“Success and failure are two sides of the same coin.” “Failure is not the opposite of success. It’s a part of success.” Though we may agree that these idioms are overused and are used mostly in commiseration, they certainly do hold some degree of truth.
One has to bear all competition, failure, criticism- in order to survive in the market. It is not the way a company is ruined that people remember, but the way the company faced failure and came back from the brink of defeat is remembered for years and years.
Here are five major famous companies in the world that were once on the verge of bankruptcy but bounced back much stronger.
From the inception of a revolutionary vision to change the way people viewed computers to its subsequent failure to presently being a billion-dollar company, Apple’s journey is a roller coaster ride that has inspired millions. After forcing Steve Jobs out in 1985 due to his questionable leadership style and a power struggle between him and CEO John Scully, Apple went through a drastic period of stagnation till 1997, where the company was severely lacking in vision and execution of its various disjointed projects. Microsoft had caught up by the mid-1990s and served as a very tough competition to Apple that was almost as powerful as Apple but with cheaper services. Steve Jobs returned to the company in 1997 to resurrect it from failure. Immediate action was imperative. Steve Jobs made some controversial but extremely important decisions that made Apple rise from ashes like the phoenix. One major decision was to stop Newton’s production altogether, which has already proved to be a failed project and was just sucking millions and millions of money out of the company. The second major decision was a partnership with Microsoft that rescued Apple by investing 150 million dollars. It was a five-year contract, and Microsoft also updated a Mac version of Microsoft Office. In return, Apple made Internet Explorer the default browser for Mac.
In August 1998, Apple launched the iMac that contributed immensely to jumpstarting Apple’s popularity in the market. Apple turned its focus to making its products more attractive and appealing to its customers. The iMacs came in fancy desktop designs with vibrant colors, which were quite unique for that time. In 1999 the sales grew by 3.2%, and profits doubled to 601 million dollars with almost a 94% increase from the previous year. Though its 2001 launch of the Apple iPod cemented its position in the music industry, it was iTunes that placed Apple far more ahead of anyone. It was compact, stylish, and simple to use technology that catered to the common man’s desire to listen to music on a portable device. It provided music subscription services at a much cheaper rate, which helped major labels like Universal and Warner fight piracy. Steve Jobs, in the later years, kept the company growing by coming up with innovative concepts. Steve Jobs switched to using Intel Core Duo chip technology in MacBook Pro and iMac, making the systems perform faster. In 2006 it surpassed Dell’s market cap. Apple’s launch of the iPhone in 2007, its release of the Apple Store in 2008 for iPad and iPod touch revolutionized the tech industry by introducing features that no other company had attempted before. Its popularity was evident when Apple became the third-largest mobile-handset supplier in the world in 2008. In August 2018, Apple made history by becoming the first publicly traded U.S. company valued at One Trillion dollars. In August 2020, the company again broke records by becoming the first U.S. company to reach a two trillion dollar market cap.
- GENERAL MOTORS
General Motors in 2009 fell into bankruptcy. The major issue with General Motors was its failure to understand the importance of cost-cutting when the sales slowed down. According to the Harvard Business Review of 2009, Karen Berman and Joe Knight penned down some reasons to what led to this situation:
- The sales of General Motors were going down as they could not understand the customers’ needs.
- The company did not innovate much, primarily because of its large size.
- It was too bureaucratic and unable to adjust to the changes in the market.
- Its dealer network was too large.
- General Motors sold 51% of the interests of GMAC (General Motors Acceptance Corporation) in 2006 to Cerberus Capital Management.
General Motors filed for a government-backed Chapter 11 reorganization on 8th June 2009. They were saved at the last minute by the Governments of the United States and Canada by investing $61 bn owning 73% of the total stocks. General Motors rebranded itself to appeal to its customers more. Due to various factors like cost-cutting and improved sales in new and emerging markets like Brazil and China, the company was able to sustain itself in the market. The company saw a rise of 23% in sales after the factories were reopened post the worst phase of the global financial crisis. However, it still struggled to make profits in Europe. In 2010, General Motors broke free from Government control and was reborn again. Presently, Mary Barra, Mark Reuss, and Dan Ammann are the top three stakeholders of the company. In 2021, General Motors was the 22nd largest company by revenue in U.S. Fortune 500 rankings and had its presence in 6 continents. The significant contribution to its success is its improvement in the quality of vehicles produced and its focus and investment in environment-friendly and prescient innovations that give its customers affordable electric cars, starters, airbags, etc. Its new models like Chevrolet Equinox, the Cadillac SRX, and the Buick LaCrosse proved to be a hit in the market.
- ALLY FINANCIAL
Ally Financial, formally known as GMAC inc., is a bank holding company that provides financial services, including car finance, online banking, corporate lending, etc. But before it became one of the largest car finance companies in the U.S., it went through a rough patch. The company had previously suffered due to the collapse of housing and auto markets amidst the global recession. In 2008, GMAC transformed into a bank holding company and received an investment of 17.2 billion dollars from the United States Department of treasury with the condition that General Motors and Cerberus would both reduce their stakes in GMAC. In May 2009, GMAC Bank was rebranded as Ally Bank, and in 2010, GMAC was rebranded as Ally Financial after the company accepted the U.S. Government bailout in the hope to improve its image in public and attract new customers.
