Is Organisational Cuture The Most Important Cause of Business Failure?
The organisational culture of a business is the collective behaviours of the individuals in a company and the way in which they strive to succeed. Business failure refers to a company ceasing operations following its inability to make a profit or to bring in enough revenue to cover its expenses. A profitable business can fail if it does not generate adequate cash flow to meet expenses. But what are the reasons for business failure? Is it predominantly due to the organisational culture of a company, or are there other underlying factors?
One of the possible reasons for business failure is the nature of the culture. Take Kodak, for example, who used to dominate the camera film market. Their complacent organisational culture lead them to believe that they did not need to move into the digital world, and that the traditional film market would continue to grow. This was not the case, and by the time Kodak had reacted to the digital revolution it was too late and they were forced to file for bankruptcy. Had the culture been quicker to react and more daring, they would have been able to react to the huge technological developments, and thus financially benefitted from the digital age as their then-rivals Fujifilm managed to.
However, there are other internal factors that can cause business failure, such as a poor marketing mix. Each section of the marketing mix (price, product, place and promotion) must be finely tuned to meet the needs of the customer, otherwise they will shop elsewhere for goods/services and no sales will be achieved. An example of a business that failed due to its poor marketing mix was Tesco’s American enterprise: Fresh and Easy. A combination of a name that sounds like a sanitary product, its cold decor, selections such as herbed lamb cuts and a lack of American staples such as Oreos and Doritos at reasonable prices meant that only 20% of its stores were profitable, leading to its closure earlier this year.
Another argument for the view that
One of the possible reasons for business failure is the nature of the culture. Take Kodak, for example, who used to dominate the camera film market. Their complacent organisational culture lead them to believe that they did not need to move into the digital world, and that the traditional film market would continue to grow. This was not the case, and by the time Kodak had reacted to the digital revolution it was too late and they were forced to file for bankruptcy. Had the culture been quicker to react and more daring, they would have been able to react to the huge technological developments, and thus financially benefitted from the digital age as their then-rivals Fujifilm managed to.
However, there are other internal factors that can cause business failure, such as a poor marketing mix. Each section of the marketing mix (price, product, place and promotion) must be finely tuned to meet the needs of the customer, otherwise they will shop elsewhere for goods/services and no sales will be achieved. An example of a business that failed due to its poor marketing mix was Tesco’s American enterprise: Fresh and Easy. A combination of a name that sounds like a sanitary product, its cold decor, selections such as herbed lamb cuts and a lack of American staples such as Oreos and Doritos at reasonable prices meant that only 20% of its stores were profitable, leading to its closure earlier this year.
Another argument for the view that