THE survival of an industry is achieved by balancing four cardinal resources of a firm which are workers, customers, products and funding.
The intangible attributes of business leaders such as integrity, diligence, humility and creativity are necessary, but not sufficient condition for the success of a firm. The presence of resources in an organisation in correct proportions (otherwise known as technology) is a sufficient condition for its success.
Workers One of the most important determinants of the success or failure of a company or an industry is its employees. There is no industry or company which can succeed without adequately catering for the needs of its employees. Advances in technology and the relatively free flow of knowledge and information imply that the exploitative model of business which had currency in the past is now obsolete.
Modern workers are not only unionised, they are also aware of economic issues such as the poverty datum line, the consumer price index, the household basket, per capita national income or gross domestic product per capita and inter-regional income averages.
This means that the chronic information asymmetry in favour of employers that characterised wage and salary negotiations (or collective bargaining in general) ten years ago no longer prevails.
The Lonmin platinum industry strike in South Africa which has reduced global production of the precious metal by more than 40% is a classic example of the power that workers can wield against a company if they believe that they are being taken for granted.
It is common knowledge in the business world that any company that neglects (or exploits) its workers is on a path to self-destruction.
One of the most important determinants of the success of the software and telecommunications industries is the equitable manner in which employees of high-tech industries are treated in terms of remuneration and other working conditions. Employee profit sharing and share option schemes were popularised by the software industry in developed countries such as the United Kingdom, Germany, United States, Canada, Japan and South Korea.
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The fact that most small-to-medium enterprises are able to survive economic crises is a testimony to the effectiveness of the owner-worker model of business. Most cobblers, hairdressers, lawyers, accountants and consultants own businesses they work for.
It is therefore in their best interest that their businesses do well and sufficiently take care of their own.
Customers Sustained demand for a firm’s products ultimately justifies its existence. While society exists as a complete entity, companies find their subsistence and justification in the needs and wants of society. It is a pity that when most organisations mature, some of their personnel begin to take customers for granted.
Many banks in Zimbabwe lost their clients to Ecocash, Telecash and OneWallet because of poor customer relations. Nowadays it is mostly public sector employees in Zimbabwe that are still trapped in traditional banks that do not attach much value to their clients (mostly retail depositors).
The firm that will weather the storms of economic recession and depression is a firm that invests tangible and intangible resources in training its personnel to treat customers with the dignity they deserve.
Products The most successful companies of the 21st Century are those that are at the forefront of innovation and cutting edge technological advancement. In most developed and middle income economies technological advancement means that virtually all serious companies have a presence on the internet. It is now possible to purchase many products on Amazon.com and Ebay.
The customers who were addicted to window shopping in the past are now addicted to surfing the internet. For a company to attract such potential customers, it has to have a website or some other platform like Facebook or Twitter where it establishes its presence. Many Zimbabweans buy ex-Japanese cars through the Internet.
Funding Most prominent economists in Zimbabwe link the collapse of many firms to the flight of capital from the country which is associated with uncertainty about the future, negative sentiment on the stock market, persistent balance of payments deficits and policy misalignments.
The liquidity crunch which worsened since 2012 has not helped matters.
To solve economic problems currently affecting businesses in Zimbabwe there is need for concerted action on the part of government and other stakeholders such as the private sector, non-governmental organisations and the international community.
Ian Ndlovu is an economist at the National University of Science and Technology skilled in data analysis using SPSS, Gretl, Stata, Eviews and Microsoft Excel software packages. His research interests cover business, development, economic and e-commerce issues. He writes in his personal capacity.
