In this weeks blog I had to watch a documentary covered by Evan Davis who uncovers the inside stories of mistakes that triggered some of the business world’s most spectacular falls and impacts. It shows plans and ideas that seemed good at the time for these business's turn into catastrophes for their company and either failed on a permanent basis or just for a period of time. In this blog I will address the problems made by these businesses and discuss where they went wrong with their decisions and strategy.
Firstly, the second largest sweet (candy) and chocolate company in the world - Cadbury, who employ 70,000 people in 50 countries, made a huge mistake which massively backfired when they decided to set up a scheme to make children fit and healthy. They introduced sport coupons with every chocolate bar meaning schools could buy sporting equipment and provide training sessions for the children to keep active and in sport helping reduce obesity rates. But they in fact persuaded them to eat more sweets and chocolate and with problems such as the current obesity rates this did not sit well with the general public. Consumers are much more likely to buy your product and engage if your business has a positive reputation which mean for Cadbury a loss and decline in sales.
Its extremely difficult for Cadbury to promote their products in a healthy way as they specialise in products with high content of sugar and fat. I believe a way of overcoming this is too advise their customers on the intake of sugar and fat and advise how much you should eat per week for example, as customer will hopefully stick to these guidelines and obesity will be reduced.
It was clear to customers that Cadburys were doing this scheme to benefit themselves and not the customer, which lead to harsh criticism and bad reports. This resulted in customers not being fooled into buying more chocolate juts to be given sporting equipment. This promotion ended the following winter and the 'get active' promotion was no longer. A benefit to take from this situation for the future in terms of Cadbury's is too think will this actually benefit the customer because if it doesn't we will be hugely effected by harsh criticism from customers which will be blown out of proportion by the media massively effecting the credibility of our company as a whole.
My personal opinion on this situation is that Cadburys did not expect such bad publicity and were naïve to think they could pull the wool over their customers eyes. This is a simple business mistake of making a decision and not expect the decision to go as planned and think about the 'What if's?'
Another case in this documentary was the company 'boo.com', they were a European company founded in 1998 and operating out of a London head office, which was founded by three Swedish entrepreneurs, Ernst Malmsten, Kajsa Leander and Patrik Hedelin. Within 18 month Boo.com went from concept to catastrophe, going through nearly £100 million worth of investment. The company's vision was for it to become the worlds first online global sports retail site.
Their proposal to investors was too become the largest working retail site once their website was uploaded within 6 months and investors could cash in there shares on the stock exchange market once they became a PLC. They waned to offer brand new features never seen before such as spinning images with new on the market technology. They didn't secure a private contract to offer all these amazing features such as changing and offering different currency for different countries as this had never been done before, so they decided to do it themselves. They had evaluations of projection between $300-$400 million without one customer visiting their site yet.
As pressure mounted they were rushed into launching there site still with not being 100% ready and was instantly recognised as a company who weren't ready. The list of fixes to complete were increasing. Unfortunately the stock market collapsed 8 months on and the company had to go into liquation.
From this I realise it makes a lot more sense for entrepreneurs and start up business to make plenty small steps to give you time and organise how you will fund your next step, this helps minimize risk instead of taking one massive launch and being to far deep into a list of problems. I believe if Boo.com were to spend longer on getting investors and making sure everything is right before launching there website they could still be here today as they tried to do to much at once and did not have a stable enough business plan.
The end of boo.com came on May 18th 2000, when investor funds could not be raised to meet the spiralling marketing, technology and wage bills.
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