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The boiled egg phenomenon explains the behavior of a frog when subjected to sudden change in its environment. It explains that the frog will not stand still when put into a pot that has hot water. It will immediately jump out to rescue itself from death. However, the same frog will not respond the same if it is to be subjected to heat gradually. If the same frog is put in cold water, it will stay there and enjoy the comfort. If the same water is heated slowly, the frog will not find a way out but will stay there until it succumbs to death due to the heat (Polynice, 2007).
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This phenomenon applies to businesses today. We often enjoy when businesses seem to be doing remarkably well. When profits are coming in and businesses are expanding. People forget to take precautions against any dangers that they could encounter which will cause the business to go down. Once the business has been attacked in a way, the owner has no support on how he or she will rescue it. He or she then watches the business fall and collapse like the frog.
Lehman Brothers Company was one that had flourished very well. It's down fall was not an outside effect but mismanagement of the company's leadership. This is what resulted to financial crisis that later caused its down fall. The factors that lead to the down fall of the company include poor market complacency, poor regulation, lack of transparency and, Lehman financial policy, (Zingales, 2008). The Lehman brothers should have weighed carefully the products they were giving to their clients. They did not focus on the future, but the present that the mortgages were moving at a good rate. The leadership could have foreseen on the threats that were yet to come.
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The Lehman brothers failed to detect continuous threats that the opposition is putting out there; which could play a massive role in the market dynamics in a short time (David, 2007). However, the company did not have the money to support the losses it had undergone. This is what led to it fast down fall. The treasury should not have left the responsibility to the company. They should have come to its rescue as they were its financial authorities, (Soros, 2009). This could have prevented shock that faced the market which in turn affected investors. The leadership should also have taken time to understand the market trends. They should have chosen carefully on the products that had a limited risk. This could have been more efficient to bring profit than losses. The pricing of products also should have been revised to suite its clients in the market. This way they could have avoided pressuring the customers in paying for the mortgages (Soros, 2009).
Business owner that strategize their businesses well often have a reliable backup plan. A business person cannot be sure of when losses will strike. It is therefore, beneficial to have a plan in case some faults come up. The roles and responsibilities of leaders should be well described to avoid misunderstanding between employees.
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In conclusion, a convincing business plan is one that has a clear layout. The SWOT analysis of the business should be well understood. It is of utter importance to understand the strengths and weakness. Through this, business owner can have a backup plan ready set for the challenges ahead. Knowing the opportunities that are ahead facilitate in the expansion of the business. It would be to their advantage if they could try recognizing threats that could be harmful to the organization. Otherwise, the survival for such business could be extremely difficult to today's highly competitive industry.
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