Boom and Bust - Page 87

C2 Proficiency · Multiple Matching · Ready for C2 Proficiency Student's Book, Macmillan

You are going to read an article about famous businesses which failed. For questions 1–10, choose from the sections (A–D). The sections may be chosen more than once.

Making money is a fickle business and in order to stand the test of time companies have to withstand such onslaughts as random world events, changes in legislation and shifts in consumer behaviour. Yet none is more liable to bring about their undoing than a failure to innovate and keep pace with their competitors. Probably the most often cited example is the sad tale of how Blockbuster, the once ubiquitous video rental store found in every town in the UK and the USA, and with countless branches worldwide, went from boom to bust in little more than a quarter of a century. Whether or not this was entirely due to the rise of online video rental and subsequently streaming services, as is frequently cited, is not cut and dried. After all, it could have reacted to the rapidly changing preferences of its customers and embraced the new technologies emerging, but instead chose not to evolve in line with its competitors.

Sometimes circumstances behind a business's success or failure are beyond anyone's control. History is littered with examples of ventures large and small that suffered at the hands of natural disasters or political events, but those that make the headlines tend to be large organisations, often household names, which have either formed part of the economic bedrock of a country for generations or are globally recognised, seemingly unbreakable corporations. And it is precisely this renown and perceived stability which means that their downfall is so shocking to the public. The classic example is Pan Am, America's iconic airline of the 1960s and a hugely lucrative business in its heyday. It prided itself on two of the cornerstones of aviation, renowned customer service and a fleet of modern aircraft. What it could not have predicted, however, was the oil crisis of the early 1970s which caused fuel costs to soar. Had it not been for the high fuel consumption of their aircraft, they may have weathered the storm, but they were forced to hike ticket prices and soon after customers responded with their feet.

Another area where companies are vulnerable to failure is in how they do what they do. Like the products and services they sell, this should be subject to scrutiny and periodic reassessment in order to be alive to the need for change as and when it arises. Kodak, the photography giant, is a prime example of complacency setting in and the results of turning a blind eye to the limitations of a specific approach. The company followed the 'razor and blades' model of selling one product at low prices with complementary products at vastly inflated prices. In their case, the cameras were the razors, and the processing of the film was the blades. As digital photography came of age, the costs of cameras and printing photos began to change but rather than adjust to the new trend, Kodak wasted a decade attempting to convince people of the superiority of analogue photography, all in vain as it finally lost the fight and filed for bankruptcy in 2012.

These days if you were to ask any adolescents or twenty somethings if they'd heard of Myspace, you'd likely be met with blank looks all round, but in the mid-2000s, it was the social media start-up on everyone's lips. It soon became a victim of its own success, sending shockwaves across the business world. Bought by a large news media corporation for over $500 million, it was touted as a master stroke of a takeover. However, it was plagued by technology issues and users found the excessive advertising overwhelming and off-putting. This lack of attention to the user experience was instrumental in its downfall, to the extent that it would never be able to regain users' trust. Surprisingly, in this case there was an even more destructive element that sealed Myspace's fate. The new owners had a distinct lack of understanding of the agile mentality needed to run a social media company and attempted to integrate it into their corporate way of doing things. As such, Myspace lost out to its competitors and soon the market was overtaken by the social media giants we know today.

refer to a number of situations beyond a company's control

highlight the role that one retail chain played in its own downfall

mention how ignoring customers can be fatal to a business

advocate for revision of the ways companies do business

highlight the pitfalls of continuing to adhere to a particular sales model

weigh up the core factors which contribute to a business's failure

mention that success can be a double-edged sword

disagree with the standard explanation for one company's failure

explain how a company's commitment to quality can inadvertently contribute to its demise

show how quickly a company can fall out of favour with consumers

Available as a free printable PDF worksheet with an optional answer key.

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