The world of business is not for the faint-hearted and as much as you should understand what makes a success, you should understand what makes a failure.
A wise man once explained that those who fail to learn from history are doomed to repeat it. So, in this article, we're going to look at a few colossal business blunders; the kind of commercial failures you can learn from and avoid at all costs.
Avoid making these business blunders and you'll stand a real chance of commercial success (ignore them at your peril)...
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Motorola and Iridium
Cost of business blunder: An eye-watering $8 billion.
Backed by a whopping $6 billion from Motorola, satellite telephone provider Iridium launched its service in late 2008. Within just nine months, the company filed for class 1 bankruptcy. Why? Well, because of annoying system flaws creating a poor user experience coupled with the rise of mobile and cellular networks. The lesson here? Always check what's happening in your market and make sure your product is 100% ready for launch.
Cost of blunder: A sickeningly sizable $93 billion.
Many know the ill-fated and sour tale of Enron. The now infamous Houston-based energy company created offshore entities to hide massive losses - dishonest manoeuvres that even a careful review of its opaque financial statements found difficult to detect. As a result, market analysts turned on the business in 2001, and the company was forced to file for bankruptcy a year before it shut up shop, dragging its name further through the dirt and costing a host of jobs in the process. The lesson here? Run your business efficiently, always be transparent and never bite off more than you can chew.
Time Warner Share Holders
Cost of Blunder: An off the charts $196 billion.
In February 2001, AOL was valued at $108 billion and decided to merge with the media giant Time-Warner for $164 billion in an all-stock deal. AOL took 55% of the new, combined company and Time-Warner held 45%. Later that year came a tech wreck and stocks dwindled; this situation was worsened by competition from the likes of Yahoo! and Google. As a result, stocks hit an all-time low, and Time-Warner felt the brunt, making the company far less valuable as a result. The lesson here? Trust your instincts and never get into bed with someone unless you've truly weighed up the pros, cons, benefits and risks.
Cost of blunder: A weighty 2.4 billion Euros.
This news just came in today and it's huge. Search engine pioneer Google has just been fined a rather hefty $2.4 billion by the EU as the powers in Brussels claims the tech giant abused market dominance by manipulating its search engine results to favour its own comparison shopping service. Many believe this manipulation has stopped the European consumer from benefitting in terms of choice and possible product discounts while taking away from other regional vendors and e-commerce businesses. This hit is not only bad for Google's wallet but detrimental to its reputation; it will, of course, survive but no one wants to be slapped with this level of fine or negative publicity. The lesson? Adhere to regulations and again, always be transparent.
Wow, these business blunders cost no end of money and of course, will have caused these organisations no end of inconvenience. Avoid these business blunders and build your empire the right way.