How to Avoid Crisis and Collapse in the Company Essay

My decision to join and study for a Bachelor degree in business administration at the University of Economics in Prague is motivated by my desire to attain my dream of being one of the most experienced and sought-after experts in business administration. I have a curious mind that enables me to dig digger into issues and critically examine the cause of challenges. I believe that by joining the University of Prague my independent nature and love for academic excellence will be fulfilled. As an ex-member of the interact club, I learned how to help people attain and maintain happiness in their life, and this experience would be important as I join the university. Being enthusiastic about working, I have gained many work experiences in the summer that would help me attain my dream in the future as I study business administration. I believe that living in itself is a crisis and while it cannot be managed to a certain extent through my course I can be able to access relevant material that can help me achieve my personal goals. In this essay, I discuss ways to avoid crisis and collapse in a company. Companies employ millions of people, and its failure and success affect everybody.

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In a world where business is facing crisis and often collapsing, finding ways to avoid bankruptcy of a company is crucial. The financial securities, airlines, and computer industries are not alone in facing crises. Throughout history, there has not been a shortage of business collapse and crises. Every crisis and collapse can be avoided through critical analysis of the company, and adjusting to avoid the risk of collapse and crisis. Most company fails because they do not foresee and prevent bankruptcy (Smets, 2014). When a company face crisis and collapse due to bankrupt employees suffer the most, and it leads to the disintegration of families in some cases. Some of the reasons that companies face crisis and collapse are changes in economics, globalization, high rates of debts, and sometimes unavoidable situations such as natural disasters. In the last decade, companies have faced several challenges that have led to bankruptcy cases, hostile takeovers, and eventual closure.

One major reason that companies fail is mismanagement of a bad situation, making it worse. According to researchers, one out of three companies collapses after the first or second year of business (Rey, 2015). Regardless of the economic conditions, businesses owners need to make critical procedures that help them prevent any loss of their money, time, and effort in a business venture. Managing cash flows especially when a business is in its initial stages is important (Kumhof, Ranciere & Winant, 2015). Companies need to have a way of maintaining balance in getting cash through covering their expenses and sales. As companies experience extended durations of negative flow in cash, the effect is negative on the business. Companies must ensure that they bring in revenue and reduce expenses.

It is also important to focus on having a business plan that could help the company attain its long-term goals. Although no entrepreneur gets into business, most of them start a business with a plan that is likely to fail. A strong and effective business plan is crucial to the success of a company. A business plan should have details of managing employees, cash, and risks that the company is likely to face in the short term and long term.

Another reason that most companies collapse is due to financial issues. High level of debts could lead to bankruptcy in the long-run. Credit cards, loans and other forms of debts are risky for startups and small enterprises. Although most of the companies use different credit levels to attain capital that they need to launch, and the disadvantage of credit is that the company could face issues when they have to pay the loans (Rey, 2015). As companies spend most of their incomes to repay debts and not expanding its base of customers and adding workers, they lose its flexibility of keeping up with the competition in the long run.

Apart from a strong business plan, avoiding high debts, and effective management of cash flow, businesses need to make accurate projections. Most of the entrepreneurs in the world are optimistic. These individuals analyze ideas that are likely to change the world, helping it to adopt a positive method in attaining its missions. Nonetheless, this optimism could cause them to overestimate their revenue potential and underestimate the costs from the future (Smets, 2014). These unrealistic projections could also make the business owners focus on poor decisions that are based on inaccurate analyses. The owners need to take off their mind from their optimistic nature and focus on making accurate decisions regarding costs and revenues to keep the companies moving.

The erosion of public confidence in a business or organization undermines the determination of crisis management to revert the company to positivity. However, there are several approaches in which a company cans effective manage any crisis and remain relevant while accumulating revenue (Rey, 2015). The senior management is a barrier to the adhering to the prevention protocol. Majority of the executives believe that they are in control of all areas of a business which leads the company to a blind spot in case of a crisis.

Conclusion

In conclusion, I believe that resolving a crisis should be done as speedily and efficiently as possible with zero margins of errors. How a company handles the aftermath of the crisis is relevant to its longevity and profits. Joining the University of Prague to study Economics will offer me a chance to employ my competencies in helping the society, companies, and pushing our country's economic agendas forward.

References

Kumhof, M., Ranciere, R., & Winant, P. (2015). Inequality, leverage, and crises. American Economic Review, 105(3), 1217-45.

Rey, H. (2015). Dilemma, not trilemma: the global financial cycle and monetary policy independence (No. w21162). National Bureau of Economic Research.

Smets, F. (2014). Financial stability and monetary policy: How closely interlinked?. International Journal of Central Banking, 10(2), 263-300.