, in the process of growth of general business management constraints in how to break the corresponding coping strategies.

Keywords: business growth; management constraints; diversity; Management Resources

1 Introduction
Haci Group in 1987 with 20,000 yuan loan and started a technology patent, listed in Shanghai in 1996, Haci reached its peak during the period, China's first private health care products companies. From 1987 to 2002, led by Guo Liwen of Haci health care products market in China fighting for 15 years, until November 2002, the Kwok family will transfer 100% of the shares in full, indicating that the decline of formal Haci Group. This can not help but lead people to think: Haci's diversified development strategy and internal management failure is associated with constraints? management constraints hinder its expansion is how?
2 Related Theory Review
2.1 The concept of management constraints
Management constraints was first proposed by the British economist Penrose, mainly referring to the existing managers can get any time the rate of expansion is limited, the same number of managers to manage the expansion of capacity expansion is limited. Both forces to generate constraints on business expansion, they affect the expansion costs, or improve the efficiency decrease in growth rate, which will increase the capital-output ratios and lower profit margins.

2.2 Management constraints the constraints on business growth theory
2.2.1 Entrepreneurship
Penrose in his discussion of entrepreneurial resources, said: entrepreneurs learned, financing capability, initiative and common sense are necessary for every business. In two ways for the general concept of entrepreneurship: from the process of looking to promote enterprise development the entrepreneur is specialized in production and business activities and decision-making to determine who, and organizations related to internal and external resources to achieve this potential opportunity, promote business development from the purpose and results, the entrepreneur is risk and uncertainty holders, while they should be business profits or bear the loss.

2.2.2 Resource Management
Resource-based view that the business expansion in the scale will adjust its management resources to generate dynamic adjustment costs, the costs both from existing and newly recruited management information asymmetry between managers and staff to learn new management and integration costs costs, but also from the company's human resources sticky. Penrose pointed out that the manager's time and attention is the company's scarce resources, if companies can not manage the rational allocation of its resources, business growth will be limited.

2.2.3 Structure
Organizational structure including the company's internal governance structure and corporate governance structure. Ansoff pointed to a certain stage of business development, to seek long-term development and growth or expansion strategy adopted, with the expansion of the scale, business management and basic administrative functions structure should be restructured, which requires companies to have a good internal governance and management structure, on the one hand to ensure that the management have enough incentive, it also can protect the business running effectively.

3 Haci management constraints on the growth of business impact analysis
3.1 Entrepreneurs lack of resources and lack of common sense
Haci led the $ 20,000 from a small workshop to become the first listed company in Heilongjiang Province, Guo Liwen Haci achievements of the contribution and its ability is unquestionable, but the growth of Haci Group listed company, for different products in the sales and Marketing still cling to stereotypes, while sales of branch management deficiencies to some extent explains the shortcomings of their management capabilities, according to Penrose classification, Guo Liwen entrepreneurs learned in the financing ability, initiative in ability worthy of recognition, but because of the special nature of entrepreneurial resources, even if you can get an area that can effectively operate all of the management services, can not get some of the expansion in terms of basic production services for Haci, even Guo Liwen in the professional knowledge, the pursuit of long-term growth for the company, and always outstanding, but can not because of its own resources to entrepreneurs and business operations related to the organic combination, resulting in the expansion path for Haci out of control.

Entrepreneurs of their own ability to manage risk and understanding of this capacity is changing, it is experienced by entrepreneurs and entrepreneurs operating their own "personal capital" of the impact of continued confidence in the success would Guo Liwen, and even high estimate their own ability to manage risk, such excessive self-confidence is a diversified enterprise disaster in Penrose's discussion of resources for entrepreneurs, the entrepreneurs are divided into two types: one focused on the production and delivery of services to create profit and growth; second is to create a strong cover vast areas of industrial "empire." In the latter case, to find the right business growth opportunities for discretion is essential. Haci Guo Liwen clearly belongs to the latter company home because of Haci through one of his early success against the criticism of those who while struggling, he has full discretion for their own self-confidence, but when the problem occurs after Haci expansion, some executives have been several proposed to shrink the front, the concentration of superior resources and capital return to the main business of the proposed health care products, but have not been adopted. Guo Liwen, though they have a strong entrepreneurial spirit, but still can not identify a good profit opportunities, the lack of common sense, which is leading the expansion of Haci reason for the failure of the entrepreneur level.

