HR & Management
10 worst business decisions ever made
7 min read
12 February 2014
Entrepreneurs and CEOs are faced with making important decisions everyday. While some can be successful, other decisions may have grave repercussions and can lead to financial loss.
1. Quaker Oats buys Snapple
In the 90s, Quaker Oat Company was an incredibly profitable business with their dry foodstuff becoming increasingly popular. They soon branched out and bought the Gatorade sports drink franchise. Under the spell of success, they later acquired bottled tea maker Snapple for £900m.
Unfortunately for Quaker, the beverage was unlike any of their other products: it required constant refrigeration, leaving them with a distribution nightmare. The failing business was bought by Triarc for a sixth of the initial price.
2. Western Union says ‘No’ to the phone
In 1876 Western Union had a monopoly on the telegraph, the most advanced communication technology at the time. William Orten, then President of W.U, was offered the patent of a new invention, the telephone, for £1m in current pounds.
Orten turned down the offer, writing to Alexander Bell: “After careful consideration of your invention, while it is a very interesting novelty, we have come to the conclusion that it has no commercial possibilities… What use could this company make of an electrical toy?”
3. Coca-Cola introduces new formula
In 1985, Coke had a 100-year-old history and was the world’s leading soft drink. To celebrate its centenary, the company decided to introduce the ‘New Coke’, a reformulation of the original soft drink.
The decision angered Coke lovers and sales rapidly dropped by a staggering 20 per cent as Pepsi Co started taking the lead in the market. To placate the masses, Coca-Cola Classic was soon released to reinvigorate sales.
4. Excite refuses to buy Google for $1m
Former Excite CEO, George Bell, had the opportunity to buy Google in 1999 for £600,000. He decided to pass on the offer, thinking it would be a bad investment.
15 years later, Google is now the number one search engine with an estimated market value of over £90bn.
5. Software guru misses out on becoming Bill Gates
In 1980, IBM was looking for a company that could supply their brand new invention, the PC, with an operating system. IBM wanted to collaborate with software savvy Gary Kildall. But Kildall decided to skip the meeting and pursue his favourite activity: flying his plane.
IBM was angered and immediately turned to Bill Gates and Microsoft, which is now worth over £150bn.
6. Time Warner gets over-confident
In 2000, the chairman of Time Warner, Gerald Levin, secured a deal to merge with America Online (AOL). Levin was so confident in the deal that he decided not to place a collar on the transaction, which would have enabled Time Warner to revisit its terms if AOL’s stock would drop bellow a certain price.
Time Warner executives urged Levin to re-think the deal, but he decided not to. Before the transaction was completed, AOL shares dropped by 50 per cent. To this day, Time Warner is still paying for the chairman’s mistake.
7. British Airways gets rebranded
In 1997 the airline company decided to implement a massive change in their airplane design. They chose to remove the trademark union jack from the aircraft tail fins and replace it with an ethnically diverse branding.
Then chief executive, Bob Ayling, said: “Perhaps we need to lose some of our old-fashioned Britishness and take on board some of the new British traits.”
The airline received an impressive number of complaints from unhappy passengers and crew who thought the union flag reinforced a core ‘goal of Britishness’ in a modern way. Two years later, the airline stopped painting the planes and in 2001, after Ayling was replaced, the tails fins were painted back to the original blue, white and red colours.
8. Ross Perot passes on Microsoft
23-year-old Bill Gates offered to sell Microsoft in 1979 to businessman and head of Perot’s Electronic Data Systems, Ross Perot. The asking price? A reasonable $6 to $15m.
PEDS, which was then worth about £600m was looking to invest in a small computer company, but refused to pay Gates’ asking price. Perot later told the Seattle Times: “ This is one of the biggest business mistakes I’ve ever made.”
9. Ford launches the Edsel
In the mid 1950s, Ford automobiles were as successful as they could get and the Thunderbird was a real hit with customers. But Ford wanted to create a new model to compete with General Motors’ Oldsmobile, and so, the Edsel was born.
Named after Henry Ford’s son, there was an extreme hype surrounding its launch, including a television special called ‘The Edsel Show’. But the car proved to be one of the biggest fails in the history of automobiles. The style was too similar to that of old Ford models, the price was confusing and the size was too large.
Ford lost around $350m (1950s money) before seizing the production of the model in 1959.
10. Apple fires Steve Jobs
Although Jobs is the one to have launched the Apple company, in 1985 he was fired from his position as CEO. Jobs then went on to start other majorly successful companies, such as Pixar and NeXt, which was later acquired by Apple, bringing back Jobs to his former company.
Although Apple ‘s story had a happy ending, before Jobs took over the company again in the 1990s Apple was only a few weeks from bankruptcy.