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The Bigger They Are, The Harder They Fall – Why Businesses Fail?

You must have seen so many big brands that had to shut down their operations because of a start-up. With the COVID-19 pandemic and adoption of disruptive business models, brand pivoting and flexibility is important. A lot of businesses are putting up “closed” signs and you could be next in line. In this blog, I […]

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Business Strategy

You must have seen so many big brands that had to shut down their operations because of a start-up. With the COVID-19 pandemic and adoption of disruptive business models, brand pivoting and flexibility is important. A lot of businesses are putting up “closed” signs and you could be next in line.

In this blog, I am going to talk about a few reasons why largely established brands sometimes fail despite having better products and a competitive price. I will use references to the global instances to explain it better. Check if you are also repeating any of these mistakes and change course.

So, let us begin.

Here are the top 5 reasons that I think are the causes of the fall of big brands. Read, analyse, and learn.

Failing to innovate

Everyone knows “Blockbuster” was the largest company in the USA when it came to VHS rental business. Netflix came up with easy rental policies, better customer service, and competitive price. Despite that, Netflix was nowhere near Blockbuster in terms of revenue. When Netflix founder Reed Hastings offered to sell Netflix to Blockbuster, they refused. Blockbuster grew too confident of their customer loyalty and denied to make changes to their business model. Netflix took over when DVD players became cheaper and more people started buying them. In the year 2010, Netflix’s income was $161mm and Blockbuster filed for bankruptcy.

Most businesses deny innovating. Maybe they are too confident of the customer’s loyalty or they misjudge the customer psychology.

Trying to fight the wind

Nokia was a household name. They had more than 50% market share. But when Steve Jobs unveiled the first-ever iPhone in 2007, the world changed. Slowly, Android also started pushing their limits. Apple and Android allowed developers to create mobile applications easily and more and more people started switching to these platforms for simpler user experience. In their thawed attempts to make a comeback, Nokia tried to fight the wind. Instead of building an iOS-like platform or partnering with Android, Nokia went to Microsoft and launched the Lumia series.

A lot of businesses try fighting the wind, thinking that they will be able to retain their position. But when the winds of change blow too strong, these large businesses are knocked off their thrones.

Behind ahead of the curve

Eastman Kodak, in the late 2000s, was the largest photography company in the world. But in 2011, they filed for Chapter 11 bankruptcy – they didn’t go out of business but burned their reserves to stay afloat. Kodak didn’t die because they didn’t adapt. They didn’t die because Kodak didn’t embrace the changing technology. What killed Kodak was the fact that they weren’t able to turn any of their innovations into sustainable businesses. Despite inventing digital photography, they got pushed over the edge by other players in the market. You can say that Kodak was ahead of the time and people were not ready for their innovations.

This happens to a lot of businesses. Having a great product idea and pushing that into production is not enough. If the customers are not ready to accept the revolution, your attempt can destroy you.

Seeking protection when their legacy is challenged

Harley Davidson funnelled their revenue and efforts in establishing themselves as a brand which is synonymous to wilderness and ruggedness. In the US motorcycle market, Harley created a void for the commuters which were filled by Honda. They did what Harley should have done – selling motorcycles to the non-bikers. At the end, when Harley’s sales were being challenged by Honda, they sought protection from Ronald Regan, the then US president who gave HD almost exclusive access to a market segment. 40 years later, Harley Davidson is suffering from that decision and is slowly pulling out operations from other countries.

Many businesses try to seek protection and close off themselves to save their titular position. This is a bad strategy in the long run because other businesses push their efforts to capture the market void left unattended.

Not adopting the technology

There is a story which goes like this: In the 1980s, a group of television producers approached the management of National Geographic. NG then was one of the largest information magazine publishers with hours of research and tons of data accumulated from various sources. The group pitched NG to start a cable network which was rejected by National Geographic. The producers rented an office, talked to some investors and started the Discovery channel. The National Geographic channel came in 1997, 12 years after the birth of the Discovery channel. Though NG is second in viewership, the revenue share has a huge gap.

Most businesses make this mistake, they do not adapt to the rising technology at the time. Joining the list later on and offering the same service for a lesser price is not the solution.

Why am I telling you all this?

Because the world is changing, disruption is the key. You might get your hands on the best wholesale clearance UK collection, if you are not able to understand the customer psychology the right way, the room for growth and rise is limited. And if your checklist okayes all the above points and you want to disrupt the market with the best variety and price of goods, choose your wholesale partner wisely.

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