NE SS FA I LU RE :

BUSI
IT’S
E ARLY E FFE CTS
CAUSE S &

JAN K U M A R PARIDA
BY- AN
AN A GEM EN T,AIMS))
MA IN M
(POST G RADUATE DIPLO
What is Business Failure?

 How can you tell when your business is

going to fail, and make corrective
action? Business failure is the last stage
of an organization's life cycle.
Organizational decline, leading to
failure is characterized by management
who has become reactionary. The result
is inadequate or nonexistent planning
and inefficient decision-making.
CAUSES OF BUSINESS
FAILURE
 There are so many reasons why a
business firm often fails.
  With respect to business, there are 2
major causes why business are often
falls.
1. Internal Causes of Business Failure
2. External Causes of Business Failure
Internal Causes of Business Failure

 Poor Management
 Insufficient Capital
 Dependency on Customers or Suppliers
 Poor Marketing and Research
 Putting the product first, with marketing second.
 Location
 Court order
 Lack of clear objective of business
Internal Causes of Business Failure

 Improper pricing of product and services

 High debt ratio
 Poor inventory management
External Causes of Business Failure

 Economy
 Governmental rule and International Developments
 Bankruptcy of Main Customer or Supplier
 Fall in Demand
 Rise in costs or lack of control over costs
 Poor choice of location
 Recession
 Taxation
 New technology ( failure to innovate)
EFFECTS OF BUSINESS FAILURE

 Effects for the Company

 Effects for Stakeholders
AVOIDING BUSINESS FAILURE

 External Advice
 Planning, Budgeting and Forecasting
 Audit
 Cash Flow Statements
 Critical eye on market
 Proper objective
 Proper management
SIGN & SYMPTOME OF BUSINESS FAILURE ( Early warning)

 Profit margin may decrease

 Increase of debt ratio
 Sales decline
 Difficult to manage organization
 Break up the business alliance
Conclusion
 Business and market is uncertain so always business
should go with proper plan and strong strategy .
Please ask me your
question
…………………………………….