Firstly, the company gave employees too many benefits, especially wages. This could not only increase the cost of product, …show more content…
Moreover, Olsen and Andeassen also supported that buyers will change their mind to other brands if they receive poor service.
Apart from human resource and marketing management, poor financial management is also one of the most important reasons for business failure. In accordance with Thornhill and Amit(2003):500, “Failure of young firms will be attributable to deficiencies in financial management.”. If the company cannot gain income to cover all cost of production, the situation will turn to be more severe. For example, Connaught, the social housing firm, has collapsed as a result of cash flow problem, according to Guardian (2010). Guardian (2010) reported that the government cut their spending while the company was facing with its cash flow system. Therefore, the firm had not enough money to operate the business, finally it broke. However, Bradley and Cowdery (n.d.) claimed that lack of cash flow could make the company’s ability to reinvest struck for future profit in terms of ordering inventory and doing advertisement. Moreover, Jickling and Raab (2006) provided a case study of Hedge Fund’s failure and stated that if the firm could not gain as much income as it expected, it could not attract new investors to invest in organization. On the other hand, if the company