2. What is collapse?
“Failure is not an option “, It is when the system
suddenly fails for an organization or any business leads
to a much lower level and being unable to continue or
to stay in operation.
3. Causes of collapse
InexperiencedManagementTeam.
Top management is the main player of a strong business because they make
decisions, set strategies and deciding the fate of the business well before it gets
off the ground.
NotKnowingaboutyourCompetitors.
Either if we are trying to turn around a weak business or a failing business, this
is through studying:
Competitors’ qualifications.
Competitors’ products and services.
How they add-value in each step to satisfy their customers.
Measure how are we doing if we doing more or are we lagging behind.
4. DecliningMarket.
When starting a business in such a country and a war happened so the economy falls down
so it will reflect on companies’ revenues by decreasing them so it will make losses that
makesyoudeclinesooverlongtermyouwillcollapse.
Negligence of warning signs of collapsing.
There are some signs that warning the organization that it’s going to collapse
so these sings must be taken into consideration.
these sings are:
Frequent layoffs
alarming revenue drop
the big tell-tale sign.
5. Technology
It can affect you negatively not only positively, in case of:
if the majority of your business depending on system with high technology that
collect all your data in one system that will make you need a highly secured
system to avoid breaching data which is very expensive.
if you’re not coping with new technologies in the market that will affect you
negatively.
sometimes it takes long time to be implemented.
any failure happens to the system will affect your whole business because the
departments cannot work.
6. Kodak Eastman (Background)
It was Founded in 1888 and used to be the biggest player in the photography market.
In the 1970’s Kodak was involved all technology related to photography from camera, film
technology used and printing papers.
It went bankruptcy in 2012.
In 1935 Kodak invented a film used for capturing and storing images that is called (Kodachrome)
at first this film was costly that people cannot afford but a while after Kodak made this film
more affordable for the public.
This film had differentiated them in the market and was very profitable as when someone buys a
camera he only buys it at ones and then he buys many films for the same camera.
That made Kodak obtain 85% of market share in cameras and 90% of market share in films
7. Losing the Japanese market
In 1998 Kodak hired a case towards Fujifilm to the WTO arguing that its poor
performance in the Japanese market was a direct result of unfair practices adopted by
Fujifilm.
The WTO rejected these complaints
Which resulted in decreasing its net earnings from $1.5 billion to just $5 million.
This resulted in a drastically decline in the following years and was highly reflected
on the year of 2001, When Fujifilm cameras entered the American market with a
similar product to the Kodachrome but with a relatively lower price.
8.
9. The era of digital cameras
In 2005 the digital cameras were becoming more popular in the market and people
were preferring them rather than film cameras.
Kodak didn’t focus on the digital cameras enough and didn’t give them the full
attention and enough capabilities, recourses, investment and development.
10. The decline and its reasons
Kodak did not want digital photography to cut their profits on film cameras
By this time other competitors were becoming more professional in the digital cameras
industry and beat Kodak.
Upper management in the company had become satisfied by choosing to rely on film
photography’s large profit margins, management did not display the foresight needed to
navigate the coming digital photography revolution.
They considered digital cameras as a secondary product.
In 2009 Kodak had 7.4 global market share behind Canon, Nikon, Sony, Samsung and
Panasonic.
By this time Kodak decided to enter into another market which is printer’s industry but it
also failed as there were other competitors who were more experienced and have more
knowledge in this industry.
And then in 2012 they have become officially published their bankruptcy
11.
12. Thomas cook was one of the oldest travel brands around the world.
It was very effective for 178 years with 19 million annual customers.
The company had its own airlines, cruises and hotels.
The company offered just a one-stop shopping place, by having all the
pieces of their vacations linked, from flight to hotel room to local
transport to tours even their meals.
“Don’t book it, just Thomas Cook it.”