3.2 manage the allocation of resources can not meet the expansion needs
In the 1990s to explore ways to Win, the Haci not sum up their own Marketing and management from the lessons start, not from the establishment of modern enterprise system and improve the capacity and improve the management point of view to consider and action, choosing instead to diversification. In seeking to enter the industry in order to obtain a relatively stable long-term sustainable growth platform, Haci optimistic and decided to enter the pharmaceutical industry, agriculture and tourism, and has invested heavily.

Haci new industry, and faced with new problems, new things, its business philosophy and operating mechanisms, personnel structure and ideological, and other times did not, Maris that, at any time available to existing managers expansion is limited due to lack of necessary knowledge update, Haci old employees in the face of new industry is bound to no absolute certainty, it should accelerate the pace of metabolism, to attract new employees for the company to add new blood, but Haci As a family business in this exposed some shortcomings, too confident and not listen to suggestions, leading to brain drain.

At any time, managers of organizations and decision-making capacity is limited, if managers in a higher degree of diversification, the investment in the management of resources in one area will be reduced, leading to technical, financial, Marketing and so can not be effectively implemented, thus increasing the probability of wrong decisions, according to Maris model discussion on expansion costs, due to wrong decisions which led to excessive expansion of production capacity will lead to capital - output coefficients increase, which will significantly reduce the capital long-term rate of return and business growth due to limited resources Haci management, coupled with greater mobility, leading to consumption of large quantities of internal resources in new products, new industries and new manager coordination. As Haci expanding its own management resources can not meet demand, management of the resource gap and the existing non-productive consumption of resources, leading to its further growth for Haci restrictions.

3.3 organizational structure impede the expansion
Economics, organization and management capacity of the enterprise as a management response to the competitive market environment made the strategic choice of the results, according to the "Penrose effect", can the organizational structure will be a business enterprise as one of the resources , its ability to process in the growth of enterprises to play a full, depending on whether they meet the needs of business growth. If you can not make the appropriate changes, will be a barrier to their development, produce levels of the organizational structure of management restrictions and therefore, the competitiveness of enterprises depends not only on whether it has a unique set of capabilities, but also depends on the organization's strategic adaptation and the environment ability to adjust.

As more and more advanced knowledge of products, and management philosophy was widely disseminated, Haci annual compliance management philosophy and organizational structure has been unable to adapt to the changing demands of the environment, and its gradual decline is also reasonable. Here, mainly from the internal governance structure, Marketing, organizational structure, analyzed in two ways.

3.3.1 internal governance structure
From Haci related news and data, Haci is typical family-owned company of the Kuok father and sons have complete control over the Haci Group, and Haci Haci Group is the market shares of the largest shares of the controlling shareholder, with 48.03 % of the shares. too concentrated family ownership and management of family management is more focused throughout the history of Haci a big problem.

Links to free download http://www.hi138.com in management, the management of a family-led management of the main sectors are controlled by a family member, the company's organizational structure often is just a dummy, a lot of things Guo Liwen finalized by a person, hands, while in equity, the Haci executives rarely have the company's shares, which direct the company's management initiative resulting in a serious blow to the governance structure is relatively weak, the two aspects of the factors that ultimately makes the company's core high-level resigned. Haci as a private enterprise, the Group organizational structure is not very clear, complex ownership structure between the parent and subsidiary companies; as a family business, the key issue, the president's efforts to control large through the Board of Directors, shareholders, most of the less educated, so Haci Group's organizational structure is a typical U-Zhi Neng-style centralized structure is obvious that linear functions of the type of centralized flow of information to the vertical main transmission path is longer, greater degree of information distortion is not conducive to diversification of the various types of business enterprise to control, it has also become an obstacle to the development of Haci diversified.

