Marketing
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Reasons for choosing this particular topic is because it has come to my recent knowledge that many major UK based organisations have hit a slum and are becoming bankrupt. My personal theory to why this has occurred is due to poor management skills, which will then indefinitely lead to management failure. A company which has suffered for many years due to management failure is Marks and Spencer. It will be of an interest to research further into this topic, good management is surely the key to a successful business?
For my dissertation, I will be researching into Marks and Spencer to prove if my theory of management failure or poor management skills is the vital factor due to the firm’s slum.
The question I am posing to base my dissertation around is “How, after so many years does management failure occur in major UK based companies?”
This dissertation will include a summary of the dissertation, which will be a brief outline of my research and the main issues affecting the topic of management failure and business failure, a methodology of how I will go about carrying out my investigation. A literature review, of secondary research and comparisons of literature gathered through sources such as Internet, Mintel reports, newspaper articles etc. Primary research such as interviews and questionnaires. Illustrations and figures if required or felt appropriate.
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Literature Review
There are many attributes contributing to a business failure. A business failure is the final stage of a business’s life cycle. Certain factors contributing towards a failure of an organisation could alternatively be due to poor cash flow management, absence of performance monitoring, lack of understanding or use of performance monitoring information. Also, poor debtor management, which is a combination of not paying the debtor on time and not coordinating payments with incoming cash flows. Over borrowing is another reason to blame for a business failure, because this means the company is over weighted and therefore the debt is not being reduced. Maybe another reason could be due to over dependence or trust on a few key customers. Poor market research undertaken could also contribute to failure, as it has lead to a poor understanding of the company’s target customer groups and their wants and needs have not been met. Other issues include, lack of financial skills and planning, failure to innovate, poor inventory management, poor communications throughout the organisation and maybe failure to recognise the company’s own strengths and weaknesses, unable to foresee the company’s opportunities and threats. A main cause of business failure is down to poor management, managers undergo the above responsibilities and should seek external advise about business decisions, such as bankers, accountants or a lawyer.
Enron Marconi is a multi-national designer, manufacturer and supplier of telecommunications and IT equipment and services. The company’s aim is to enable customers to evolve narrowband networks to the next-generations broadband networks. Marconi’s networks equipment covers the design and supply of communications systems that transmit and switch voice, data and video traffic. These network equipments include broadband access, broadband routing and switching, interactive kiosks, microwave radio, next generation switching, network management, optical networks, outside plant and power. The company covers a wide range of support services, such as telecommunications operators and other providers of communication networks such as consultancy and installation, commissioning and maintenance and value added services. Marconi believes to deliver value to their customers through Next Generation Network product and services.
(www.marconi.ca/Home/abouts_us, 10/03/05, www.google.com)
City Analysts Gloomy Over Marconi
A BBC news article illustrates that Marconi’s shareholders who had bought shares for 1,250p has now fallen to zero. It threatened that only a takeover or a major cash injection would save the companies stock. “Marconi is unlikely to survive unless a major rescue package is provided by a strategic backer,” says the bank.
The central question for investors of Marconi should be mainly focused around the salvage value under new ownership rather than if the company can return to positive cash flow on its own.
(BBC News- city analysts gloomy over Marconi, www.news.bbc.co.uk 10/03/05)
Oracle aided Marconi collapse- Kieren McCarthy
In July 2001 Marconi suffered a humiliating share collapse following an unexpected profit warning. The company’s profit had been jumping each year since 1997 from when it used to be known as a large lumbering giant into a lean mean telecom machine. On 5th July, the company had suspended its shares for a whole day and informed the City that the profits would be down by an enormous 50%. This lead to investors selling their shares, which lead to share prices falling by 54% within one day. The fall-out meant that further shares would drop rapidly.
It is clear to assume that the company did not realise that their profits were going to hit a slum; otherwise they would have acted long before July 2001. The reasons to Marconi’s failure results back to the lack of effort put in by the board of directors of the company to find out what was going on and the failure of Oracle reporting the software to keep up to date with the changes made. Marconi suffered by the year 2001, as they had no fewer than eleven companies to keep track of, on top of the ones they had already owned. It was evidently too late by the time the board had realised that the financial details of each company resulted to be quite problematic.
The deal with Oracle for the company’s E-Business Suite, worth $250 million, was announced with its financial results in July 2001, the company’s annual financial results. It was to provide the company with “integrated transaction system, business intelligence and Internet platform on a single instance” and was to be implemented across the entire company.
It was said that Oracle was selected because of the vision and understanding of Marconi’s