Article: Wrong Assumptions Create Lousy Results – Sony, McDonald’s, Radio Shack, Sears

HamburgerSony, McDonald’s, Radio Shack and Sears are very well-known names to most consumers.  At one time, it seemed as though almost every American household owned a Sony Walkman or Trinitron t.v. despite their premium prices.  McDonald’s seemed to personify “fast food” and had legions of kids clamoring for their next Happy Meal.  Radio Shack was the go-to place for consumer electronics and Sears, with its iconic catalog, created the idea of shopping  without setting foot in a store.

Now, however, all four of these companies are facing severe challenges.  Sony has lost money for every quarter but one over the last four years. In May, McDonald’s stores that had been open at least 13 months reported their seventh consecutive month of falling revenues and in July, the worst sales decline in over a decade.  Radio Shack is perilously close to bankruptcy and Sears hasn’t posted a profit in three years.  What went wrong?

The short answer, according to Adam Hartung’s online article in Forbes, is that markets shift, things change, and trends matter.  What used to be a phenomenal business idea can become irrelevant and a once-thriving company can become obsolete in the face of new technologies and competitors.  Relying on operational improvements and cost-cutting can prove useless when the assumptions that form the very foundation of the company are no longer correct.  Mr. Hartung asks the critical question:  “Are you changing your assumptions, and then your business, to compete in the future?”  Read the entire article here.



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