Question

Aurora seemed to have stumbled significantly at a stage in the growth cycle common to many other businesses. Identify the phase and explain why you think the company ran into financial difficulties.

Answer 1

For a business, we can see several phases; these phases are Development Phase, Startup Phase, Growth or survival phase, Expansion phase, Maturity and decline.

Here, considering the situation of Aurora, we can identify the phase, that is Growth or survival phase.

Company can ran into financial difficulties during such growth phase due to several reasons, these reasons are like during this phase company or firm started getting more number of customers, hence, to deal with such large number of customers, firm needs sufficient financial backup and proper utilization of funds, if any misuse happens, then company can run into financial difficulties.

Company or firm faces huge competition during this phase; hence, to face such competition and manage them through bringing in normal condition, company may run into financial difficulties.

Other challenges like company needs effective management, they need to deal with increasing revenue. All such challenges can lead to bringing financial difficulties in the company.