The Importance Of Company Management

September 30, 2011 by  Filed under: Management 

The success or failure of an independent business depends on a number of different factors. The success of a company depends on the business model of a company, the industry competition, and the demand for a company’s products. While all of these are essential to success, there is no area that matters more than the company’s management team. Let’s take a look at how the management team affects a business.

Setting strategic direction

A company can only go as far as the long term vision that is set for it by the management team. A company’s board and executive team are responsible for making sure that a company has a sustainable business model that can last for 20 to 30 years into the future. Management is responsible for seizing opportunities that may exist in a market and positioning a business to capitalize on these opportunities. A great management team is proactive and responds quickly to change thus giving an organization an advantage over competitors.

Ability to handle risk

Risk management is absolutely critical to the long term success of any business. Managing risk is just like walking a tightrope. A management team has to be willing to take risks that could provide additional revenue to the company and increase profitability while at the same time avoiding risks that could bankrupt the company. It is a really delicate balance between success and failure. A good management team will measure the costs and benefits of each business decision in order to determine whether it will help or hurt the company.

Growing a company

The growth of any company is largely based on how a company chooses to fund its operations. Businesses that are seeking to expand often seek capital from new sources. The two most common ways to finance a company are to use equity or debt financing. Equity financing will involve giving up an ownership stake in the business whereas debt financing becomes a long term obligation of the company. It is up to the company management to determine which forms of financing work the best for a company.

You can clearly see how the decisions that management makes has a direct effect on the outcome of a company. A quality management team can create a healthy organization that is well positioned to compete in any industry. A poor management team can hinder the growth of a company and impede the long term success of an entity.

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