Note that your final mark will not be saved in the system.
2.3.2 Liquidity & 2.3.3 Business failure Typeit
Type the correct answers into the spaces. Fill all the spaces before clicking ‘Check Answers!’
In business, some businesses succeed and grow and others . There are lots of factors that can contribute to business failure and these can be categorised as internal and or they can be categorised as financial and non-financial.
FINANCIAL FACTORS WHICH CONTRIBUTE TO BUSINESS FAILURE
Poor management of working capital, so a business is left without enough funds to pay suppliers for stock or raw . This could be from paying too early or not effectively chasing late-paying customers.
Cash flow problems, which means that the business does not effectively cash needs of the business and does not plan accordingly for them. This leaves it without cash to pay casual staff and suppliers and for the day-to-day of the business.
NON-FINANCIAL FACTORS WHICH CONTRIBUTE TO BUSINESS FAILURE
The main factor is poor and management of the business, leading to ineffective decision-making; for example, the short-sightedness of the management of Kodak: when presented with the threat of digital photography, they failed to turn it into an opportunity.
Poor leadership leads to staff and poor customer service. A further consequence of this could be damage to the brand or poor online reviews. This would lead to loss of repeat business and damage to the business reputation, e.g. Ratners.
For some businesses, it could be failure to or embrace new technologies, and failure to acknowledge that they are competing in dynamic markets, e.g. Blockbusters turning down the offer to buy Netflix.
For others, it could be the actions of , e.g. Toys "R" Us closed as they could not compete with online giant Amazon.