Causes of corporate decline

Internal External
Management Competition
Board of Directors Changes in market demand
Inadequate Financial control Technological changes
High Cost Structure Commodity price
Outdated technology Government policy
Lack of marketing capability Strikes
Excessive diversification Bad luck
Loose information systems Social changes
Poor Acquisition Environmental factors
Inappropriate financial policies Industry factors
Overtrading
‘Big’ Prospect or deal
Root Causes
External causes
General Management
Finance and Control
R&D
Operations
Personnel
 Conserva Grow of Neglec
Turnaround
Autocra tive th strate t of
mechanism
tic managem mani gic critical
management
Change in top ent a planni areas
X X X X
ng X
management
Centralized decision
X X
making
Decentralization with
X X X X
accountability
Formation of critical
X X X
staff department
Divestiture X X
Retrenchment X
R&D strengthening X X
Higher staff
X
incentives
Automation/
X X
Renovation
Diversification X X
Aggressive
X X X
Marketing
New Market
X X X
Development
Collaboration X X X
Settling Debts X
 Sickness Prevention Model
Factor contributing
Factor contributing to
Factor
to Sickness Immunity from
Financial sickness
Low High
Liquidity Debt Heavily leveraged High borrowing
structure poor credit potential and good
Senior Worthiness credit rating
management
Skills Narrow, specialized Diverse
Composition Homogeneous Heterogeneous
Size of dominant
Small Large
group of executives
Age distribution Similar Well distributed
 Sickness Prevention Model
Factor contributing
Factor contributing to
Factor
to Sickness Immunity from
Constituents sickness

Customers and Dissatisfied, narrow Loyal, wide product

product product range range
Irregular, few Reliable, alternatives
Suppliers Employees
alternatives available available
Grievance ridden, Well motivated,
underskilled top down skilled, two way
Government
communication, poor participative, healthy
group process group processes
Suspicious, Hostile, Cooperative,
poor economic consultative, good
Communities
infrastructure and infrastructure & huge
unskilled labour pool pool of labour skills
Highly dependent on Low dependency,
Other relations
other volatile parties alternatives available
Sickness Prevention Model
Factor contributing
Factor contributing to
Factor
to Sickness Immunity from
Technology sickness

Type Single, specialized Multiple, adaptive

Obsolete, poorly Advanced, well
Condition
maintained maintained
Options None Many
Vulnerability Fails catastrophically Fails gracefully
Utilization High breakeven point Low breakeven point
Standardized, cost Flexible by-products
Production
controlled, inflexible and inputs
 <need to format slide>
• The number of sick MSMEs declined
from 1,40,337 (Mar 06) to 1,32,081
(Mar 07)
• Cases