While some businesses grow from grass to grace and glory to glory; from start-up, having close to zero initial capital to unicorn with business valuation of over a billion US dollars after being run for some time, some businesses fail – having initial capital of over a billion US dollars to near zero capital within a short period, and at times, to insolvency. Some stay in the same position without improvement or growth in all the factors that combine to make a successful business. These factors are motives (profit), management, men, machineries, materials, money (turnover), methodology and minutes (production time). There are various risk management tools that can be adopted for business growth. These tools include SWOT (Strengths, Weaknesses, Opportunities and Threats) Analysis; PESTLES (Political, Economic, Social, Technology, Legal, Environmental and Security/Safety) Analysis; Pareto Analysis; and Business Analytics.
All the risks and business management tools are important to prevent premature death of start-ups and big organisations. A lot of “too-big-to-fail” businesses unexpectedly witnessed crashes in the recent past. Talking of big businesses that experienced grace to grass phenomenon, organisations like Pan American Airline founded in 1927, which was the largest international air carrier in the United States of America before it crashed in 1991; British Caledonian Airways; Borders Group, Inc, an American multinational book and music retailer based in Ann Arbor, Michigan, which was founded in 1971 and crashed in 2011; and Pets(dot)com (1998 – 2000), an American enterprise based in San Francisco, that sold pet supplies to retail customers; Nigeria Airways Authority which was founded in August 1958 and ran out of business in 2004 due to mismanagement of fund, large scale corruption, overstaffing, and a poor safety record; Concord Newspapers, Standard Biscuits, Bata and GlaxoSmithKline Nigeria, easily come to mind.
Others are Tower Records (1960 – 2004), Compaq (1982 – 2002), General Motors (1908 – 2009), Kodak (1889 – 2012), Lehman Brothers (1850 – 2008), AIG (1919 – 2008), Olympia and York (1952 – 1993), Hypo Real Estate (2003 – 2009) and Nortel (1895 – 2009). It is interesting to note that 65 percent of big corporate clashes happened in the banking and finance industry. It is also noteworthy to state that organisations go into liquidation not because of the businesses they do or the location of their businesses but majorly because of bad management (leadership which refused to adapt to change). Businesses also fail due to corruption, failure to observe due diligence and failure to adhere to the market and ethics. While Wirecard, a German banking and money transfer company collapsed due to corruption in June 2020, companies like Flutterwave, Western Union, Moniepoint and Remitly, in the same sector, are doing well.
To appreciate how to exploit business gap analysis for improved business performance, we need to discuss the meaning of business and business gap. Business is concerned with understanding the needs of potential customers and satisfying them. According to F. C. Hooper, “The whole complex field of commerce and industry, the basic industries, processing and manufacturing industries, the network of ancillary services, distribution, banking, insurance, transport and so on, which serve and interpenetrate the work of business as a whole, are business activities.” A business may be defined as an activity organised and operated to make available goods and services to the society under the ‘profit motive’. Business is as any activity which leads to the creation of utility, in the form of goods and services to satisfy human wants.
While one of the objectives of business is to make profit, the major aim is to satisfy customer’s needs. A good business must leave customers satisfied (value for money). Businesses are in charge of production of consumer goods and to make sure that the needs of the people in an area are met. Businesses are set up for specific goals, set of objectives or motives. It is important for all corporate organisations to analyse the gap between customers’ needs and their production levels or nature of products or services. Change is the only constant thing in life. The ever changing needs of man means that businessmen and women must continue to review their objectives, methodology and the quality of their finished goods or services, or the strategy of getting the products or services to their valued customers. A good way to do this is the “business gap analysis”. Gap analysis can be used to analyse all businesses, either in the primary, secondary or tertiary sector.
A business gap analysis or gap analysis is a method of assessing the performance of a business unit to determine whether business requirements or objectives are being met and, if not, look for the steps to be taken to meet them. A gap analysis may also be referred to as a “needs analysis”, “needs assessment” or “need-gap analysis”. The “gap” in the business gap analysis refers to the space between “where a company is” as a part of the business (the present state) and “where the company wants or ought to be” (the target state or desired state based on stated goals or best performance of other organisations in the same sector). Gap analyses are used for various roles. In information technology, gap analysis reports are often used by project managers and process improvement teams as the starting point for an action plan to produce operational improvement. In professional football management, it is the main tool of target setting. The gap analysis also helps in benchmarking actual business performance so it can be measured against optimal sector performance levels.
To be concluded next week
