Analysis on Failed Company 1. Kodak Kodak founded in 1880 by George Eastman. Eastman Kodak, the 131-year-old film pioneer that has been struggling for years to adapt to an increasingly digital world, filed for bankruptcy protection on January 2012. (Merced, January 2012) Example: In 1996, Kodak introduces Advantix Preview film and camera system, which Kodak spent more than $500M to develop and launch. One of the key features of the Advantix system was that it allowed users to preview their shots and indicate how many prints they wanted.
The Advantix Preview could do that because it was a digital camera. Yet it still used film and emphasized print because Kodak was in the photo film, chemical and paper business. Advantix flopped. (Mui, 2012). Reasons of Failure: Kodak’s strategic failure was the direct cause of Kodak’s decades-long decline as digital photography destroyed its film-based business model. Kodak’s missed opportunities in digital photography. Kodak management’s inability to see digital photography as a disruptive technology, even as its researchers extended the boundaries of the technology, would continue for decades.
George Eastman, who twice adopted disruptive photographic technology, Kodak’s management in the 80’s and 90’s were unwilling to consider digital as a replacement for film. The transformation from analog cameras to digital camera was failed. This limited them to a fundamentally flawed path. They cannot compete with the gradual rise of the mobile phone camera ( Apple iPhone, Samsung) and others strong competitors ( Nikon, Olympus, Canon). Kodak mistakes that people, in after the picture will continue to print it out, but this kind of thing more and more impossible.
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From this perspective, photo sharing more for communication, rather than personal memories. 2. Pets. com (internet and new technology failure) Launched in August 1998, Pets. com was created to sell pets food and accessories via the internet. Users of the site could browse through different categories, choose products they like and have them conveniently delivered to their home. On 7 November 2000 Pets. com announced that it could no longer continue as a business, and as such became the first US dot. com on the stock market to close. Pets. com folded after having burned through $300 million in less than two years.
Over 300 people lost their jobs and the site was shut down. In a statement made to the press on that same day, CEO Julie Wainwright explained the situation. ‘It is well known that this is a very, very difficult environment for business-to-consumer Internet companies,’ she said. Reasons of Failure: Perhaps the main problem was that Internet users weren’t ready to order their pet food online. After all, dog food is dog food, and there clearly weren’t enough people searching for rare pet items that they wouldn’t be able to find in their hometown.
In 1998, people will rather driving down to the shops and getting the pet food and accessories on the spot, rather than wait a few days delivery period. The strategy of offering extreme discounts clearly wasn’t working. According to Dan Janal, author of Branding the Net, the cost per customer acquisition for Pets. com was about US $80. He said ‘There’s no way you make that back when you sell a product with a paper-thin margin... ’ But its discount policy wasn’t Pets. com’s only problem.
It had also introduced free shipping – which was proving increasingly expensive for the company to sustain, especially when customers were ordering very little. One of its major mistakes was the excessive spending on marketing and advertising. During its lifetime Pets. com spent more than $70 million on marketing and an average of $400 to acquire each new customer (Bucholtz, 2000). Pets. com advertised more heavily than any other online pet e-tailer. Pets. com spent too much money on building awareness, and too little time questioning whether its Web site was a viable business in the long term. 3. Tesco in Japan Japan is the smallest of Tesco's 13 international businesses, consisting of 129 stores in greater Tokyo and making less than ? 500m in annual sales, according to analysts' estimates. According to Guardian News (August 31, 2011) noted that Tesco has decided to sell its Japanese business after eight years there. On June 18, 2012 Tesco sell half its operations in the country to Japanese retailer Aeon Corp. for a nominal sum, the first of a two-stage exit. The two companies will form a joint venture, with Tesco investing some 0 million pounds (($63 million) to finance further fund restructuring. After that, Tesco will have no further financial exposure to the Japanese business. Reasons of Failure: •Lackluster economic growth In the almost decade-long period (it entered in 2003 through acquisition of local player C Two-Network) it was operating in the market, the retailer never seemed able to gain scale and traction in a notoriously difficult retail sector. In 2011, Tesco Japan made trading losses of ? 35m. •Wrong partner In Japan, C Two-Network at the time of acquisition had 78 stores and annual revenues of less than $0. 5 bn.
By any stretch of the imagination it was not a major player in the Japanese retail sector. Plus, some of its stores required plenty of investment. •Tough competition Tesco’s competitors had been operating before the entry of Tesco and had built strong market dominance. Launching Tesco Express seemed a logical move given the existing store portfolio and the format’s success elsewhere. However, it faced stiff competition from local c-store giants such as 7-Eleven, LAWSON, FamilyMart and Ministop. In addition, these players have also expanded into residential price-focused supermarkets - LAWSON STORE 100.
