Chapter 9 - Performance Evalutaion and Corporate Failure

Question 1

Causes of Corporate failure

Answer 1

1. Technological problem
2. Working capital problem
3. Economic distress
4. Mismanagement
5. Over expansion and diversification
6. Fraud by management
7. Poorly structured board
8. Financial distress

Question 2

Reduce corporate failures

Answer 2

1. Preventing corp failures
2. Appt of non exec directors
3. Audit committees
4. Development of env learning mech
5. Focus on R and D

Question 3

Corrective actions to be taken

Answer 3

1. signs-investigate- identify causes
2. related- diff funtctions- eg: FM, marketing, prod
3. seek external advice
4. move on to soln, rather blame
5. action- putting in controls - prevent future loss
6. best strategy- effective mgmt sytems