What Everyone Can Learn From 5 of the Biggest Company Failures in History
When a company's brand, product or service becomes essential or familiar to your life, it can be easy to imagine that company will remain in business forever. Yet businesses rise and fall over the years, with millions and billions of dollars changing hands as executives try to stay current on what consumers want at any given time.
Building and maintaining a brand is no small feat, and many companies spend millions just to stay relevant. While many big businesses have the safety net to experiment and fail from time to time, others -- even some of the giant corporations that seem invincible -- meet with surprising loss.
GOBankingRates looked at five of the biggest business mistakes that cost companies a lot of money at best or put them out of business at worst. Here's what everyone can learn from them about handling money in their own lives.
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Quaker Oats Loses Billions on Snapple
The Los Angeles Times referred to Quaker Oats' acquisition of Snapple as "one of the worst flops in corporate-merger history." After purchasing the drink company for a whopping $1.7 billion in 1994, Quaker continued to lose money until it was forced to sell Snapple off, 27 months later, for a paltry $300 million, losing $1.4 billion.
The Takeaway
The colossal loss suffered by Quaker on its ill-fated acquisition of Snapple serves as a cautionary tale that underscores the importance of conducting due diligence before entering into large investments. Hasty decisions without proper research can lead to disaster.
There are risks associated with any business venture, and it's vital to make informed decisions based on sound data rather than succumbing to the impulse to pursue something new and shiny.
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Blockbuster Misses the Boat on Netflix
Once, Blockbuster was the going concern when it came to video rentals, but the entertainment giant made a fatal decision: In 2000, it passed on an opportunity to purchase Netflix for $50 million, according to NPR's Marketplace.
Since then, Netflix has become a major player in the streaming entertainment market, producing its own unique content, and Blockbuster is just a memory, having declared bankruptcy in 2010. Netflix, meanwhile, is worth over $30 billion.
The Takeaway
The story of Blockbuster and Netflix is a classic example of how failing to adapt to a changing landscape can spell financial doom. It's always important to stay flexible and open-minded when it comes to investing.
Instead of sticking to outdated or declining industries, try to look for opportunities to diversify your portfolio and take advantage of emerging areas for growth and new technologies. By doing so, you can avoid missing out on potential growth.
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Excite Loses Out on Google
In 1999, before "Google" was a verb, the second most popular search engine was Excite. One of Google's founders, Larry Page, pitched a sale of Google to Excite for a mere $750,000 if the company would agree to replace its tech with Google search tech, according to Inc.com. Excite did not bite and was eventually bought by Ask.com.
Today, Ask.com corners less than a 2% share of the search market, while Google has more than 60% of the U.S. search market share. Google's assets are valued at more than $130 billion, making its worth 173,333 times more than what Excite would have paid for it.
The Takeaway
This is a stunning example of how passing on a great deal can cost a fortune in the long run. Do your homework on financial opportunities and learn to recognize value when you see it.
Instead of dismissing an offer or an idea that seems too good to be true, keep an open mind and do some analysis to evaluate the potential as well as the risks.
Motorola Fails To Stay Relevant
Before Apple ever dreamed the iPhone into being, the go-to mobile phone company was Motorola, according to The Conversation. It introduced its first Android phones in the early 1990s and cornered the market well into the early 2000s.
By the time the iPhone hit the market in 2007, the company was already falling behind, but in 2011, it decided to split the company in two, selling part of it to Google, which would be the death knell of the company. By 2014, after Google sold its share of Motorola to Lenovo, the company took its final breaths.
The Takeaway
Failing to stay relevant and innovative can lead to the downfall of a nest egg as well as a business. It's important to be proactive and creative when it comes to managing your money. Instead of relying on old strategies that may become obsolete, you should always be looking for ways to stay knowledgeable and explore new options and markets.
Lego Nears Bankruptcy
Though it seems that the popular building block toy company Lego, founded in 1932, has never gone out of style, it actually came perilously close to bankruptcy between 2003 and 2004, according to the blog FireStartToys. Trying to offer a wide variety of new block kits, the company spent a lot of money producing new molds and also opened three new theme parks in England, Germany and the U.S.
By 2003, it was $800 million in debt. It took on a new CEO in 2004, however, and came back from the brink in the end.
The Takeaway
Trying to do too much can backfire and jeopardize your financial stability. If you find yourself tempted by a big purchase, it may be important to focus instead on your long-term financial goals, like savings, paying off debt or planning a vacation.
The last thing you want to do is take on unnecessary debt. Instead of splurging on unnecessary purchases, you should stick to your plans and budget wisely.
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Laura Beck contributed to the reporting for this article.
This article originally appeared on GOBankingRates.com: What Everyone Can Learn From 5 of the Biggest Company Failures in History
