Causes of Failure in Business
Normally, following are the common causes of failure of any business:
- • Lack of market knowledge
- • Start of any business without having proper experience in the field
- • Lack of control over procedures
- • Lack of understanding customer’s demand
- • Poorly designed Production Processes
- • Cost
- • Wastage
- • Complaint handling
- • Quality
- • Insufficient capital
- • Bad Luck
- • Natural Disaster
Reasons for Success in Business (controllable factors)
- • Response of Market
- • Competence – The ability to work
- • Knowledge of Market
- • Knowledge of Product
- • Knowledge of Systems
Reasons for Success in Business (uncontrollable factors)
- • Luck and Act of God
- • Law of Government
- • State Laws
- • Climate change
- • Using disaster (if any) as an opportunity)
Joint Venture
Two or more people or organizations join hands and decide to do a combine business. In a joint venture, There is equal sharing or capital resources by each firm.
Instead of expanding the business at broader level or to start a new business with very high cost, joint venture shares the financial burden in order to gain new opportunities at diversified level.
Advantages of Joint Venture
- • Provide opportunities to acquire new expertise
- • Allow to enter in new geographic markets
- • gain new technological knowledge
- • Sharing of specialized staff and technology
- • sharing of risks
Strategic Alliance
In strategies alliances, two or more than two organizations collaborate for mutual profits.
In strategic alliances, Pool of resources occurs such as products of both firms, distribution channels used by every firm, manufacturing capabilities of firms, future projects funding, capital equipment sharing, knowledge,
expertise and intellectual property sharing among both firm are the basic out comes of strategic alliances.
One good e.g. of strategic alliances is commonly seen in Air Lines industry around the world.
Merger and Acquisition
Merger is a new trend in market in which two or more organizations combine together and form a new organization.
Acquisition
Slightly differ from Merger, here one business acquires the other business instead of combining. Ownership moves more towards the acquiring partner.
Common Advantages of Merger & Acquisition
- • Expansion of size
- • Minimize the operational cost
- • To reduce competition
ACTIVITY
After studying the all the concepts mentioned above, you as a student of Introduction to business studies is required to acquire knowledge about practical organizations who are performing their activities under any business form mentioned above and if they are successful,
what are the core strengths of their success & if they are failure, (at any part) where were the weaknesses?
