Business leaders are faced with various problems since its very inception. Various problems remain continuously from the start of a lifecycle of a business to the end of its life cycle.
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Biggest Challenges Business Leaders Face Today
Following are the biggest challenges business leaders face today:
1. Problems Related to Objectives
A business operates under economic, social, political, and cultural environment.
Each entrepreneur has to decide the objectives of his business looking to the variant environment.
The problem of objectives arises on account of different objectives of an enterprise and they are contradictory to each other.
The maximization of profit with the improvement in the quality of a product keeping the price low and expansion of the market as the sum of mutually contradictory objectives.
A business has the objectives of meeting social responsibilities, protection of national interest and political stability.
Keeping in view the contradiction of these objectives coordination among these objectives is a must.
Related: 26 Challenges in Way of Social Responsibilities of Entrepreneurs.
2. Location and Size of the Plant
An entrepreneur has to select the place of his plant.
The determination of place is affected by several factors such as availability of raw material, the supply of labour, nearness of sources of power, measures of the market, availability of means of transport, the location of Banking, Financial, Institutions.
While selecting the place of a plant an entrepreneur keeps all these factors in his mind.
Therefore, the size of the firm or plant is an important problem.
Whether the size of a plant or firm is small or large he has to study the various aspects relating to technology, managerial, marketing, and financial.
He should be realistic while making all these decisions.
3. Government Policies
Government policies such as the industrial policy, the fiscal policy, the tariff policy, etc. May have a profound impact on business.
Some policy developments create opportunities as well as threats.
In other words, a development which brightens the prospects of some Enterprises may pose a threat to some other.
For example, the policy of globalization in India. Particularly around the Mid eighties have opened up new opportunities and threats.
They have provided a lot of opportunities to a large number of the enterprise to diversify and to make their product mix better.
But they have also given rise to the serious threat to many existing products by way of increased competition.
Related: 15 Essential Elements of Creativity in Entrepreneurship.
4. Finance Problems
In a business not only physical planning is adopted but financial planning is also adopted.
Financial planning consists of the following elements:
- Determination of demand for a product and the cost of the product.
- Determination of Necessary funds for physical planning.
- Forecasting of profit and its calculation on the basis of capital structure.
- Determination of period.
5. Organization Structure
Business is faced with problems relating to its organizational structure.
A business leader has to divide its total function into two different departments on the basis of specialization and each activity is sub-divided into sub-process and each sub-process is completed by the group of workers.
Division of work of each department, accountability, the delegation of authority and coordination are concerned with it.
In the absence of clear out division of work, duties, and relationship no enterprise can work efficiently.
6. Marketing
The success and development of an business depend on the proper marketing of products.
Markets are searched out and customers for different products are also found out.
Where the customers are residing and what are there necessities.
After finding out all these things an entrepreneur has to take the following decisions:
- Share, characteristics, and utility of the product.
- To take decisions relating to social contact, individual sales, advertisement and publicity in order to encourage marketing.
- Price, concessions, and discounts, etc.
- Selection of place of stores, distribution of products and place.
7. Legal Formalities
Whenever a business is set-up, operated and closed down a large number of formalities are accomplished.
These formalities are relating to different types of taxes to be paid namely corporate tax, excise duties, sales tax, custom duties, keeping accounts, supply of various types of information, compliance of various laws and rules namely selection of place, Environment protection, pollution control, size, wages, bonus, working and living conditions.
Related: 37 Essential Qualities of a Successful Entrepreneur (Must Know).
8. Industrial Relations
The modern production system is very large and complicated.
Under such a system, the entrepreneur has to take several steps so that the corporation of workers employed in a large scale business is sought.
The interest of capital and Labour are contradictory.
A slight doubt between the two parties leads to industrial unrest resulting in go-slow tactics, lockouts, strikes, etc. in an enterprise.
There is an urgent need to maintain cordial relationship between Labour and capital through the coordination of trade unions, prevention, and settlement of industrial disputes and democratic participation in the management.
9. Impatience of Stakeholders
By virtue of being “strategic“, strategic plans tend to have the long-term focus and results arising from them will come slowly while stakeholders as ever are impatient to see results right from the next day.
This causes a lot of stress on strategic programs and many times distorts them simply to satisfy the stakeholders.
Related: Privatization: Meaning, Features, Scope, Objectives.
10. Business Skills
Business skills are also a big factor. This is a personal opinion, but I know that at least at my work, nothing is systematic.
Meaning that there are no express written guidelines, training manuals, quality tests, etc, which makes it difficult for us employees because there is a lack of communication.
This is definitely a problem because it can lead to unhappy customers if different employees do things in different ways.
11. Growing Competition
Growing competition is a huge challenge for business owners today.
There are more people in business today and huge companies that have been in a particular line of business longer than newcomers than at any time in history.
12. Physical Facilities
After selecting the location and size of an enterprise, an entrepreneur has to select various physical facilities.
He has to take the decision regarding the process of production and basic infrastructure.
Production involves division of labour and specialization which involve complicated machinery and process.
Its selection depends on comparative cost and efficiency. He has to allocate the shape of the plant, building, and each activity.
13. Globalization
Business leaders are today facing three major challenges and opportunities that are globalization, advances in technology and deregulation.
The key to surviving in today’s world is to determine the needs and wants of target customers and delivering the desired satisfaction more efficiently and effectively than competitors.
Thus, now you know the biggest challenges business leaders face today.
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