Reasons Why A Organization Can Fail Business Essay

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

We can identify certain familiar reasons why Organizations fail to achieve a competitive advantage and end up loosing out to their competitors. These reasons are universal in nature and find the same footing in Pakistan as well as any other place in the world.

1. Too much emphasis on short-term financial performance. Quite often, cost cutting, profit maximizing at the cost of social responsibility or employee motivation is a failed strategy pursued by organizations, which just hastens their status to oblivion.

2. Failing to take advantage of strengths and opportunities. This is in reality failing to hold on to proven successful strategies or core competencies. Sometimes a change in leadership leads to change in strategy, where just for the sake of glory and high profits, organizations forget their core competence and opt for strategies and tactic which cause their downfall.

3. Failing to recognize competitive threats. This reason is the exact opposite of failure to make use of the organizations strengths. Quite often organizations decide to pursue status quo and ends up bringing no new product or service or even no innovation in its existing product or service line leading to lack of customer satisfaction, decline in profits and finally being declared a failure.

4. Neglecting operations strategy. This is definitely the most important reason of failure; organizations often end up employing non productive techniques which lead to inconsistent and failed operations. Absence of an Operations Strategy leads to

5. Too much emphasis in product and service design and not enough on improvement.

Differentiation in terms of service and product, American companies in 1980s did that they never introduced incremental refinements rather went for big changes and thus lost to Japanese competitors.

6. Neglecting investments in capital and human resources. A total disregard to use the best resource. Capital and human resources in the long run make or break an organization

7. Failing to establish good internal communications. Matrix organizations or hierarchy or such a strong structure that often the structure does not allow communication.

8. Failing to consider customer wants and needs. This is actually indicative of an organizations lack of marketing research skills. This also shows that there is no respect to Customer Relationship Management Concept and certainly no respect to the customer.

Concept of Strategy for a Pakistani Automobile manufacturer

Strategies are plans for achieving organizational goals

Mission is to provide BEST AUTOMOBILES to individuals as well as BUSINESS organization of Pakistan

Mission Statement is to give you safe wheels to move around"

Goals are to provide utility and heavy equipment mobiles.

Tactics consist of employing TQM methods to accomplish strategies

Strategies in Consideration:

1. Low cost (Cost Leadership/Economical )

2. Scale-based strategies (Critical Value)

3. Specialization (Specific characteristics)

4. Flexible operations (To change production design of products on the same infrastructure)

5. High quality (exceeds customer requirements and satisfactions)

6. Service (meets minimum standard specifications)

The special attributes or abilities that give an organization a competitive edge are:

1. Price

2. Quality

3. Time

4. Flexibility

5. Service

6. Location

Determinant of Quality:

The various Determinants associated with the quality concept in general and TQM philosophy and that mostly integrated with the Atlas automobile company:

1. Quality of design: Intension of designers to include or exclude features in a product or service

2. Quality of conformance: The degree to which goods or services conform to the intent of the designers

3. Quality of Ease of Use: Ease of use and instructions to use increase the chances but do not guarantee that a product will be used for intended purpose and function properly and safely.

4. Quality of Service after Delivery: The degree to which goods or services can be recalled and repaired, adjustment, replacement or buyback or reevaluation of service all come under this category.

Consequences Faced by the Company:

The common consequences of Poor Quality have recently faced by the company are:

1. Loss of business: Loss in sales, revenues and customer base.

2. Liability: A poor quality product or service comes with the danger of the organization being taken to court by an unhappy or affected customer.

3. Productivity: Loss in productivity as more time is spend in rectifying the errors or short coming then producing more.

4. Costs: Increase in costs as a poor quality product is repaired or replaced or made new.

Required tool, resources and system needed:

Atlas Auto mobile has in the phase of development, support form their employees and labour because without them they are unable to move a single step toward the growth. But an effective operations strategy can give you a competitive advantage, With expanded techniques and growing awareness of the field at the close of the war, operational research was no longer limited to only operational, but was extended to encompass equipment procurement, training, logistics and infrastructure

Atlas managers must need to rethink many of the basic principles of good operations management that worked for them in past because a small action in the past give the way of success.

Companies must adopt a strategy for improvement that fits the specific needs of the organization at that point in its life for that purpose Atlas need to do SWOT analysis first than get in the phase of implementation.

