Business management – managing survival and growth

Survival of the fittest- is the law of the jungle which is equally applicable to the competitive market place where firms struggle and fight for survival and ensuring survival of the firm is a critical task of the manager and that alone is not enough and the manager has also to actively seek growth and no matter how big or powerful a firm may be today, it is sure to be left behind in the race by newer, healthier and more efficient firms if it does not pursue growth. Two sets of factors impringe upon the firm’s survival and growth. The first is the set of factors which are internal to the firm and are largely controllable and these internal factors are choice of technology, efficiency of labor, competence of managerial staff, company image, financial resources etc.

In order to survive in the market, it is the responsibility of the organization in improving the efficiency of its workforce and efficiency is the ratio of output to the input and a manager has not only to perform and produce results; however, to do so in the most efficient manner possible. In order to produce the results a manager requires inputs in the form of money, men, materials and machines. The more output that the manager can produce with the same input, the greater will be the profit generated and profit is the surplus or difference the manager can generate between the value of inputs and outputs.

Profit is essential for the survival and growth of the business and a manager may decide to forego some profit today for the profits which he is seeking tomorrow; however, in the long run he should understand that no business can survive if it does not make profits and the business activity is undertaken to satisfy a need of the society in a manner which yields profits. A business is not a philanthropic or charitable activity which is run merely to provide some goods and services irrespective of whether it is making a profit.

Profit generated can be used for expansion, upgrading of technology, growth or paying dividends. Profits are one of the cheapest sources of financing growth as they involve no interest liability nor putting the freedom at stake by having representatives of financial institutions sit on the board of directors. Profit drives the business manager an initiative to take risk, think big and venture into relatively unknown areas. A profitable firm can turn unprofitable because of obsolete technology, inability to meet high fixed cost structures, high levels of wastage, or simply because the product is no longer in demand by the customers.

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