Is leadership failure causes a company to go bankrupt?
After last month course on leadership, we were debating what are the main reasons for a company to become sick. After a lot of debate we picked one company which was number 1 in its industry in 2003 and now number 6. It’s a classical case on how once a profitable company becomes so sick now that it is forced to stagger the salary of its people across the month.
We debated several reasons for the failures of the company. Here are top 4 reasons
1. Company management took highly leverage position. Management increased foreign currency debt with an assumption that Indian Rupees will appreciate but actually INR depreciates almost 40% since then. It is a huge dent in operating cash flow for the company.
2. Management failed to attract and retain proper talents. They recruited few highly paid people with a big hope but those people actually delivered a big zero. According to me the company lost its heart and brains both with the hands of these immature top executives.
3. Management promoted few people in top positions who are very average and not have a track record of success. They just decided to cut cost without bringing synergy to the entire organization. They failed to lead and deliver.
4. Management failed to make a strategy to win the minds of its customers. They tried to compete with price war but that's a self-destructing technique. Almost 50% fall in revenue in last few years coupled with appreciating Dollar almost put a death knell to the profitability of the company.
In short, decision makes the company successful and the job of a leader to take correct decision with the best available information.
After last month course on leadership, we were debating what are the main reasons for a company to become sick. After a lot of debate we picked one company which was number 1 in its industry in 2003 and now number 6. It’s a classical case on how once a profitable company becomes so sick now that it is forced to stagger the salary of its people across the month.
We debated several reasons for the failures of the company. Here are top 4 reasons
1. Company management took highly leverage position. Management increased foreign currency debt with an assumption that Indian Rupees will appreciate but actually INR depreciates almost 40% since then. It is a huge dent in operating cash flow for the company.
2. Management failed to attract and retain proper talents. They recruited few highly paid people with a big hope but those people actually delivered a big zero. According to me the company lost its heart and brains both with the hands of these immature top executives.
3. Management promoted few people in top positions who are very average and not have a track record of success. They just decided to cut cost without bringing synergy to the entire organization. They failed to lead and deliver.
4. Management failed to make a strategy to win the minds of its customers. They tried to compete with price war but that's a self-destructing technique. Almost 50% fall in revenue in last few years coupled with appreciating Dollar almost put a death knell to the profitability of the company.
In short, decision makes the company successful and the job of a leader to take correct decision with the best available information.
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