Assigning a team to carry out a job may not always be the best idea. Sometimes it's more effective to let a gifted individual do the task

Operational failures occur within organizations across all industries, with consequences ranging from minor inconveniences to major catastrophes. How can managers encourage frontline workers to solve problems in response to operational failures? In the health-care industry, the setting for this study, operational failures occur often, and some are reported to voluntary incident reporting systems that are meant to help organizations learn from experience. Usually organization found that problem-solving in response to operational failures is influenced by both the risk posed by the incident and the extent to which management demonstrates a commitment to problem-solving. Findings can be used by organizations to increase the contribution of incident reporting systems to operational performance improvement

Performance standard to be adopted:

We are already familiar with these three terms and appended mentioned term are the core for meeting the performance standards, we just only need to do is keep them in line and implement it accordingly when required.

1. Competitiveness refers to an aggressive willingness to compete and as we all know the market of auto mobile in Pakistan is highly mature and bringing a new product in the market is very difficult and required specialized skill, for that purpose Atlas need to bring something that easily acceptable in the market, and all the crisps lie with the operation management, because in the process of production all words speaks in tangible forms.

2. Strategy is an elaborate and systematic plan of action with defined resources and required proper planning to implement it, Atlas is failed in communicating its product properly to the audience, if the strategy was properly formulated than this failure would not occurred.

3. Productivity refers to the ratio of the quantity and quality of units produced to the labor per unit of time or simply ratio of output to input. But this is not as simple as it seems by words, it required continuous improvement and monitoring by the managers and all the concern staff, because productivity has to do with humans and it is the most difficult task for anyone to handle the human resource.

Five Performance Objective:

Atlas automobile company also monitoring the appended mention performance objective, trying to keep in hand;

Cost: cost is the core ingredients for the performance and in the automobile cost is the key player because it has direct proportionate with the revenue and the profit if operation manager managed properly, high quality, high speed, high dependability and high flexibility so that would be easy for the organization to save the operation cost."

Excellence: refers when the customer has nothing to complain about they will be happy with their products and services and are more likely to consume them again. This brings in more revenue for the company and this is the main objective for the operation manager to make the communication between operation department and front line staff, because front line staffs are the true observer of customer need wants and demand.

Time: this is the value added service that creates a value for the customer and through that organization generate its own value (Profit).

Flexibility: The important point to remember is that flexibility always means 'being able to change the operation in some way' and don not rigid to one thing, always focus on market changing environment, and organization need.

Constancy: every factor of the production is interrelated and all have to be integrated with other. The main task is to create relation among the all the factors.

This is highly recommended to the managers for strictly compliance with all the above mentioned tool, resources and system so that the company can grow in future.

Task 3 Organization's performance:

Businesses since the beginning of time have competed against each other. On the basis of competition, various types of market exist for nearly all lines of products and services. We already know that absolute monopoly and perfect competition type of markets are not that pervasive, yet businesses try to avoid perfect competition and strive to go for absolute monopoly so they can enjoy no competition and exploit the customer sentiments for buying. We can identify the following common and widespread ways in which organizations can compete against other organizations.

1. P rice: In our day to day routine observations, we often see that a lower price would attract more customers provided the product or service fulfils its intended use. Lower price helps an organization to increase its customer base.

2. Quality is an important dimension by which superior raw materials as well as high Skillman ship would ensure that product manufactured or service developed is offered to the customer with something extra. That something extra is nothing else but Quality. Quality is always offered free of cost.

3. Product Differentiation refers to special features that make the product or service look more suitable to the customers like an automobile manufacturer decides to provide GPS system to selected customer at an additional price etc.

4. Flexibility is the ability to respond to changes. It may refer to changes in target sales, product feature like adding GPS device to all automobiles

5. Time refers to the period required to provide a product or service to a customer from the moment the order is booked to the delivery, also time required to rectify a shortcoming or mistakes.

Organization performance is measured through all the above mentioned point, because they are the indicator of any company performance if we talked about performance of the company in the light of customers and other stake holders requirements, than it would be difficult because all stake holder demands are different because their objective is different.

Organization's performance by comparing with the customers' and stakeholders' requirements:


The customer is measuring performance with the help of Quality, Speed and

Flexibility for the price or cost he is willing to pay, and this is the main area where we can target them and attract toward the product.


Employees are measuring performance with the help of bonus, incentive and other fringe benefit and all these incentive and bonus has direct relation with the organization profits and earnings


Competitor are measuring performance with the market share , number of product and customer loyalty, and the value of company can be count in term of company equity.


