Organizational Challenges

Situations in business can move rapidly. This can often influence your

surroundings and your workload. While some of these organizational changes

may be challenging for you in your surroundings, they often mean growth and

change for the company, which can ultimately be a good thing. Companies and

businesses are moving, growing, and changing all the time, but not all of it is in a

positive direction. You might find yourself with a new manager or boss, working

under a new position or title, being let go, or any number of other challenges that

occur when businesses merge, fail, succeed, and grow.

Business Failure

Let’s first take a look at how businesses fail. A failure is an unsuccessful attempt.

A business failure is the inability of a business to cover its costs, resulting in a

shutdown. This means the business has not succeeded in making enough money

or selling enough products for solvency. Solvency is success in financial affairs or

having enough money. Travis Thorpe wrote in Inc.com that there are five major

reasons for business failure. These are 1. Failure to market, 2. Failure to listen to

customers, 3. Failure to leverage growth, 4. Failure to adapt or grow, and 5.

Failure to track marketing efforts. Clearly, marketing, or promoting the business,

and growth are essential to all business success. When a company is insolvent, or

completely out of money, it is called bankruptcy or going bankrupt.

Business Failure Examples

There are many famous examples of business failures, but we will look at two:

Blockbuster and Kodak. According to Ashley Pugh, writing for e-careers.com, both

companies sank because of their failure to innovate. Innovation is creating

something new or improving upon another model. In these cases, we can see

failure to adapt and grow in particular as the reason for these companies’ failures.

Blockbuster was a major movie and video game rental chain that did not hop on

board with new delivery then streaming services of companies like Netflix. This

failure to innovate ultimately resulted in the company’s failure. Similarly, Kodak,

a leading photographic film company, balked at the digital trends that they saw as

a threat to their empire. Kodak’s failure to innovate meant bankruptcy for them,

but the company still exists on a much smaller scale.

What Happens When Businesses Fail? Take-overs and Mergers.

Before or during a company’s bankruptcy process, it is possible for another

company to buy or take over the failing company. This is simply called a take-

over. One company buys another and takes control over the operations. Another

way failing companies are saved is by mergers. A merger is two companies

merging into one, sometimes under a new name. It is not the same as a take-over.

You may also hear the phrase ‘buying out’ when businesses merge or transfer

ownership, as in Company A is buying out Company B. Take-overs and mergers

are full of negotiations or discussions in which both sides bring their terms and

agree on mutually beneficial terms. Unfortunately, layoffs and firings are also

part of mergers and take-overs and can affect dozens or even hundreds of

employees.

Two famous mergers you may be aware of include film companies Walt Disney

Co. with Pixar, now known as Disney Pixar, and Sirius and XM radios, satellite

radio stations now known as Sirius XM. Julien Meyer, writing for Northstar

Investment Banking, claims these are two of the most lucrative mergers in

history. In 2007, Disney paid 7.4 billion to acquire Pixar studios, a merger that has

been mutually beneficial and now represents a stronger company. The radio

providers have also been a success as a blended company and, as this stronger

entity, continues to acquire other music services such as Pandora.

Business Success

So, what makes a business a success? Obviously, the business must have enough

money to cover their expenses such as payroll, overhead, marketing, etc. Turning

a profit, or making more money than is needed, is a key factor in business success

as well. A successful business cares about their employees and their customers

and focuses on bringing a product or service that is useful and helpful to the

public. We have seen that successful companies pay attention to their marketing

efforts and their customers’ needs and wants, growing and innovating along with

the market.

What Makes a Business Succeed?

Kiely Kuligowski of Business News Daily quotes Hope Wilson on business success:

"Success is running a profitable firm that conducts business with honesty and

integrity, makes meaningful contributions to the communities it serves and

nurtures high-quality, balanced lives for its employees…As business owners, we

must think outside our own doors. We must think about the potential impacts we

have on those around us as well as future generations."

In other words, a company must make enough money, run operations diligently,

and consider the community and employees’ well-being. We also know that

innovation is key to business success as is the ability and willingness to grow and

adapt with the ever-changing market.

How can you negotiate these organizational challenges? First, know that businesses

and companies are changing all the time. You must prepare yourself to change

with them, or you might find yourself superfluous to the company. Knowing what

each of these terms means and the health of your company will assist you in

determining where you are a good fit or when you might need to keep moving.

• 1. Growth and adaptation are essential to business____________.

  2. Business failure occurs when a company cannot pay its expenses or

  becomes_________.

  3. According to Ashely Pugh, both Blockbuster and Kodak failed because they

  failed to _________.

  4. Discussions in which parties bring terms and settle on new, mutually

  beneficial terms.

  5. When two or more companies join, sometimes under a new name.

  6. Making more than enough money to cover expenses is called ‘turning a

  _________.’

  7. When a company is completely out of money, they file for __________.

  8. ___________ and firings can be part of take-overs and mergers.

  9. __________ __________is determined by solvency, caring for employees,

  and listening to customer feedback.

  10. Promoting a business’s products or services.

  Taking complete control of another business is called a: takeover/merger

  Solvency is the inability to pay one’s debts: true/false

  Innovation is trying something new: true/false

  Bankruptcy is considered a business: success/failure

  Negotiations only happen with bankruptcy: true/false