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The sustainable growth model: A tool for evaluating the financial feasibility of market share strategies

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  • Poondi Varadarajan

Abstract

Market share objectives constitute a key element of a firm's corporate strategy. Market share strategy decisions—to build, maintain, or harvest share—are generally based on a careful consideration of the long‐term and short‐term profitability and cash flow implications of such decisions. The product sales growth rate and capacity expansion implications of share building strategies, the sustainability of implied sales growth targets and its consistency with the established financial policies and objectives of the firm are the subject of this report. The sustainable growth model outlined provides a framework for evaluating the financial feasibility of sales growth objectives at the strategic business unit level and the firm level, from the standpoint of expected return on sales, investment requirements per dollar of sales, target capital structure and the dividend policy of the firm.

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  • Poondi Varadarajan, 1983. "The sustainable growth model: A tool for evaluating the financial feasibility of market share strategies," Strategic Management Journal, Wiley Blackwell, vol. 4(4), pages 353-367, October.
    • Handle: RePEc:bla:stratm:v:4:y:1983:i:4:p:353-367
    DOI: 10.1002/smj.4250040406
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    Cited by:

    1. Erkan, Asligul & Fainshmidt, Stav & Judge, William Q., 2016. "Variance decomposition of the country, industry, firm, and firm-year effects on dividend policy," International Business Review, Elsevier, vol. 25(6), pages 1309-1320.
    2. Xiaodong Teng & Yanzhi Wang & Aiguo Wang & Bao-Guang Chang & Kun-Shan Wu, 2021. "Environmental, Social, Governance Risk and Corporate Sustainable Growth Nexus: Quantile Regression Approach," IJERPH, MDPI, vol. 18(20), pages 1-15, October.
    3. Isnurhadi & Sulastri & Yulia Saftiana & Ferry Jie, 2022. "Banking Industry Sustainable Growth Rate under Risk: Empirical Study of the Banking Industry in ASEAN Countries," Sustainability, MDPI, vol. 15(1), pages 1-21, December.
    4. Deleersnyder, B. & Dekimpe, M.G. & Steenkamp, J.E.B.M. & Koll, O., 2007. "Win-win strategies at discount stores," Other publications TiSEM 34fbe624-0ee7-4c52-b640-7, Tilburg University, School of Economics and Management.
    5. Patel, Pankaj C. & João Guedes, Maria & Pagano, Michael S. & Olson, Gerard T., 2020. "Industry profitability matters: The value of sustainable growth rate and distance from bankruptcy as enablers of venture survival," Journal of Business Research, Elsevier, vol. 114(C), pages 80-92.
    6. Deleersnyder, B. & Dekimpe, M.G. & Steenkamp, J-B.E.M. & Koll, O., 2005. "Win-Win Strategies at Discount Stores," ERIM Report Series Research in Management ERS-2005-050-MKT, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.

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