Business Closure and Liquidation: A Management Report

This report analyzes the closure and liquidation of a business due to market competition. The document outlines the decision-making process, driven by declining sales and the impact of a major discount retailer. The report details the legal framework for liquidation, emphasizing the importance of timely action and strategic planning. It discusses the practical steps involved, including asset security, employee discharge, and communication strategies. Furthermore, the report addresses the emotional and financial impact on employees, highlighting the company's severance package. References to legal definitions and academic research on business failure and entrepreneurship are included to support the analysis.

Running head: MANAGEMENT 1
MANAGEMENT
Name of student
Institution Affiliation

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CLOSURE OF OUR DEPARTMENT STORE CHAIN
As witnessed in the recent few months, our business operations have been significantly
affected by the entrance of a major discount retailer in our market. Due to the competitive nature
of the industry, our attempts to maintain the competitiveness of our business has born no fruits.
Our sales have drastically gone down and this trend is worsening day by day. The owner of the
company has decided to shut it down as of January next year to avoid further losses.
Although painful, liquidation is a natural process of any business. Our country’s law
allows any organization to voluntarily liquidate upon discovery that closure of business cannot
be avoided(US Legal, 2019). For the management and the owner of the organization, this is the
most painful decision bearing in mind that the organization has served its clients for the last 87
years. However, the owner understands that sober judgement and good timing are integral
aspects of success even at such times of failure (Ucbasaran, Westhead, Wright & Flores, 2010). This
therefore timely liquidation of the organization will avail more resources to affect the process.
Additionally, the owner understands that the best liquidation policy requires the process to be
carried out in a business-like manner with hard and clear deadlines. January has therefore been
chosen as the month of closure.
As part of the liquidation process, the business will have to be shut down, assets secured
and employees discharged
Once a decision to liquidate has been reached, the business needs to be closed, employees
discharged, and company assets must be secured and inventoried. In larger operations. All the
information relating to the closure will be availed on the company’s website and leading dailies
to facilitate the success of the process. Besides, since the owner cannot singlehandedly carry out

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the process alone, the input of some employees will be sought (Ucbasaran, Shepherd, Lockett &
Lyon,2013). Kindly oblige when called upon.
Considering the high number of long-term employees working for the company, it is
expected that this will be a painful time for the business. Normally forced layoffs may lead to
months or years of anxiety and agony (US Legal, 2019). For this reason, the company has
resolved to offer severity packages to all its employees equal to one-week pay for every year of
service in the store. This is intended to make the transition easier for them.

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References
Ucbasaran, D., Shepherd, D. A., Lockett, A., & Lyon, S. J. (2013). Life after business failure: The process
and consequences of business failure for entrepreneurs. Journal of Management, 39(1), 163-202.
Ucbasaran, D., Westhead, P., Wright, M., & Flores, M. (2010). The nature of entrepreneurial experience,
business failure and comparative optimism. Journal of Business Venturing, 25(6), 541-555.
US Legal, I. (2019). Liquidation Law and Legal Definition | USLegal, Inc. Retrieved 29 July 2019, from
https://definitions.uslegal.com/l/liquidation/