- Failed Business
- Strategic management is one of the key significant requirements that a business organization needs. Fail to honor strategic management principles in a business organization result into poor implementation of various initiatives. Although many business owners consider employing strategic perspectives in their organizations, some fail due to improper budget management. The significant goal in supporting the strategic perspectives in a business is to stick on the budget plan (Swayne, Duncan & Ginter, 2006). The following research illustrates how a business organization might fail due to poor strategic perspectives using the case study of Washington Mutual Inc (WAMU) bank.
- Washington Mutual Inc
- The bank operated as a mutual organization with a motive of getting profits from its prospective members. During the period of the banks existence, several shifts had occurred in its strategic banking activities. Various purchases with other banks took place during the period that WAMU was active (Mitchell & Wilmarth, 2010). The bank was contributing various purchases with other financial holdings in order to expand its membership. After 94 years of operation, the bank encountered a demutualization period in its performance. In order survive; the bank was issuing capital stocks to the members during the demutualization period. In addition to this, the banks managers changed WAMU into a company (Mitchell & Wilmarth, 2010).
- WAMU was one of the trusted mortgage companies in America with a large number of customers. The bank was an established company that customers trusted with issuing of credit cards. Some years back, WAMU become a victim of America’s economic recession. The recession affected the banks operation resulting in heavy losses and financial breakdown (Mitchell & Wilmarth, 2010). The mortgage rates were always high due to the recession and this affected the potential members. During this period, the bank started offering considerable assets to its members in order to make money from loans. What followed to WAMU was a mere failure in managing its budget due to high rates. After all this failures, the FDIC resulted in selling the WAMU bank in order to cover the affected accounts (Mitchell & Wilmarth, 2010).
- How the management of WAMU failed to implement strategic perspectives
- The top managers in the bank failed to reduce the huge risks that the bank was taking in the subprime market. The managers failed to recognize the philosophy that was required in order to secure the bank from falling (Swayne et al., 2006). The WAMU top managers failed to recognize that the housing downturn was leading to a serious financial depreciation. The managers failed to employ strategic thinking that is more important required in management of a business. Through this failure, the bank experienced huge loses of money from the housing loans. The management also submitted subprime loans to the members while still knowing that it was a risky attempt. The management team was an effective in a manner that they failed to work hard and prevent the bank from falling down. In order for a business organization to perform well, the top management needs put full commitment and support towards the business. The managers also failed to create an effective implementation plan that would assist in stabilizing the banks activities (Swayne et al., 2006).
- There were unclear strategies in the implementation of strategic perspectives in the WAMU bank. The bank failed to ensure that people who were loyal to the organization took part in its ownership. The bank ended up giving mortgages to disloyal people who were later making late payments. The late payments of loans also affected the credit card department in the bank. The bank strategies used by the bank failed to recognize the external environment that is a significant task of strategic management (Beer &Eisenstat, 2000). Failure of implementing clear banking strategies led the banks shareholders to lose large amounts of money after the FDIC had to seizure the WAMU the bank. Another factor that led the bank to fail in its business activities is poor communication among the concerned bodies. There was no vertical communication in the bank among the top managers and the members. The bank failed because of expecting that every member will understand its managerial structure and the financial difficulties that it encountered (Beer &Eisenstat, 2000).
- There was poor coordination between the bank and the perspective members that resulted into strategic management to take a long time develop. In addition to the failure of top managers, another factor that led to the fall of the bank is poor leadership among the junior employees. If the bank employed necessary leadership among its junior staff, the probability of falling down would be very low. Every entrepreneur ought to understand that the strategic management is not one-day accomplishment (Beer &Eisenstat, 2000). The entrepreneurs ought to note that it may take a lot of time to fix everything as required. In this case, the bank failed to employ the expected leadership skills to junior staffs. Another issue that contributed to the fall of WAMU is the failure to act as fast as possible when the problem arises. In a competent strategic management, the concerned bodies formulate any risk and failure. All the above named factors resulted to poor performance of WAMU bank that led to its being out of business.
- Reference
- The Silent Killers of Strategy Implementation and LearningMcKinsey & Co.
- Mitchell L. E & Wilmarth A. E. (2010). The Panic of 2008: Causes, Consequences and Implications for Reform. New York: Edward Elgar Publishing, 2010
- Swayne L. E, Duncan W. J & Ginter P. M. (2006). Strategic management of health care organizations. New York: Wiley-Blackwell.
930 Words 3 Pages