Thomas cook
13. Thomas cook life cycle
INTRODUCTION GROWTH MATURITY DECLINE
Stage
1841-1869
1919-1992
1997-2003
2010-2019
14. Approximately 600,000 travelers around the world were trapped when Thomas
Cook closed.
The company announced that it would liquidate its assets and filed for bankruptcy.
The company had a debt of 1.7 billion pounds about $2.1 billion.
There were negotiations to obtain $250 million in emergency but it didn’t work.
Collapse stage
15. Causes of collapse
The internet:
The company didn’t cope with new technologies as others did.
The company depended mostly on physical stores and telephone assistance.
It had more than 600 stores.
Declining interest in package tours:
The market of holiday packages has gotten squeezed.
Nowadays people prefer to choose their elements by themselves not to be
attached into a certain package.
16. Operating an airline is expensive:
It has many costs: costs of running an airline, operating costs, the crew,
maintenance and other many costs.
The company get 70 % of the earnings from their cruise ships and hotels but tour
operations and airlines make up only 30 % of the earnings.
Brexit:
In May, many U.K. customers canceled their holiday plans for that summer
because of Brexit.
it was a shock to the system, that the pound lost so much of its value, which
led to many loans.
Paying bills and buying oil was in dollars.
17.
18. Payless Shoe Source is an international low priced footwear chain that
offers shoes for both genders and all ages
Established in 1956 originally in USA
The company faced bankruptcy two times, the first time was in 2017
and the second was in 2019
Payless
19. The start of the decline (the first bankruptcy)
In 2017, Payless gone bankruptcy and announced the closing of 400 stores
in the United States.
Payless joined a group of week retailers that were struggling in the market
and had no strong brand name.
It moved from bankruptcy with $400 million in loans.
The cause behind this bankruptcy was because of the port strikes that
delayed its shipments before the essential Easter holidays so they had huge
amount of obsolete inventory and excess of off-season shoes. So, they had
to sell it at a deep discounted price
20.
21. Not having a long-term strategy
Failing to retain customer which
caused their customers not to be loyal
The new organization wasn’t aligned with
specific goals and was only targeting quick
profits.
sharing week partners led them
to lose their brand name
causes
In 2019 Payless filed for bankruptcy again and
closed its e-commerce platform and all the
remaining stores in USA and Canada
Payless has about $470 million in outstanding
debt.
Payless second bankruptcy
High staff turnover rate at all levels
22. Payless bankruptcy caused 16,000 workers to unemployment
This graph shows the number of layoffs in USA and it is obvious that in 2017 and 2019 the layoffs were
higher than normal and the bankruptcy of Payless was one of the significant reasons for this increase.
23. Recommendations
There are some recommendations to make you avoid the collapsing:
Conduct frequent SWOT analysis of your business system. (strengths, weakness, opportunities
and threats).
Be aware of the warning signs from the beginning.
Monitor the changes in the market’s trends, advanced technologies and changes in customer’s
needs.
Being engaged into more than one independent business is not easy, so before taking this
decision, you’ve to make sure that your capable of doing that.
24. There are some recommendations to recover from collapsing:
Get very strong and efficient management team in order to plan for long term
not only short term.
Cooperate with strong and high performance companies to get benefit from their
market share and reputation.
Try to add-value to our service / product and introduce something unique to get
back customer’s trust and make them loyal again.
25. Conclusion
To sum up what was discussed in this research, international companies are collapsing and bankrupting for
many reasons that could be related to the management, environment, strategies or inexperience. All these
reasons could lead to the end of the firm. And in order to supplement these theories with real examples that
already occurred. And in order to investigate the causes of collapsing the international companies, real cases
should be considered and studied. So, three different cases of companies that collapsed for different reasons
have been discussed. This could help other companies to avoid going bankrupt and protect themselves. By
discussing the causes that leaded (payless, Thomas cook and Kodak) to collapse and ended with
recommendations for companies that should be considered in order not to collapse or to return after collapsing.