Beside this, rivals such as Seven & I and AEON have really invested in improving their own ranges in recent years. ? 4. Harley Davidson Harley Davidson (H-D), the American motorcycle manufacturer has a loyal brand following not only in the U. S. but also in many countries across the globe. It also introduced a range of accessories to match the bike. A chain of retail shops sold H-D branded merchandise like T-shirts, jackets, caps, gloves, helmets key chains, socks, ornaments etc. Reasons of failure: A brand over-extension In the 1990s, it extended the brand too far and moves into inappropriate categories.
The company introduced products like ties, infant clothes, wine coolers, aftershave and perfumes. Even the loyal fans did not like the idea, as it did not resonate with the tough brand identity. However, Perfumes and wine coolers were eroding the mystery of the H-D brand. After strong criticism from the loyal customers, the company pulled of many inappropriate products. H-D had learnt a branding lesson. More products did not mean more revenue and overextending the brand meant a short-term focus. The company has now admitted its mistake, and stopped producing perfumes and other inappropriate products. . Pan Am Pan American World Airways was one of the most famous brands of airline on the planet in the 1980s. Pan American World Airways known as Pan Am was the principal and largest international air carrier in the United States from 1927 until it ceased operations on December 4, 1991. Reason of failure: •Tragedy – terrorist attack In 1988, disaster struck. A Pan Am plane (flight 103) on route from London to New York disappeared from radar somewhere above Scotland. Later it emerged that a bomb had gone off in the cargo area, causing aircraft to break in two.
In total, 270 people were killed, including 11 on the ground. This horrible nature of the tragedy make Pan Am name was tarnished and could never recover. Despite the company’s constant promises of commitment to increasing its airline’s security, the public was simply not willing to fly with Pan Am due to decline in confidence. ? 6. Kellogg’s in India Kellogg offered Corn Flakes, Wheat flakes, Basmati rice flakes (ready to eat cereals) in India. Despite offering good quality and being supported by the technical, managerial and financial resources of its patent, Kellogg’s product failed in the Indian market.
In April 1995, a 25% decline in sales happened in India. Reasons of failure: •Over confidence and ignorance of cultural aspects Kellogg’s believed that it is going to introduce the new breakfast products, heavily on the quality of crispy flakes. But pouring hot milk on the flakes made them soggy. Also Kellogg in its advertising campaigns hinted that the Indian breakfast was not nutrition and that Indian breakfast was not good for health. This deeply hurt the sentiments of the home maker. Once the home maker’s ego was hurt they psychologically turned themselves against the concept of corn flake based breakfast. Lack of understanding Indian consumer’s behavior and habits India is a country that has a history that comprises of traditional practices, which also include the regular and long followed eating habits. Kellogg’s failure was the fact that the taste of its products did not suit Indian breakfast habit. •Premium pricing policy Another reason for the low demand was deemed to be the premium pricing adopted by the company. The prices of its products were too much than the nearest competitors like Mohan’s Cornflakes. ? Analysis on Successful Company 7. Starbucks in China
Howard Schultz, the CEO of Starbucks announced that China will become its largest market outside the United States. It has opened over 500 outlets in the country, which are more profitable per outlet than in the U. S. China will soon become the biggest market outside the United States for Starbucks. The keys to Starbucks were to: •Create products tailored to China’s unique cultural tastes Instead of trying to force onto the market the same products that work in the U. S, Starbucks developed flavors (e. g. green tea-flavored coffee drinks) that appeal to local tastes.
Rather than pushing take-out orders, which account for the majority of American sales, Starbucks adapted to local consumer wants and promoted dine-in service. •Position its brand as “aspirational” to allow higher product pricing. The average coffee sold in China is far more expensive than in the U. S. Carrying a Starbucks cup is seen as a status symbol, a way to demonstrate sophistication and the capability to afford a personal luxury for the up-and-coming middle class in China. Starbuck's high pricing strategy of specialty drinks allows it to have its Chinese outlets be more profitable per store in China despite the lower sales volume.
Overall in Asia, its operating margins are 34. 6% in 2011 versus 21. 8% in the United States. •Differentiate itself from its competitors Starbucks build-in spacious, comfortable air-conditioned or heated stores attracting professionals for business meetings. Starbucks former strategy was centred in offering a high quality product to a narrow consumer segment (coffee lovers). By offering high quality, these lead customers to have a lower sensitiveness on price, opportunity for higher margins, and an increase of customer loyalty. ? 8. Subway The main reason for their success is they are going with the right trends.
Since people now are more concern on healthy lifestyle, food with less calories and more nutritional food. Subway constant expansion has turned us from choosing McDonald to ‘Eat Fresh’ value meal. At the end of 2010, Subway had 33,749 restaurants worldwide, in comparison to McDonald’s which had 32,737, the BBC reports. A major promoter of the Subway brand, and a huge boost to the company’s image, has been Jared Fogel, the young man who decided to go on a diet that simply consisted of Subway sandwiches. He was hundreds of pounds overweight, and successfully lost this weight on his Subway diet.
