Discussion on the Cause and Effect of Business Growth and Failure
A business develops or fails due to various reasons. Efficientmanagement helps a business to thrive even at compromisingsituations. A firm should be competitive enough to establish a marketin a place where there are many competitors or a place with limitingfactors. The paper will discuss the causes of business growth orfailure and their effects.
Variousfactors contribute to a success of business. The factors include
A business with sufficient strategies is competent. Strategies referto what is carried in a business and then lead to increase ofbenefits.
A business with responsible employees carries out their dutieseffectively. They help an organization to realize its goals andobjectives. They are punctual and perform activities without or withminimal supervision. In addition, they have passion and a positiveattitude towards their job.
A business that is controlled by competent leaders has the potentialof rapidly developing. Leaders provide effective strategies that arefollowed. They create an enabling environment that is favorable for abusiness to thrive. The environment creates a good relationshipbetween employees with management and employees with the customers.The positive interaction increases the level of sales and ultimatelyresults in increased production and profit.
Culture is people`s beliefs, mode of communication, and norms. Abusiness that respects its employee`s cultural values grows fast. Acompany has to respect cultural differences and work towardsincreasing equity among all involved cultures. In addition, themanagement should nurture the social beliefs to increase culturaldiversity (Mitchelmore,Siwan, and Jennifer, 129). Through embracing culturaldifferences, employees can work peacefully with one another, and theyare positive about their duties. It results in increased production.
An organization should be flexible enough to handle frequent changes.The changes involve those in technology and the market. A flexiblebusiness increases its adaptability to various situations. They canadapt to a low season especially when the business is beginning. Theycan also embrace the technology advancement, which influences thebusiness production positively. Sometimes, the market reduces due toincreasing of competitors and availability of cheap alternativegoods. At this moment, a firm should develop strategies that willincrease its competence through minimizing cost and maximizingprofit.
It should handle sensitive issues with the urgency they deserve. Inthe case of a problem or a limiting situation, they should find thebest solution to the issue and keep the business running. Riskfactors such as fire and economic inflation are uncertainties andcannot be avoided. However, with a proactive organization, theyalways get a quick and efficient way out. They are also ready to facethe issues, hence are not caught unaware.
Creativeand Innovative Workforce
An organization that is made up of creative thinkers alwaysexperiences a smooth running. The creative workforce develops ideasthat are vital in helping a business to exist in a competitivemarket. They also innovate new methods of running a business. Theworkforce brainstorms and develops decisions that steer the business.In addition, they can understand new technological changes, embracethem and include them in their systems. The ultimate result is anincrease in organization growth.
Effects of Growth of a Business
The business enjoys the economies of scale. The economies of scaleinclude technical economies of scale, which refers to purchasing moremachines to improve the production. In addition, there is marketingof economies where an organization enjoys bulk buying and getsdiscounts. There are also financial economies where an organizationwith rapid growth rate enjoys easier borrowing of loans and at a lowinterest rate.
ExternalEconomies of Scale
They are the benefit enjoyed by an organization due to itswell-planned arrangement. The firm enjoys subsidies from thegovernment, minimized duties on the imported goods and are given taxholidays.
However, there are few demerits of rapid organization growth. Anexample is diseconomies of scale. High growth and expansion of a firmrequire extensive marketing. The organization incurs high advertisingcost, high cost of maintaining machines and face challenges inmanaging the rapidly growing organization.
Causes of Organization Failure
Several factors can result in a failure of an organization.
Failingto Understand Market and Customers
An organization that is unaware of the type of customers or marketfaces some difficulties. They lack knowledge on what should beprovided to the consumers. In addition, they are unaware ofcustomer`s taste and preference. Hence, they do not meet thecustomer`s expectations. Their level of selling is low and if thetrend continues will lead to the business failure.
Usingan Unprofitable Market
Setting business in a non-productive market is a threat to thedevelopment of business. The flow of goods and services is limited,hence the level of profit is low (Ucbasaran,Deniz, et al., 170). If the trend does not change, itleads to the business failing to meet its cost.
Every new business requires enough capital that will propel itsactivities. The capital enables smooth flow of business and acontinuous sales cycle. However, a business with insufficient fundsfaces challenges of competing favorably in the market. They develop apoor flow of sales, which ultimately lead to the firm failure.
Effects of a Failing Business
A failing business leads to firing of employees. A poorly performingbusiness has challenges of paying their employees. They struggle tomeet basic business needs like marketing. In addition, poorlyperforming business try to minimize the cost of production while theymaximize profit.
Low performing business has no potential to employ personnel withhigh qualifications. Personnel with high qualifications demand largesalaries, which the firm is not in a position to pay. Hence, theyinvolve low skilled, non-competent personnel, which will be acontributing factor to poor performances.
Proper research on the market will provide necessary knowledge inunderstanding your competitors and the preference of the customers.The knowledge will guide in providing the required goods andservices, which will satisfy human wants.
Any business should develop their brand through advertisement. Theyshould also provide quality products that will satisfy customer`sinterest. In addition, use of familiar brand names increases theirawareness in the market.
Effects of Marketing
Increasein the Level of Sales
Marketing of goods and services creates awareness of the existence ofproducts. Hence, the total number of customers increases whichmaximizes the level of sales.
Marketing helps in the establishment of a product in the market. Thebrand gets its customers who trust the type of good.
Engagement of customers is a trend that cannot be overcome bychanging technologies and market. The relationship between customersand business is necessary to create a healthy existence and runningof the firm.
Taking data from customers will provide necessary information aboutcustomers. The information would involve the customer`s preferenceand provide their demand (Ramakrishnan,Thiagarajan, Mary, and Anna, 491)
In conclusion, the success and failure of a business depend on thetype of stakeholders. A good management helps in creating a safe andhealthy working environment leading to more success. In addition,creative and innovative employees help in making business ideas thatare essential in the development of business. However, the failure ofa firm also depends on the form of management and types of employeesinvolved. Hence, any starting business should consider the mentionedfactors.
Mitchelmore,Siwan, and Jennifer Rowley. "Entrepreneurialcompetencies of women
entrepreneurspursuing business growth." Journalof Small Business and Enterprise Development 20.1(2013): 125-142.
Ramakrishnan,Thiagarajan, Mary C. Jones, and Anna Sidorova. "Factorsinfluencing business
intelligence(BI) data collection strategies: An empiricalinvestigation." DecisionSupport Systems 52.2(2012): 486-496.
Ucbasaran,Deniz, et al. "Lifeafter business failure: The process and consequences of business
failurefor entrepreneurs." Journalof Management 39.1(2013): 163-202.
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