“We are launching a new brand with a new approach of treating customers with total transparency.”
- Al de Molina (GMAC Chief Executive)
Therefore Ally Finance was just like GMAC, except it is no longer a part of General Motors, although GM is still Ally’s biggest customer.
In 2012, Ally Financial’s Residential Capital filed for Chapter 11 bankruptcy when it still owed 12 billion dollars to the government. The company shifted its focus from riskier mortgage ventures and started to focus on auto loans and direct banking. In 2014, the government sold its last stocks in the company, making a profit of 2.4 billion dollars. In the same year, the company became a public company via an initial public offering. It focused on cost-cutting, selling assets and lifted some regulations to start making a profit. In 2016, Ally Bank re-entered the mortgage business with its direct-to-customer service feature called Ally Home and later in 2019 partnered with Better.com to start a digital mortgage platform. In 2020, Ally Financial emerged with a market capitalization of 5.9 billion dollars.
- MARVEL ENTERTAINMENT
Imagining a life without the Marvel Cinematic Universe seems impossible now, but there was a time when the company struggled to even survive. In 1996, Marvel was on the verge of bankruptcy, majorly due to the rapid collapse of the comic book industry in the 1990s. To make matters worse, Marvel was caught in intense legal battles and was unable to pay back its creditors- it even owed 1.7 million dollars to Disney. Though with the bankruptcy filed, they were able to clear all their previous debts, but their outdated thinking and ideas like “Marvel Mania”- Marvel-themed restaurants and Marvel Interactive CD-ROMs took them nowhere. If that was not enough, Marvel had decided to auction off film rights to some of its most famous characters, like Hulk was sold to Paramount, Spiderman to Sony and Daredevil, the X-Men, and Fantastic Four to 21st Century Fox. Everything that could go wrong went wrong for the company.
In 2003, David Maisel, a talent agent of Endeavor, came up with a radical idea: instead of giving away the best of their work to other studios and earning meager amounts out of it, why not build their own production house? This idea was realized in 2005 when the Marvel board came into a seven-year-old financial deal with Merrill Lynch and launched Marvel studios. But it was not an easy decision as they literally had to ‘give their everything’ If Marvel’s plan failed, the bank would own 10 of the properties of Marvel- Captain America, The Avengers, Nick Fury, Black Panther, Ant-Man, Cloak and Dagger, Doctor Strange, Hawkeye, Power Pack, and Shang-Chi. Iron Man seemed to be the best option to introduce the audience to its new project, but since it was not part of the deal, they could not use the finance money. But they were so convinced with the character that they decided to fund the film with their own money. The risk was huge, but the success of the movie turned out to be even bigger.
Later, seeing the success of Iron Man, Disney bought Marvel Entertainment for 4 billion dollars in 2009, which gave Marvel an even bigger platform and opportunity to create a multi-superhero, multi-firm crossover project that would live in our hearts for generations.
As of August 2021, the Marvel Cinematic Universe series was the highest-grossing film franchise with total worldwide box office revenue of 22.89 billion U.S. Dollars.
Till the 2010s, BlackBerry reigned its dominance in the smartphone market and was the unanimous choice of most people. But today, BlackBerry has lost all its significance, and it’s BlackBerry Messenger technology that was considered revolutionary seems to have faded in the dark. It went from nearly 20% of the global smartphone market share at its peak to nowhere in a few years. Sadly, BlackBerry fell victim to its own stubbornness, its lack of innovation, and farsightedness. It failed to see iPhone as its biggest competitor. Even with Apple’s launch of the iPhone with a phone, e-mail, internet facilities in the same device, the founder of BlackBerry, Mike Lazaridis, seemed to show no concern. He believed that Apple’s innovation was not ideal as the networks would not carry all these features. Even though Mike was right with his initial analysis, Apple controlled these problems and in no time dominated the industry. Soon, other companies like HTC hit the market following the same Apple model, increasing the competition for BlackBerry. iPhone provided a bigger screen, better U.I., better camera, better multimedia playback, etc. Although BlackBerry tried its best to stay in the competition by changing all its physical features, it remained loyal to its outdated and faulty operating system. They later switched from its Java-based OS to a new O.S. built-in language called Qi and X. Still, this strategy did not work as developers were not much attracted to making applications for this O.S. and instead focussed on Android that catered to a much larger audience. To stay in the competition, they again changed their O.S… They switched to Android O.S. but, in this process, lost its originality.
Even though BlackBerry is seemingly out of the picture, the company has not given up hope and is still fighting to come back to the competition again. In 2020, the company announced that it would launch a 5G phone in 2021 when many smartphones have not adopted this technology. With proper infrastructure, it could give BlackBerry a great headstart over other companies. OnwardMobility has also hinted that it might keep the smartphone’s QWERTY physical keyboard, thus keeping its originality and signature design intact.
by Aashna Verma