Section 4: Business Challenges and Dissolution of a Business

This section examines some of the challenges businesses may face in today's complex marketplace. This section concludes with the different ways businesses are able to discontinue operating.

Lesson 1: Challenging Issues

Operating a business requires a great deal of organizational and managerial skill. In addition to legal and legislative requirements, businesses are required to operate within an ever-changing social, economic, and political environment. Often the manner in which businesses deal with changes have a direct impact on success.

Community Relations

Businesses operate in a social context. They need to take issues that concern the public and their client base into consideration when planning and making decisions. Consumers expect businesses to operate in a socially responsible manner that reflects changes and trends in societal values. Businesses must balance the costs associated with these demands and the cost of being able to provide products and services at competitive prices. For example, the link between cancer and cigarette smoking prompted many establishments to become smoke-free, even before being legislated to do so. This decision satisfied the desire of the majority of customers. Another example is alcohol producers initiating advertising campaigns that urge consumers to use their products responsibly. They are sending the message that drinking to excess can lead to serious consequences.

Business involvement in community relations are often dependent on the nature of the business, the size of the business, and the community environment in which they operate. Businesses in smaller communities frequently involve themselves in supporting cultural and sporting events, fundraising activities, and can be relied on to make donations to school programs and youth groups. In return, these businesses receive a fair amount of increased visibility, and their commitment to the community is often rewarded with customer loyalty.

Environmental Issues

Businesses must be able to assess the impact their enterprise has on the environment. Although all three levels of government legislate regulations pertaining to air, water, and soil contamination through the Canadian Environmental Protection Act and related provincial legislation, public standards are often more demanding. Many consumers are concerned with environmental issues and the depletion of non-renewable resources. The public is able to initiate change through the products they choose to purchase, thereby influencing businesses to conduct themselves in an environmentally friendly manner.

Competition

Most businesses operate in a very competitive marketplace and the trend towards a global economy presents both opportunities and challenges. Many businesses have become successful through their ability to adapt existing products and services so they are more efficient in meeting consumer demands. Others remain competitive by offering their products at reasonable prices through effective importing practices.

To remain competitive, businesses need to be aware of consumer trends. Today we live in a health-focused and fast-paced society. Businesses that fail to take these factors into consideration are ill-equipped to compete. For instance, all major fast-food chains have added a number of healthy food items on their menu for this very reason. As well, many businesses have extended hours and/or provide consumers with alternatives such as toll-free telephone ordering and Internet services that accommodate their active lifestyles.

When businesses are able to identify a need or trend, and can find a way to satisfy it, they are in a unique position to profit. For example, Booster Juice, in the space of little more than a year, became one of Canada's largest juice bars. The business capitalized on the trend to a healthier lifestyle and provided consumers with an alternative to more traditional fast-food establishments.

Consumer Movement

The public has been, and continues to be, instrumental in having laws enacted that are directed at protecting their rights. For example, changes to various safety features in motor vehicles were brought about as a result of consumer lobbying for seat belts, air bags, padded dashboards, and shatterproof windshields.

Activists have been instrumental in having several consumer protection laws passed that ensure a number of basic consumer rights. These include the following:

• the right to safety

• the right to be informed

• the right to choose

• the right to be heard

Consumers, as a group, have a great deal of power and influence. This can present businesses with numerous challenges and opportunities.