Retail failue Essay Example | Topics and Well Written Essays - 2000 words

Retail failue - Essay Example Failures and bankruptcy cannot occur overnight. The symptoms start showing years ahead of the actual failure. According to Mellahi, Jackson and Sparks (2002) organizational failure can occur due to changes in both the external and internal business environment, but failure is necessarily caused by the external factors over which the managers have no control, contend Sharma and Mahajan (1980) and Mellahi and Wilkinson (2004). This is because the external environment imposes pressures and constraints on the firm’s strategies that can lead to failure. This suggests that firms do not fail due to the inefficiency of the management but they fall victims of the external environment. Changes in customer tastes, brand switching, cyclical decline in demand, competitive rivalry, technological uncertainties due to product and process innovations, are some of the external factors that can lead to organizational failure (Mellahi, Jackson & Sparks, 2002). In addition, retailers undergo the à ¢â‚¬Ëœwheel of retailing’ where they start as low cost, low set business offering modest products but as they develop, they add to the ambience, the products and then they make themselves vulnerable to the other new entrants. Circumstances lead to the inability to respond to the threats of the business. This suggests management inefficiency as the cause of organizational failure. ... When trading conditions became difficult, they sought new trading opportunities. Their decisions were such that at one point they were confused whether they were retailers or consumer finance company (Pal, Medway & Byrom, 2006). They operated under uncertain micro-environment conditions; they changed their format and refurbished their stores when the real estate market was at its height. Failure at AGS was a multi-factor issue. There was no top management homogeneity and hence continuity and growth was also affected. Each decision maker had his own perception and this was based on the micro- and macro- environment prevalent during his tenure. Managers also tend to become blinded to their own weaknesses and strengths, to the customer demands and to the competitors (Mellahi, Jackson & Sparks, 2002). Once success is achieved, overconfidence and arrogance steps in. When organizations become conditioned to exploit their old advantages, they become vulnerable to failure. They either ignore or do not respond to new opportunities. These are internal inadequacies in dealing with external threats. Impulsive decisions, poorly informed managers and the habit of taking unwanted risks are also some of the causes that can cause failure. Managers fail to react to external threats and they continue to focus on the internal methods that were successful in the past. Marks & Spencer’s (M&S) the legendary UK retailers, referred to as ‘managerial giant in the western world’ by Peter Drucker, was recognized as one of the best managed companies in the world. It started facing survival crisis since 1998. M&S were blinded by their past success and refused to advertise (except for new store openings) or make any other