QUESTION: $1[15$ MARKS$]$

CASE STUDY

A once$-$thriving business saw an opportunity to expand into new markets and grow its operations. Excited by the prospects, the leadership began expanding rapidly, pouring resources into new territories without thorough market research. In their eagerness, they overlooked key details about the different consumer demands and competitive landscapes in these regions.

As the company grew, they stretched their resources thin. Financial planning became inadequate, and they failed to secure enough capital to maintain their operations, leading to cash flow problems. The original business, which had been successful due to its focused approach, started to suffer as management became overwhelmed by the complexities of running a larger organization. Leadership faced challenges managing new teams and navigating the cultural differences in different markets, causing internal discord and inefficiencies.

To make matters worse, the company$$s business model, which worked well on a small scale, wasn$$t adaptable to the larger operation. They didn$$t take the necessary steps to tailor their services or streamline their operations for scalability, leading to declining quality and customer dissatisfaction. Eventually, the combination of poor market entry, operational mismanagement, financial strain, and loss of focus on the core business led to the company$$s downfall. The expansion, meant to propel them to new heights, became the very reason for their failure.

QUESTION:

As a business manager trained in microeconomics use appropriate theories and relevant diagrams in microeconomics to explain what could have led to this situation and how you could turn around the situation.