Measure supplier performance with the repayment capacity and demand for the raw material by the company, because if the company sells increase than automatically the supplier earn more and get the payment on time.


Government evaluating company perform through the payment of taxes on time and meeting the ethical standard by the government, government are more focus in strict compliance of rule and regulation by the company.

All the stake holders have personal interest in the organization success because there success is also lies with the success of the related organization.

Recommendation of improvements which align with the organization's objectives and goals:

Sometimes a team of consultants can provide a fast and thorough measurement of your business operations, but be sure that they are familiar with your industry before you hire them. Because a single error in hiring cause the disaster in the whole operation and put you far behind the objective of the organization.

Transportation time and costs are another aspect of operations that are easy to measure, but sometimes hard to predict

Don't let only one person be responsible for measuring operations in order to prevent human errors.

An automobile company must have to guarantee its production capacity and the layout design should be as per the need of the organization.

Recycling of the waste material or make a collaboration with other organization which can use / buy the waste material.

Eliminate or reduce the wastage by providing appropriate tools and equipments

Continuous training and development of employees / labor / managers so that all the new techniques can be learnt by employee / labor / managers, and the biggest advantage of the continuous learning is that employees are never get rid of its learning path and this is most beneficial for the company itself.

Equip the organization with highly technical machineries, so that innovating product produced, and waste can be eliminated.

Engage all the stake holder in the strategy building and implementation

It is important now to learn as an Operations Manager the concept of Recycling. Recycling is in simple words recovering materials for future use. The common recycling reasons are

Cost savings

Environment concerns

Environment regulations

Design for recycling is a design strategy that facilitates the recovery of materials and components of old products in the manufacture/assembly of new products. The focus here is to design components that would allow for disassembly and reuse or even CANABALIZATION.

Vertical integration either backward or forward would be the best in this situation for Atlas because they need to keep the supplier / distributor to reduce the service cost.

Design for Assembly (DFA): Design focuses on reducing the number of parts in a product and on assembly methods and sequence.

Onsite service should be started to create a differentiation from other competitor.

Implement Six sigma procedure for improvement in the production

Key Decision for the Production Manager:

Production / operation managers are involved in many task / operations but most importantly they has to thing in the following ways i-e

What : What resources/what amounts is required for production either in financial or raw material quantity.

Why: The work is needed to be done, OPM has to know the organization goals and objective so he / she can work accordingly and meet the standards.

When goods are Needed/ when to scheduled/ when to ordered more inventory / inventory

Where work need to be done, what would be a good place for production and putting the raw material to full fill the sudden fluctuation in demand.

How much Quantity to be produced or served,

How to Designed/capacity planning

Who to do the work

Following are Beneficial and effective to an Operations Manager primarily because of the following reasons

Easy to use, less expensive

Require users to organize

Systematic approach to problem solving

Increase understanding of the problem

Enable "what if" questions

Specific objectives

Consistent tool

Power of mathematics

Standardized format

Impact of changes on Organization:

Change either good or bad bring problem in the initial stage but if it properly managed / implement than it can bring prosperity in the organization. So this is highly recommend to the managers to think thousand time before implementing any new ideas in the organization, because a small wrong step lead the organization in to big trouble.

Above stated change required lots of resources and skills, and all the changes can lead to organization in the profitability and improvement in all aspects, all the above mentioned recommendation required proper research and can only be implemented after doing SWOT and TOWS analysis.

The best option for the Atlas Company is to do vertical integration specifically backward integration so that the cost of input would go lower in order to maximize the profit, contrary quality of the good will go up as well because the raw material would be a same standard, the main drawback with Atlas Company is the quality is not the same and they are fail in providing after sale services to the customers. Pakistan is slowly but surely facing a change in its demographics, economics and more important social norms. This shift has often proven to be the source of service sector growth.

Value addition refers to conversion of raw materials to finished goods or services. Value added often refers to the difference between the cost of the raw material and the price of the finished good. The revenues from selling goods are used in betterment of existing product or service or R &D, investment in new facilities and equipments. Weeding out or eliminating non value adding operations. E.g. storage of goods which have been produced ahead of scheduled production, increases storage and inventory costs, reducing storage cost would reduce transformation cost and thus increase value addition.


Operations people need information about demand over a short range in order to purchase raw Materials or manage inventory or schedule production plan where as the design people need information to redesign or simply design new products or services. Overall organization success is lies in the proper communication among the departments, In last I would like to say Atlas need to develop proper strategy in managing its supply chain network to improve the overall service and production level.