Case Study: Sustainability Of Business Operations

c. Sustainability of business operations

Sustainability of a business refers to the capability to stay in business, survive and perhaps thrive within the constraints or limitations imposed on it. A business and its performance is sometimes sustainable because of the favourable economic environment or because of some strategic advantage that other competitors do not have. Instead of having to deal with deeper aspects of management strategies, we will address two more apparent issues.

i. Economic change and resilience of the business

The economy of the country will affect the success of the company and its business. The various stages of the economic cycle carry with them risk issues that are different with varying impact. In the review of

The key concern here is whether the boom stage here will last long enough for the investors to recover their investments and for business people to make the target profit. A pre mature decline in the economic boom might become painful and possibly financially damaging to over invested businesses.

Stage C

This is a worrisome stage. The decline in economic activities brings danger of reduced sales, slower collection and uncertainty in price and costing. High cost businesses and those with poor or careless management, will likely experience growing risks and poor results.

Stage D

This is the final stage where poorly managed businesses, those with thin margins or large borrowings are likely to close their operations. This economic stage is one where consumer confidence has dropped and income is low. A period of time has to pass to allow income and confidence to pick up and for the economy begin to its recovery.

It is important to understand how the profit margins of the company have been earned and this can help predict the prospects of survival or otherwise when bad times

At sunset stage, demand is seen as falling, or growing too slowly. Competitors may view this as no longer attractive to consider new investment or fresh marketing effort. Technological products generally have a short PDC and moving into the sunset stage rather quickly.

Sunrise Sunshine Sunset

At the sunrise stage the product introduced to the market is probably new and has not gained market acceptance. Advertising and promotion activities are essential and competitors are not keen to consider.

After market acceptance has been achieved, sales began to grow rapidly, and at this stage it will also attract competitors as demand has been proven.

Finally the product moves into the sunset stage when the customers are offered alternatives, or they are no longer users of the products. Sales and cash flow begin to decline and no further investment by the business owner is expected. The following template has been create to facilitate the reader’s thinking and analysis.

Sunrise

Sunshine