How can "No-Growth Companies" succeed? Lessons from Majestic (1973-2012)

Corporate growth triggers a virtuous circle by creating economies of scale and making more financial resources available to invest in powerful differentiation policies and in growth itself. Family businesses struggle to grow and, in some industries, are replaced by larger companies. By focusing on the case of a small Italian company, this paper elucidates how small companies can target particular markets and thereby coexist with large companies, despite the latter’s economies of scale and superior capabilities. The ‘no-growth company’ avoids frontal battles with large corporations by occupying declining market segments in which large rivals no longer invest in improving their products. To seize such opportunities to gain market share with limited financial resources, the no-growth company needs to exploit available technologies and differentiate its products by combining existing functionalities or improving its product design.