Subway achieved its rapid growth, in part, by opening outlets in non-traditional locations around the world. It had very strategic in planning its locations. These include a car showroom in California, an appliance store in Brazil, a ferry terminal in Seattle, a riverboat in Germany, a zoo in Taiwan, a Goodwill store in South Carolina, a high school in Detroit and even a church in New York, according to the Wall Street Journal. The Subway Restaurants are pretty small; this mean their cost are very low and can fit basically anywhere. Another great idea Subway had was to introduce the 5 dollar foot long.
As money becomes tighter and tighter, consumers didn’t want to waste money on lunch. For 5 dollars, you can get a decent amount of their subs. The nice, round price that can be paid with one bill has led to a song and tons of sales. 9. Blackberry in Indonesia Compared to all countries in Southeast Asia, Indonesia does have the largest number of BlackBerry users. The BlackBerry came to Indonesia in 2004, when Research In Motion (RIM) formed a partnership with local telecommunications company PT Indosat. There are about three million BlackBerry subscribers in Indonesia. Atika Shubert , 2009). Blackberry discovers the habits of the users in Indonesia. Indonesians love to use their phones to type and chat. People from all walks of life here like to form online communities and share information, especially on their BBM profiles which is ideal for this type of social engagement. So they come out with the phone that with keyboards and touch screen function. The iPhone's touch screen has less appeal in this respect. Another reason is price. Blackberry phones cost about $500 when sold new, compared to an iPhone that costs around $900.
But if bought on Indonesia's "gray market" -- in order words, smuggled in tax free -- then a BlackBerry can be purchased for around $300. That caters not just to Indonesia's high-end businessmen but also to the country's growing and fashion-conscious middle class. (Atika Shubert , 2009). Another reason is accessibility. Indonesia's Internet infrastructure is expensive and not always reliable. Getting a home broadband connection can cost as much as $100 a month. For many Indonesians, it's easier, and cheaper, to get a web-enabled phone. (Atika Shubert , 2009). 10. Tesco in South Korea
Tesco had been evolving itself, adjusting to the local market. It even change the name itself from Tesco to Home plus. When grocery chain Tesco wanted to expand their market share in South Korea without increasing the number of stores. They came up with a brilliant idea. Due to the people in South Korea work long hours and less leisure time. Also increase populations possess smart phones. They thought of an efficient way to sell their products. The Korean subsidiary Home Plus put up billboards in subway stations with their range of products, accompanied by QR, or Quick Response codes.
All people had to do now is scan the QR codes with their cell phone and the groceries were delivered to their doorsteps. The South Korean market remains Tesco’s largest international business with sales of ? 4. 5bn and profits of almost ? 300m. (ReWiring Businees, 2011). According to Tesco’s Business Review in Asia, their Home plus concept is delivering remarkable results with sales growth of 33% and profits went up to over 50% in South Korea. They otherwise continue to make good progression with establishing a strong brand in Asian markets. List of references
Atika Shubert (December 28, 2009). CNN tech: BlackBerry boom in Indonesia. Available from the world web: http://articles. cnn. com/2009-12-28/tech/indonesia. blackberry_1_blackberry-phones-iphone-mobile-phone? _s=PM:TECH Brand Failure (November 14, 2006). Internet and new technology failures: Pets. com. Available from the world web: http://brandfailures. blogspot. com/2006/11/internet-and-new-technology-failures. html Casestudyinc. com (Mar 12, 2012). A brand extension mistake by Harley Davidson . Available from the world web: http://www. casestudyinc. om/harley-davidson-brand-extension-failure Gray, Paul (December 23, 2009). Pets. com – A Classic Example of Product Development Failure. Available from the world web: http://www. brainmates. com. au/brainrants/pets-com-%E2%80%93-a-classic-example-of-product-development-failure Merced, Michael J. De La (January 19, 2012). New York Times: Eastman Kodak Files for Bankruptcy. Available from the world web: http://dealbook. nytimes. com/2012/01/19/eastman-kodak-files-for-bankruptcy/ ReWiring Business (July 4, 2011). Tesco goes virtual again – Application of few success factors in South Korean retail business.
Available from the world web: http://www. rewiringbusiness. co. uk/tesco-goes-virtual-again-%E2%80%93-application-of-few-success-factors-in-south-korean-retail-business/ Mui, Chunka (January 19, 2012). How Kodak Failed. Available from the world web: http://www. forbes. com/sites/chunkamui/2012/01/18/how-kodak-failed/3/ USA Today ( Feb 10, 2012). Rein, Shaun, CNBC. com Contributor: Why Starbucks succeeds in China and others haven't. Available from the world web: http://www. usatoday. com/money/industries/food/story/2012-02-12/cnbc-starbucks-secrets-of-china-success/53040820/1
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