When you’re coming up with an idea for a successful startup, you’ll need some qualities like perseverance, patience and hard work. And when it comes to sustaining your success, several factors will play a role like successful management and continuous analysis of the market along with development and innovation. These are considered some of the most important factors to build and sustain a successful business. But for some companies, lacking some of these traits might have unfortunate consequences, like companies bankrupt!
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In the entrepreneurship realm, we always emphasize the imperative of having a special department for crisis management within each institution, we also emphasize the importance of having a department for research and development. If you want to ensure the continuity of your business’s success during the competitive and digital era that we live in, you need to start working hard now. You’ll also need to learn from the mistakes that these global companies made, as they were once at the top of the game and they’re absent from the scene now!
Example of companies that went bankrupt
The reliance of startups and small businesses on innovation and development has a competitive force in the market. It passes the continuously rising and falling indicator. However, there are many international companies that managed to capture a large share of the global market and their owners won billions, then suddenly we found them out of competition and declared bankruptcy. And among these global companies:
Kodak
Kodak specialized in the production of old cameras and films. Where Kodak has been at the forefront of the camera industry and has achieved a proven history of major successes in the camera industry for more than 133 years.
Kodak was founded in 1892 in New York by its founder, George Eastman and was specialized in the manufacture of photographic equipment. This company acquired nearly 90% of the American market. I believe that it has become the leading company in the world of photography and cameras. Until it fell into a grave error!
Kodak froze the digital camera project after it had invented it in 1976, for fear that these cameras would devour sales of photography films. Then, their shares continued to decline until 2004. Until their share price reached one US dollar.
The company figured out many solutions to save itself from bankruptcy. One of these solutions was to sell their products at a reduced price, which would enable them to achieve global reach again. Unfortunately, her attempt failed. And despite her 133-year history of success, Kodak declared bankruptcy in 2012.
Now, what are the real reasons behind Kodak’s bankruptcy?
There are several factors that helped bankrupt Kodak, including:
- When the digital cameras appeared, Kodak took no action to study this development. Rather, she preferred to compete differently by increasing the size of her ads while lowering the prices of her products. She did not even consider the idea of studying the development happening in the market.
- Kodak’s confidence in its product as well as its overconfidence in its customers led them to neglecting the strong competition in the market.
Economic analysts unanimously agreed that Kodak had to acquire competing companies, whether by buying or merging with them. So that it could develop its products and compete strongly. This behavior is currently seen on the global market through many models, such as the acquisition of Uber to Careem.
Careem emerged with the same idea of the well-known Uber company, but in a different and sophisticated manner, which made it acquire a large share of the Arab market and compete strongly with Uber. The tough competition forced Uber to buy Careem. Indeed, Careem has joined Uber's management, and now the entire market for Uber and Careem is under one management.
Nokia
Nokia was one of the promising mobile phone manufacturers in the world. It also produced mobile applications and software for computers. Its profit amounted to about $13 billion annually. Although it was a pioneer in this field and the first to provide the world with smartphones, it was unable to maintain that leadership and did not seek to develop or change, so the company lost everything and it became an example of the companies bankrupt.
Nokia was founded by Friedrich Edistam in 1865. At the beginning, it was working in the paper and timber industry. But after the end of World War II, it started in the field of electronics and communications. Nokia produced the first mobile phone in the late 1980s. This was the most prosperous period for the Nokia Telecommunications Division, as its mobile phones became famous everywhere and swept the whole world. Even with the strong competition from Motorola, which dominated the US market, Nokia was the preferred brand for users in the rest of the world.
Unfortunately, Nokia has started to collapse in the last ten years. This is when Apple announced the emergence of the iPhone for the first time. The iPhone's system was completely different from the Nokia and Motorola systems, and Nokia failed in making a phone comparable to the iPhone in its capabilities and did not address the problems that had appeared in its phones.
Then, Samsung appeared and entered the smartphone industry, which confused Nokia a lot. As the number of competitors increased, Samsung with the largest share in the market became an alternative to Nokia. Years later, Nokia woke up from its coma and tried to restructure its management in an attempt to keep pace with the market, but it did not achieve results due to the Nokia share price dropping to less than $4 per share.
To give a better perspective, what are the reasons behind the company’s bankruptcy?
This question did not baffle many economists. Many economics colleges have dedicated lectures to study the reasons for the failure of the leading Nokia company in the smartphone world. And what they found out is Nokia did not fail because of material matters or arbitrary measures that prevented the emergence of its production. Rather, Nokia fell due to the lack of strategic vision and reliance on previous successes, as did Kodak and others.
For me, the most important thing in the failure of Nokia is the failure to keep pace with the development and modernization and study the global market for smartphones and work to amend in order to continue the competition between these giants.
Also, one of the reasons that led to its failure is the operating system, which has become competing with Android and iPhone operating systems.
Despite its late attempts, Nokia did not reach what it was hoping to revive its products with a modern camera and Windows operating system. It has not kept pace with the development in the services provided in smart devices by competitors. Its store apps were not available as required for consumers around the world.
Therefore, the foreseen result did happen, Nokia disappeared from the scene due to fierce competition between Samsung, Apple, and other brands.
In the end, the CEO of Nokia stated that the company stopped its activity and that he sold it to Microsoft and closed it completely.
How can you avoid the mistakes that made global companies bankrupt?
The important question that you need to ask yourself now is: How can I learn from the mistakes that made global companies bankrupt and avoid repeating them?
In order to avoid falling into the same traps, you need:
- Carry out market studies: following user tendencies and conducting long-term marketing research on a permanent basis.
- Create an efficient business plan.
- Resort to innovative creative solutions to solve problems.
- Go digital or go home.
- Keep up with the new technologies.
- Put ‘crisis management plan’ into consideration.
In the end, I advise you to keep abreast of the evolving technologies and continue to learn and develop your vision. Make sure that your work and team skills in line with the developments of the global market. And for all the tools and help that you need to put your business online, GoDaddy is there for you.
