Why Succesful Companies Fail

Topics: Stock market, Microsoft, Seven deadly sins Pages: 10 (3622 words) Published: May 24, 2013
whyWhy Succesful Companies Fail ?
Ex : This article examines the internal and external factors that contributed to the decline of Dunlop. For much of its history Dunlop operated in a protected home market or instigated strategies to restrict competition. This enabled Dunlop to dominate the British tyre industry. The complacency and inertia of management was exposed by a number of external jolts that produced radical environmental changes. Management failed to develop appropriate strategies which led to large losses in an industry suffering from overcapacity. Plant closures and the divestment of the European tyre operations were implemented to reduce company debt. This turnaround strategy proved to be a temporary respite as Dunlop was acquired by BTR.

Culture :
It takes years to build (or rebuild) a culture, too. I outlined how organizations can do so successfully at any stage of a company’s life, and organizations with such cultures would do well to take note. As the article points out: Zynga has made efforts to change its ways. … Still, rivals say Zynga will have to do more to bolster its image, or risk losing its appeal as an employer at a time when resources are scarce. Zynga’s towering public valuation — a boon for investors — may only further dissuade recruits, who may turn to younger start-ups with more potential.” The article also points out ways the organization is working to turn around its culture, including manager training and coaching (from the CEO on down) on how to better motivate, inspire and engage employees. I would also strongly encourage Zynga to look at its employee recognition programs to create a more frequent positive feedback loop that relies on the appreciation and recognition of peers as well as managers.

Strategies :
In 2005, its number one position in the industry had been threatened for the first time. That was the year when, in May, Chennai-based Tractor and Farm Equipment (TAFE ) bought Eicher Motors's tractor division, increasing its market share to 22 per cent. This brought TAFE, whose earlier market share was just 14 per cent, within striking distance of M&M, whose share was 31 per cent. When Mahindra & Mahindra (M&M) acquired Punjab Tractors Ltd (PTL) for Rs 1,489 crore in March 2007, the latter was a pale shadow of its former robust self. Once the country's most profitable tractor company, with its 'Swaraj' brand renowned throughout north India, PTL had suffered due to poor management, which had reduced it from being the second biggest player in the industry at the turn of the century to fifth place. Its share price had also dropped from around Rs 1,000 to about Rs 250 in the same period. Started in 1970, with the Punjab government as the majority shareholder, PTL began floundering after 2003 as the state government tried to divest its shareholding.

ALL Details

1. The Company has no Vision, Strategy or Strategic Business Plan, 2. Weak or ineffective management,
3. Lack of information and control systems,
4. Under capitalization.
The first reason, lack of vision, no clearly delineated strategy and no strategic business plan is one reason seen in almost all-failing companies. Without clear focus on the company's strategy as to how they face the market - "What They Bring To The Party", the company will have lost its way and the members of the company organization will inevitably be working at cross purposes. This acts as a drag on a company's momentum. Lack of focus leads to continual unplanned reaction to situations as they develop. This leads to "Fixes" rather than solutions and, in most cases, costs that were not anticipated. This problem must be solved before any productive work can be done on the other problems. Weak or ineffective management is seen in many small companies but is most prevalent in family owned and run organizations. In many of the smaller companies, the owner is very competent at whatever the company does - stamping, machining,...
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