Cause Of Corporate Failure

Abstract:

Corporate failure has continued to dominate the entire corporate environment throughout the World. The paper contends that corporate failure is not wanted because its occurrence has a lot of consequence in the economy. This has elicited continuous outcry about corporate survival; and the blame is always shifted to corporate management on the account of its failure to harness and use available resources effectively and efficiently for good corporate objectives. Thus, there is an increasing lack of confidence on corporate management. The negligence has led to untimely liquidation of many businesses. The main objective of the study is to examine the causes of corporate failure and how we can predict and avoid failing in corporate failure.

3) Underutilization of resources.

4) Increase in crime level.

5) Instability of the banking system due to inability to pay back borrowed funds.

6) Instability of the financial markets where short to medium and long-term funds were sourced and corporate failure makes it impossible to meet such obligations

Remedial measures of minimizing corporate failure

The identified causes of corporate failure could be used to minimize its incidence. The most effective measure of averting corporate failure is the institution of a very effective management. The responsibility of management would be to look at all areas of operations to see how efficiency could be induced. Such areas include:

1) Staff training and development. This is important in the sense that the employees are expected to lead all areas of job performance and the essence of training is to make them improve on job performance.

2) Enhancement of productivity and business process re-engineering. These consist three important areas namely: improvement in productivity, application of appropriate financial structure, increasing the level of competitive advantage in the market place.

3) Effective management of the product and product

They social standpoint he argues, is in terms of its impact. That is, the human suffering that such a phenomena usually brings, it affects almost everyone: the owners, employees, government, customers, investors, suppliers, creditors and the society in general. However, not everyone agrees that the longer-range social impact of corporate failure is negative. The economic standpoint viewed failure as a situation whereby the realized rate of return on investment capital is significantly and continually lowers than prevailing rates on similar investments. In fact, a company could be an economic failure for years and yet, in the absence of legally enforceable debt, be able to meet its current obligations. This view of failure is however subjective, and there are very few data available on industry or company incidence of economic