Growth Strategies Creating Shareholder Value

The corporate history is abound with cases to show how companies embark on rapid sales growth, report happy bottom line and earning per share, and then experience perils of growth. History also suggests that not all growth companies with long-term payoffs are rewarded in the stock market. Over the last one decade or so, academicians and professionals have therefore put more emphasis on value creation for shareholders in crafting the business strategies. No matter what growth strategies are pursued by the companies, they must pass through the benchmark of shareholder value creation. What does constitute shareholder value? How does often growth lead to destruction of shareholder value? What are the key value drivers to be analysed in evaluating alternative growth strategies? This paper presents a comprehensive value creation model to address these questions. Besides, a set of propositions are being derived from this model and their practical implications to strategy formulation discussed.