Establishing indicators and causes of business failure

• Main Author: Валентина Дувњак
• Format: Article
• Language: English
• Published: University of Banja Luka, Faculty of Economics 2021-05-01
• Series: Acta Economica
• Subjects: business failure, external cause of downfall, internal cause of downfall, poor management
• Online Access: http://ae.ef.unibl.org/index.php/ae/article/view/362

Business failure provokes negative implications on economic and social situation in the country. The company’s downfall starts with the lack of action due to failure as to problem identifcation on one hand, or due to the incapacity to solve it resulting from the lack of vital resources on the other hand. Business failure from the viewpoint of management means dicrease in the company’s effciency. The causes of the business failure can be external (price competitiveness, intensity of competitiveness in the industrial branch, dicrease in and change of demand) and internal. The most obvious internal cause of downfall is poor management, while other causes can be treated as its follow-up (abortive acquisition, wrongful management of large projects, ineffective management of fnance, marketing, production, and inadequate fnancial policy).