ACCA Strategic Professional · Strategic Business Leader · Enabling success: organising
Tessera Print has a stable market, falling sales growth and strong cash flow. Its structure is highly formalised and innovation has slowed. The board fears moving into decline. Which action is most consistent with the life cycle view of managing a mature organisation?
The board should pursue renewal, such as new products, new markets and more flexible structures. A mature organisation with slowing innovation and rigid formality risks decline, so rejuvenation is the life-cycle response. Adding more controls would worsen rigidity, while liquidation or ending investment would be premature.
- APursue renewal through new products or markets and more flexible structures to avoid declineCorrect
- BCut all investment and move to a purely informal entrepreneurial structure
- CImmediately liquidate the business while cash flow is strong
- DIncrease formal controls further to protect the existing position
Explanation
A mature firm risks stagnation and decline unless it renews itself, for example through innovation, diversification or restructuring. Adding more controls deepens rigidity. Liquidation and abandoning investment are premature given strong cash flow, and a sudden return to informality does not fit a mature firm.
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