3.3.2 Marketing Organization
Further split the 21st century market, market segments, gradually increasing the difference for the end consumer-oriented companies, led to the distribution supply chain structure has been unable to adapt to market development, target market needs as the starting point of "market Logistics "is becoming the key to business growth organization. According to this theory, companies should first identify the target market, consumer demand, and reverse-engineering the supply chain planning, while establishing the infrastructure to meet market demand, expected to perform and control the country of origin and the final product from the initial stage to meet consumer demand and thus profits in the process.

In Haci Marketing model, Marketing, logistics flow and market the opposite direction, the end consumer feedback can not be effectively delivered to the company, which is hindered Haci growing weakness. This violation of the core concepts of modern Marketing organization structure, starting from the establishment of their own product design, production, distribution organization, product development and Marketing management neglect, focusing on advertising strategy, Marketing structure doomed Haci not go far.

In summary, the organizational structure of Haci Haci seriously hindered the process of diversification: from Haci's internal governance structure, family governance are fragile, U-style centralized structure functions to longitudinal main flow of information, transmission path is longer, larger distortion of information, from the Marketing structure analysis, in violation of the core concepts of modern Marketing, advertising and neglects the over-reliance on product development and Marketing management, Marketing structures to achieve sustained profitability.

4 Haci Group management constraints on other business inspiration
4.1 lifelong learning and sustained entrepreneurial activity, the accumulation of effective "entrepreneurial resources"
Entrepreneurs learn the knowledge, the equivalent of investing in the "entrepreneurial resources" to help entrepreneurs in the formation of the unique value judgments, to enhance the sensitivity of the information, to further promote their own capabilities. Entrepreneurs entrepreneurial activity is found and selection of market opportunities, and the use of external resources within the enterprise the opportunity to practice this process in the ongoing activities of entrepreneurs, entrepreneurial minds are mature and improve, further enhance entrepreneurship. Therefore, lifelong learning and sustained entrepreneurial activity, entrepreneurship is the key to the formation.

4.2 based on their own objectives and resources, to develop a reasonable diversification
Enterprises in the expansion process, there must be sufficient strength, adequate resources and personnel necessary for the protection, an enterprise can not continue to grow. Expansion to differentiate itself based on the comparative advantages of natural resources, coordination and management of resources and business expansion pace. Business expansion, to grasp the degree of diversification has become key to business success. Enterprises to ensure successful growth, first of all enterprises can afford the cost of the management level, there is a clear understanding of the amount of capital to determine the extent of overall expansion. The development of new industry must fully consider whether the cost of investment in the enterprise within the tolerance range, in a timely manner to enhance the integration between the various departments in the growth, control costs and increase revenue.

4.3 rational organizational structure to build, to better adapt to environmental change
Nonaka (Nonaka tacit knowledge that constitutes a source of human knowledge, and knowledge-driven management organization, the individuals within the organization is to promote tacit knowledge into explicit, for the exchange of knowledge used in the process of knowledge transformation , social communication, to build a common cognitive mechanism, the enterprise of cognitive, learning to play a decisive impact on the face of corporate management structure of the binding mechanism of the objective requirements, the firm is more to strengthen the internal communication between the vertical level, the individual's knowledge, ideas and organizational development concepts combine to form an open, innovative organizational culture, "induced" to make a strategic adjustment, not only to achieve self-control management system, the ideological basis, but also respond to environmental change , an important guarantee for improving management efficiency.

References
[1] [English] Donald • sea • Derek Morris. Industrial Economics and Organization [M]. Beijing: Economic Science Press, 2001. Links to free download http://www. hi138.com