ID – WIL/002737
4Th April 2014
Table of Contents
Task 4: Power Point Presentation (Submitted separately)
Insolvency arises from a situation whereby a business organization has too many liabilities than its assets. This makes the business organization unable to pay its debts hence resulting to closure of the business and all its assets auctioned to pay its debts. Insolvency affects the economic growth rate of a country. Insolvency mostly arises from poor organizational performance in terms of profitability and poor cash management and leadership. Due to increased insolvencies, the economic growth of a country is reduced. The economic growth rate has effects on the population of a country (Ackelsberg and Arlow, 2005). If the economy of a country is down, it population is low due to lack of necessary resources to meet needs of its citizens satisfactorily and vice versa. Therefore, the management of business organization should ensure that their organizations are performing exceptionally well in order to contribute significantly to the economy of the country, directly and indirectly to the population growth in the country or region.
1.1 Statement identified in the case scenario and the main research questions For business organization to operate smoothly, they need sufficient resources. For the organization to acquire all the necessary resources it requires to meet its goals and objectives, it has source funds from different available sources of funds. Apart from the capital owned by the business, a business organization borrows finance from banks and other financial creditors in order to finance its business operations effectively (Ackoff, 2003). The funds borrows are recorded as long term or short term loans depending on the repayment period. Insolvency arises whereby the business organization fails to pay its financial obligations with its lenders due to lack of sufficient funds to do so. Insolvency mostly arises from poor cash management within the organization, reduced forecasted cash inflow, increased cash expenses, continuous losses being made by the business organization and much more. In a country where its business organizations continuously become insolvent, the economy declines. A decline in the economy of such a country affects the population of the country significantly due to lack of employment leading to poor living standards and hygiene hence increasing death rates (Andersen, 2004). The rise of crimes also results from lack of employment opportunities and the high rate of crimes affects the population of the country indirectly. Therefore my main research question for this research project is, “Has there been a decrease in population in North Scotland in the past 12 months as a result of insolvencies?” This gave me a variety of research topics to choose from and they are: 1. The causes and effects of insolvency in a country.
2. Ways in which businesses become insolvent and how business insolvency can be avoided in future. 3. Population decrease as a result of insolvencies within a country. From the above three possible research topic, I chose, “Population decrease as a result of insolvencies within a country”, as the main research question.
1.2 Factors that contributed to the process of research project selection Importance of business organizations in a country
Business organization performances affect the economy of a country either positively or negatively. Once the organizations are doing exceptionally well and achieving its goals and objectives, the economy of a country is raised. However, when the business organizations are continuously going bankrupt and insolvent due to insufficient funds, continuous losses and poor overall management, can affect the...
References: Ackelsberg, R. and Arlow, P. 2005. “Contribution of small businesses to population growth”, long Range Planning, Vol. 18 No. 5, pp. 61-7.
Ackoff, R.L. 2003. A comparison of population growth in Wales, Scotland and England:, New York, NY.
Andersen, T.J. 2004. “The performance of Scotland Firms and contribution to its population growth, Vol. 33, pp. 184-200.
Andersen, T.J. 2005. “the effects of business insolvencies on population growth in a region”, Journal of Management Studies, Vol. 41 No. 8, pp. 1271-99.
Armstrong, J.S. 2004 “The value of formal planning for strategic decisions: review of empirical research”, Strategic Management Journal, Vol. 3 No. 3, pp. 197-211.
Balestra, P. 2006 “The concept of insolvency in business organizations”, J., Milgate, M. and Newman, P. (Eds), The New Palgrave: Econometrics, Macmillan, Basingstoke, pp. 70-4.
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Chakravarthy, B.S. 2006 “Measuring financial performance”, Strategic Management Journal,
Covin, J.G., Slevin, D.P. and Schulz, R.L. 2004. “Implementing strategic mission to avoid insolvency”, Journal of Management Studies, Vol. 31, pp. 481-505.
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