Business Solutions: why do companies need to cope with problems
Studying at the Faculty of Technological Management and Innovations at ITMO University (Saint Petersburg, Russian Federation), third-year students have a discipline “High-technology enterprise management”. During learning, they were doing research trying to answer the following questions:
- What does lead to firms’ collapse?
- Which methods do help solve problems?
Failures
In Italy fashion business is in decline due to the economy and the shortage of capital, acquisition by foreign companies and lack of public trust. Bureaucracy in the public system hinder the development of “young business”. There is adherence to tradition, although readiness for innovations and inclusion of the latest developments could help move forward.
Stable business strategy of eBay without risk leads to low demand. The firm is not trend-conscious, does not respond to customer needs, and the service is falling out of favour. The largest producer of personal computers, Digital Equipment Corporation, went out of business due to the emergemce of competitors in related industries and the effect of “destroying” innovations. Key staff was lost and the leadership was seen indecisive and weak in management.
Speaking of startups, over-investment does not automatically equal success. Business venture launched in Hollywood could not stay afloat shortly after the launch. The investment was waste rapidly. Failure to meet performance targets and low levels of interest among potential customers led to the closure.
The solution to the problems is balanced experience and assigning managerial responsibility, timely and unambiguous decision-making, reliable communication with staff, openness and using proven initiatives.
Successes
The experience of the French design house Hermès is considered successful. The company quite competently combines innovations with traditional methods of working, not holding on to the past but drawing on existing experience for the future. In addition to that, the fashion house is very protective of its quality and reputation, whithout technological change in customer service.
Walmart company’s strategy remains since the opening and became obsolete because of the market entry. New CEO Doug McMillan helped overcome a difficult situation. He forced e-commerce, digital buying channels and started Walmart Pay. Moreover, the firm covered missing specializations: startup Jet.com, online shopping and logistics; closed less profitable shops and introduced new technologies.
PayPal was led to success by Dan Shulman’s management. He was able to address such issues as competition, conflicts with similar payment systems. The decision was compromise — contract with competing companies, thus ensuring the growth of income and reputation as well as transaction values and share prices.
McDonalds company has a distinguished success story. The problem existed in 2015 year — the distrust by clients, dirty restaurants, expensive and unhealthy menu, a narrow range of products and the loss in comparison to other restaurant chains. Implementation of different measures helped — franchise, short position, focus on quality and cost (the policy of Ray Kroc); technological improvement, product testing, collaborations, loyalty programs and reliance on best-sellers as well. Such a trend resulted in excess of proceeds from franchising over the own restaurant corporation in 2018 year.
Findings
Problems are prevalent in different companies’ business processes management. Since there are no universal formulas, it is essential to undertake thorough measures to build a business and to raise the level of consciousness among managers.
The case studies indicated that it is not enough to become a legend. It is more needed to perpetuate itself in the marketplace, bearing in mind the main points: to focus on reality and not to be afraid of implementing new formats, despite the global sales. Companies require seriousness and thought provoking. Good deals and sales require a certain point. The ability to take risks and to market featured competitive products will help to overcome conservatism and to provide leadership.