Crises that May Come Your Way

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Francisco Faraco

Every business faces some problems in its lifetime. The business managers have to be prepared to face different crises that may come their way. Here are a few crises that a business may face in its lifetime.

1) Financial crisis

An example of a financial crisis might be a lack of working capital to pay immediate bills. In other words, the firm is faced with a liquidity problem. This might arise because the business has too many assets that are not easily converted into cash. Long-term unpaid debts and inability to recover money owed by others are also factors that may lead to a financial crisis.

2) Production crisis

Breakdown of a crucial piece of machinery is a typical example of a production crisis. This would lead to a loss of production for the manufacturer and perhaps a failure to deliver products on time. Natural disasters, such as crop failures may affect the supply of agriculture products. Technical problems like an inefficient computer system can also cause a delay in the production process.

Francisco Faraco

Francisco Faraco – Founder & Managing Partner at Faraco Partners, LLC

3) Human resources problems

Businesses may face problems in case of industrial action. Production may be halted and sales suffer because of a lack of supply or because the image of the business is affected. Strikes, go-slow policies, poor motivation level, and high sales turnover can lead to a loss of productivity.

4) Environmental problems

If a business is involved in an activity that causes environmental damage, this might result in opposition from a variety of pressure groups including the community and the government. Ultimately, the controversial activity may have to be halted.

5) Corporate problems

Certain crises are capable of affecting the whole organization. An example might be an attempted hostile takeover by a larger company. Another might be a loss of confidence in a public limited company. This would most probably lead to a fall in its share price on the stock exchange as the shareholders start selling their shares.

6) Product and legal problems

At times crises take place when faulty or dangerous products are manufactured that break the law, for instance, a children’s toy causing harm or a food item leading to health problems can be banned.

About the Author

Francisco Faraco

Francisco Faraco is an experienced Investment Advisor and CEO, Portfolio Manager and Founder of Faraco Partners, LLC, an Independent SEC-Registered Investment Adviser.

Crises that May Come Your WayunratedFrancisco Faraco2018-03-23 03:17:49Every business faces some problems in its lifetime. The business managers have to be prepared to face different crises that may come their way. Here a…

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