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Essay / Research Paper Abstract
This 7 page paper considers the finical difficulties faced when a company seeks to grow and diversify. The paper looks at issues such as lack of working capital and growth that is too rapid along with the difficulty of determining which type of financing should be used; debt or equity. The bibliography cites 5 sources.
Page Count:
7 pages (~225 words per page)
File: TS14_TEgrowthd.rtf
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Unformatted sample text from the term paper:
but these also pose p-problems and risk. Any growth or diversifications will require funding, this can stretch a company many cause difficulties. The strong choices regarding which investment to make
and who much to grow are crucial, grow too fast or too broadly and the company may not have foundations necessary, increase growth or diversification may increase the required level
of working capital disproportionately, reducing profitability, may dilute the core competences and distract the business from its principle aims. The entrepreneurial spirit that carried a business forward may also be
to focused on some goals so that more diverse issues, such as financing and control are less considered. One reason that growth and expansion has been so successful in Japan
compared to other countries due to the support companies may find within the Keiretsu structure that is seen and larger companies support smaller companies (Suzuki et al, 2002). This
shorten the learning curve and also provides stability and support, but not for all companies. In the west the same is lacking and as such there are fewer barriers and
more opportunities, but also the difficulties which exist. For new businesses there are high failure rates, depending on which industry is considered. In some businesses such as the restaurant
trade the failure rate after two years may be as high as two out of every three businesses folding. Ironically, in most industries the biggest risk is not a
lack of orders, but too many orders and a company being unable to support the growth. A study by Moulton (et al, 1996) looked to identify the reasons for the
occurrence of failure, in this case business failures that resulted in bankruptcy. This study compared seventy three companies that had been through bankruptcy with seventy three that had not in
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