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The Global Scene

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The increasedboardroom confusion led to further woes to the company. Laura Ashley continued to record losses in the subsequent years and there was need to eliminate the trend. They continued to get further into debt as the new American ventures continued to deteriorate. The change in management where the company changed its CEO for 14 times between 1989 and 2000 did not help the company either. There was late merchandise and since some of the clothing they dealt with depends on the prevailing weather conditions, late merchandise would lie in the stores and wait for a similar period for a yare. It resulted to losses and reduced sales which in return continued to diminish the value of the company. Dividends reduced and had to be stopped at some point. The shares that had been oversubscribed by over 30 times were now weak and there was jeopardized future to the company (Wes 1996). Their main financiers at some point refused to offer them loans if they did not dispose off their American investments. It was later that the American operations were stopped and this led to an increase in profits to the company.

Companies look to expand and hit the global scene with their goods. This fact is unrivalled due to the increased process of globalization. Technological advancements in the industries are also doing well to connect different regional branches to increase efficiency in management. In this expansion race, some companies are either following the wrong strategies to expand leading to their poor performances after their expansion. Some are unfortunate and are only affected by the larger global economy to disrupt their expansion processes.

Laura Ashley was affected by both factors. They used the wrong strategies while at the same time were not favored by the existing regional and global economic status. This led to their poor performance and an almost an imminent near collapse of the great company that had been renown in the whole world for their competitive products (UNIDO 1996).

It is therefore paramount that companies undertake a thorough capital budgeting to reduce collapse or poor performances (Halseth & Markey 2010). Properly conducted capital budgeting will lead to great company performances which will lead to the increase in profits and further expansion. When poorly conducted, the company might need to restructure their whole system since it may result into extremely dangerous position for the company in terms of financial strength. Laura Ashley had been successful and there was a lot of prospect that it would even improve its market share (Saloner, Shepard & Podolny 2006; Wes 1996). However, their decision to expand was not properly carried out and this led to the big fall of the company which took over 10 years to recover from. Therefore the process of capital budgeting should be carried out with extreme care and caution, involving thorough consultation from experts.

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