Essay by ataf78 July 2006

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Generally we consider a company has failed if "it does not meet the objectives set for it by its stakeholders, or if it produces outputs that are considered undesirable by those associated with it." (Thompson, 2001, P.622) Same as the success of companies, the reasons for company failures also vary, and sometimes the same reason for a company's success could be the cause for another company's failure due to the different implementation process or the influence from external factors.

Much of this decline is the result of increased merger and acquisition activity in recent decades. However, most of this is due to distress selling rather than strategic buying.

Let's begin by looking at some of the key internal factors for failure:

For many companies, success breeds failure; they enjoy such enormous success in their early years that they become complacent and even arrogant.

Many practise "status quo" management and become highly bureaucratised: their existing policies, procedures and culture create inertia for change.

They are often rife with internal conflicts. Infighting among functional departments and business units creates a negative impact on customers and employees.

There are six ways that the external environment of a company can change: regulation; losing favour with investors; competition; technology; globalisation; and customers. What happens when these changes occur? Companies need to make changes of their own to adapt. Unfortunately, many companies -- and their managers and executives -- are unwilling or unable to change. The primary reason is that they become locked in to certain orthodoxies and therefore do not take charge of their own destinies fast enough. What is needed instead is a proactive approach to controlling one's destiny in a changing market.

Sun Microsystems Inc. (SUNW) - Inadequate leadership

The latest case for inadequate leadership that brought the company into trouble...