Introduction
In the world today, there are very many companies that have become obsolete and they have shrunk their market share because many other companies have emerged thereby taking the market share that was previously occupied by the fallen companies. For example, the world’s leading carmakers such as Ford and General Motors lost their market share considerably in 1985 and they are today struggling to turn around in order to recover the market share that they once had (Cokins , 2010).
In addition, industrial firms such as ITT restructured itself in order to become a fortune 500 company. However, companies such as Wal-Mart, Banks and technology firms engaged in production activities which replaced the activities of ITT in the market. Other companies such as Wang Laboratories and Digital Equipment, which were some of the leading computer firms, disappeared from the market completely (Newman, 2010).
It is therefore true that companies that were once successful may fail and therefore face difficulties while trying to meet the needs of the market. This paper will therefore look at the various reasons why once successful companies fail in the market.
Discussion
With the advancement in technology, customer needs change from time to time. It is therefore important for a company to ensure that its production processes meet the needs of the customers. However, there are those companies which are unable to change their production processes to fit the needs of customers. The demand for services being offered by such companies goes down significantly thereby driving such companies out of the market.
Advancement in technology influences the production processes of organizations. Investing in new technology is a very expensive venture and it adds complexities to the production processes. As a result, the businesses that cannot manage to implement new technology leave the market thereby creating room for those businesses that are capable of implementing new technology to meet the demands of the customers adequately.
Competition plays a very significant role in determining whether a company in the market has chances of failure. Competitors may come up with production processes that are much efficient and cheaper thereby making a company to lose a significant market share when customers shift to the new company that adopts efficient production processes. This case has been evidenced when Dell overtook Gateway in the personal computer market (Robinson, 2004).
Globalization increases the complexity of the markets especially for those companies that conduct their operations in the global market. In the global market, there is high competition, lower costs and more advanced production processes (Robinson, 2004). It therefore becomes difficult for certain companies to cope with the different challenges present in the global market place especially if the companies cannot manage to offer low costs and adopt new production processes.
There are those managers in various companies who believe that if they do things the way they have always done them, they will be able to cope with the competitiveness present in the market. However, these managers fail to understand that new and efficient production techniques are discovered every day (Sinek, 2010). When such managers argue that they should do things the way that they have always done them, their company ends up being overtaken by the other companies which adopt more efficient production techniques.
Conclusion
It is true that successful companies may fail despite being in the market for many years. In order for companies to remain relevant in the market therefore, they should ensure that they adopt new technology, hire competent managers, show appreciation to their loyal customers and employees, and diversify their products and services to the international market
Reference List
Cokins , G., 2010. Why Do Once Successful Companies Fail? Web.
Newman, R., 2010. 10 Great Companies that Lost their Edge. Web.
Robinson, C., 2004. Why Good Companies Fail. Web.
Sinek, S., 2010. Why Great Companies Fail. Web.