Many large businesses have made bad strategic decisions at some point. For example, Microsoft was slow to realise the opportunities created by the internet whilst Marks and Spencer had to close many of its stores it had opened abroad. What do you think are the main reasons for big businesses making bad decisions? Justify your answer with reference to Microsoft and Marks and Spencer

and/or other businesses that you know. PLAN

Intro: All businesses will implement bad strategic decisions at some point. It would be hard to find a business who have had a smooth sailing throughout their lifetime. There are businesses who have come to light more recently about their bad strategic decisions e.g., Tesco. (downfall in profit, new leader, the cuts in 43 stores, ‘bullying suppliers) Others who have made bad decisions but pulled through them well(Apple- selling U2’s album to every phone however have seen a massive increase in profits) Many reasons for big businesses making bad decisions; being too optimistic with profits, not enough MR, poor leadership, poor culture, un ethical)

Point 1: Not enough MR- Tesco moving into America; Fresh & Easy, spent millions on MR but had to pull out as they did not research how Americans shopped.

M&S pulled out of Europe because they were not ‘modern’ enough. Didn’t do extensive MR. Downfall in profits- loss of stores and loss of jobs. Bad CSR for the shop in Europe.

MR is fundamental in any businesses esp when moving abroad. Without MR, a company has no chance of survival. However, Coca cola thought when they changed coke they had done enough but they pulled through it well and handles it well therefore it was not too big of a loss.

Point 2: Poor leadership – Tesco Dave Lewis (got out while he could) Before Tesco went into Turmoil. Was he the reason? He was aware of Tesco ‘bullying’ suppliers, why didn’t he stop it? Did he know about their accounting antics?

- Netflix id another example of a business who suffered die to poor leadership. Netflix had the potential to take over and revolutionize the video industry, and in fact that’s exactly what it did when it took down Blockbuster. Nobody saw RedBox coming or the popularity of paid online streaming like Hulu Plus – including Netflix – until it was too late.

- Blackberry has a history of nepotism, which often leads to poor leadership. The company also promotes people from within based on tenure rather than on skills and potential to actually lead. When competence isn’t the primary reason for a promotion, a company will surely sink.

Point 3: Poor culture and Unethical behaviour- Poor decisions regarding these can completely break a company. If a company makes a poor decision on ethics it affects everything from their corporate image to their profits. Many UK company have made mistakes, many pull out better than others eg, Starbucks, Primark.

- “Starbucks named most unethical café in UK”, it covers everything from serving up genetically engineered growth hormone in milk in the US and a relentless union-busting campaign, to attempting to block Ethiopia’s attempts to improve the livelihoods of coffee

growers and petitioning a US federal judge to allow in evidence the past sexual history of a 16-year-old former employee when she took a case of sexual harassment to court.” Starbucks have been accused of not selling/using Fairtrade products despite advertising that they do so. This can lead to a huge fall in customer retention and loyalty ultimately leading to a fall in sales/profits.

- Primark’s disastrous factory collapse in Bangladesh which killed over 1100 workers was due to their unethical behaviour. The company were manufacturing their products in LEDC countries were the conditions were appalling. A huge mistake on Primark’s part, was fatal to many people. Primark focused more about their cost savings than the people they were putting at risk. Many companies use sweatshops to products their products.

Conclusion: Many reasons for big businesses making bad decisions- lack of MR, unethical behaviour, poor leadership. All about how the company comes back from the mistake. Can be a mixture of all of these that cause them to make a bad decision. Tesco’s recent turmoil is a perfect example of how they have made bad decisions in all different aspects of the business causing them to see a fall in profits and a closure of 43 stores.