The competitiveness and sustainability of an organization

The competitiveness and sustainability of an organization

The competitiveness and sustainability of an organization are hugely dependent on the financial health of an organization. Financial statements, which are regularly evaluated by the finance department, help in revealing the financial health of the organization. The most vital advantage of analyzing the financial statements of the company is allowing the organization to make critical strategic decisions that support the growth and long-term profitability of the firm (Drake, Quinn & Thornock, 2017). Based on the financial analysis that has been done by the Finance Department over the last couple of months, the team and I have determined that the amount of debt the company has is overwhelming. From the enormous deficits that have been incurred over the years, it would be a mountain task to come back from using standard business processes.

Apart from the vast debt the company has accumulated over the years, the performance has been declining owing to the alternative purchasing methods being used by the customers. The declining performance of the organization is not doing the company any good. From the preceding, the best choice for the company going forward is to close the stores. This is one of the most challenging decisions the organization will have to make, but it will be worth it in the long term. The finance department is capable of using accounting to measure the financial profitability of the company. From the losses the company has made in the last couple of years, coupled with the massive debts that have been encountered, the viability and future sustainability of the business cannot be ascertained.

The decision to close the stores is in the best interest of the company. With this decision, the company will avoid bankruptcy and the negative image associated with such a financial entity. The inability of the company to generate adequate profits is closely associated with the decision to close the business. Analysis from the finance department shows that a lot of money has been spent on production, inventory, and overhead costs, but the returns have been dismal. Spending a lot of money in generating revenues is killing the bottom line of the company in terms of profits and sustainability.

If we fail to close operations and the stores, the consequences will be dire and massive. The company will be forced to sell most of its assets to offset the outstanding debts and maintain its operations. The other consequence that would result from failure to close the company is the inability to pay staff and the regular business expenses that keep the company afloat. The result of delaying staff or paying lower salaries will be less motivated staff. When the team is not motivated, their performance levels decline, and such is reflected in inadequate revenues because the productivity levels go down significantly.

More importantly, the company is currently facing fierce competition in the industry, which makes it completely difficult to operate. In the last couple of years, the company has had to spend a lot of money on marketing and promotional campaigns to improve the image of the company. However, such attacks have not yielded any significant success for the organization, resulting in severe losses that we have to cut going forward. If the company is to retain some of the few assets and properties, we have to make the difficult decision of closing the stores and re-strategizing how to move on going forward. Failure to close the stores will not only hurt the company in the short-term but kill any chances of future success, especially if the strategy is to be re-opened in the future with the hope of investing in a new idea.