Name: Desireé Ulerio

ID#: 10131322 / 2017-0395

Class: English III (1461)

Professor: Daisy Yadira Jackson Grullón

Title: Five Reasons Companies Fail

On occasions, company’s failure is inevitable. Of course, understanding why

powerful companies fail and how to avoid such failure is crucial in business and
management research. Yet, the fact that successful companies continue to fail shows how
hard this is to come by. Some argue that strategic outcomes and the company’s future are
determined by the choices, commitments and actions of top management. The inexperience
of the founder can be critical. Having said that, causes of companies failing may be due to
external reasons, but it may as well be for internal factors.

One of the most common reasons lays on the poor market research, marketing and
sales. According to a study published by Australian Centre for Business Growth, many
entrepreneurs fail because they have not spent enough time researching their business idea
and its viability in the market. Another significant reason is the inadequate financial
management. This tends to occur when the CEO of the company lacks the necessary
financial knowledge. A simple setback can be devastating if the company does not have the
adequate financial base.

As mentioned before, external factors such as fires, market crashes or changes in tax
regulation produces a negative impact on the company. Of course, the length of the
situation will depend on how prepared the company is to backfire these eventualities. With
poor leadership and management skills, as well as lack of planning and execution, these
externalities will turn into nightmares.

Taking everything into account, every decision and action that an owner makes has
a significant impact on the company. There is no way to guarantee success but, by focusing
on internal procedures, financial planning and proper market knowledge, it sure can help a
company become and remain successful. Having a structural plan will avoid conflict,
mistakes, multidirectional blame and failure.