Multifactor Trend Model of Sustainable Company Growth in the Context of Competition and Inflation

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Abstract

The present research analyzes corporate growth against the background of competition and inflation, with a focus on the sustainable growth concept. The existing sustainable growth models are more suitable for solving the inverse problem when funding sources are defined at a predetermined growth rate, and less effective for solving the direct problem of sales volume planning when initial data is known. This is due to the fact that traditional models leave out external growth factors. Although inflation models of sustainable growth have remedied the situation, they are still dismissive of competition. The offered multifactor trend model of sustainable growth bridges this gap by taking into consideration the key growth drivers: investment ratio, asset turnover, return on sales, financial leverage and dynamics of product and resource prices. Differential and integral calculus methods were applied to develop the model, and financial ratios are considered as dynamic values described by the trends that are indicative of the external environment impact. The model potential is exemplified in various industries. It provides an opportunity to model the company’s entire life cycle, including a period of decline, and may be used as a strategic planning tool. The model describes natural, typical and logistics growth and may be used at the early stages of the life cycle when data is limited.

About the authors

V. Belykh

Novosibirsk State University of Economics and Management, Novosibirsk, Russia

Author for correspondence.
Email: v.v.belykh@gmail.com

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