WHY DO SUCCESSFUL COMPANIES FAIL?

Why do successful companies fail?

Why do Successful Companies Fail?

Introduction

Experience shows that the period of successful operation of businesses is often finite. Although there are many companies that are doing business for 50 or more years of business. But the number of companies - regardless of their size - which is already there for 100 years or more already significantly lower. Presumably, a representation of the company after a similar age structure will have as a typical population pyramid.

Discussion

Business life cycle is a major reason why there is relatively little very old company that have a limited temporal existence. Assuming that the majority of companies have a finite life cycle, first the characteristics of the end shall be regarded by corporate existences.

The classic cases of involuntary withdrawal from the market are economic problems that ultimately make it impossible for insolvency and / or indebtedness to continue the business.

Less often companies are dissolved by the owners without economic coercion and liquidated. This is often the case for special purpose entities, which were established from the start, only for a specific finite project, such as real estate development projects.

All three forms of absorption of a company in another unit have their origin ultimately in one form or another, that owner or to see a market value in the reorganization of the existing organization. The whole thing is in these cases worth less than the sum of its parts (Childers, 2012: 24-78).

It seems not easy to run a business over long periods of time so that its continuation is the preferred strategy for all involved. Much has been written about and researched, which diverts from the company to success. In general, the failure of companies to be the following causes:

Common triggers are management errors. Through bad decisions in the management and control, any doubt - and young - companies fail to be accommodated. Even if in the sector of large enterprises are a number of highly publicized and discussed in detail examples of management errors, they should more often be found in small and medium enterprises. This begins with such blatant misconceptions about market potential, attractiveness, etc., in the case of start-ups and continues in business weaknesses. When you consider the current examples of poor corporate governance in mind, also refuted the above hypothesis that earlier and more businesses have failed through lack of management skills.

In addition, companies often struggle to adapt to changing environmental conditions or dynamic. It needs no further examples, such as late or incorrect responses to the various changes (customer behaviour, competitive mechanisms, product development, etc.); companies can run into life-threatening crises.

Especially the last point - lack of adaptability to changing demands of the environment - is most often found in older companies. This increase does not necessarily have the size of the problem. Many small businesses and artisan craftsmanship often have no significant growth over the decades (Childers, 2012: 24-78).

Companies in the first years of its existence and rapid growth phases are often called "mental flexibility": ...