Why Business Fails
Experience shows that the period of successful operation of companies often is finite while there are many companies in the 50 and more years of activity back. But the number of companies - regardless of their size - which have already been 100 years or longer there is already much lower. Presumably, a representation of the company after a similar age structure as a typical population pyramid (without the current ageing phenomenon in many countries).
To explain this phenomenon, one might argue that the population in most developed countries 100 years ago were lower and that therefore probably had fewer companies were founded as recently. Maybe also played a role that management methods and training was not as developed as it is today This has all companies equally affected, so that then as now in relation to the influence of good or poor management such as equal opportunities have expected.
The following details about the specific problems of ageing companies are as fundamental observations in terms of a trend statement. They include no, that company is also totally different.
According to the author is a key reason why relatively few very old company that also have a life cycle and thus a limited time existence. If it is assumed that the majority of companies a finite life cycle, are the manifestations of the end of Unternehmensexistenzen to consider:
1. The classic case of involuntary withdrawal from the market are economic problems, which ultimately insolvency and / or over a continuation of the business impossible.
2. Rare are the owners of companies without economic coercion dissolved and liquidated. This is common in special purpose entities the case, which from the start only for a finite concrete projects were created, such as real estate development projects.
3. Frequently go in other companies and therefore exist in its current form. Typical features are:
· Split into several legally and economically independent units independently further developed. This is often at regional or for products highly diversified companies in the case where the individual business segments little synergy.
· Merging with other companies, this creates a new entity, but based on older roots. A well-known example is the merger of Rhone-Poulenc SA and Hoechst AG to form Aventis SA 1
· Takeover by another company, followed by integration: If all the functions and systems of the company in the acquiring inextricably integrated unit, the company acquired in fact even then, if the legal shell and / or trademark from certain reasons be still persist.
4. All three forms of Afghans a company in another unit have their cause, ultimately, in one form or another is that the owner or market an added value in the reorganization of the existing organization. It is in these cases worth less than the sum of its parts.
It is thus not simply a company over long periods to be operated that its continuation for all concerned the preferred strategy. There is a lot has been written and researched what companies on the success rate abbringt. In general, is the failure of companies to the following causes?
A common triggers are management mistakes. Due to poor management and control can be any doubt - also young - brought business to fail. Even if the sector of large enterprises and numerous media extensively discussed examples of management errors, it is more likely in small and medium-sized enterprises encountered. This begins with a stark example to misperceptions about the market potential, attractiveness, etc. in the case of start-ups and is in commercial weaknesses. Where you look at the current examples of poor corporate governance in mind also refuted the initially established hypothesis that sooner and more companies are due to a lack of management skills have failed.