Choose one of the ‘Bad Decisions' below for the main focus of the discussion
Bad Decisions
1. In 1977, the senior execs at 20th Century Fox made an astonishingly short-sighted decision. They signed over all product merchandising rights for any and all Star Wars films to George Lucas - in exchange for a mere $20,000 cut in Lucas' studio paycheck. The combined revenue from merchandising is estimated to have exceeded three billion dollars, and continues to grow annually, making it the most lucrative deal ever struck between an individual and a corporate studio in entertainment history.
2. In 1962, the Beatles auditioned at the London office of Decca Records. The executive in charge of talent rejected them: he thought they sounded too much like a currently popular group called The Shadows (who?), and he told Brian Epstein, their manager, "We don't like your boys' sound. Groups are out; four-piece groups with guitars particularly are finished." Well over 2 billion Beatles albums have since sold worldwide.
3. In 1876, William Orten was President of Western Union WU +0.47%, which had a monopoly on the most advanced communications technology available, the telegraph. Orten was offered the patent on a new invention, the telephone, for $100,000 (worth about $2M in current dollars). He considered the whole idea ridiculous, and wrote directly to Alexander Graham Bell, saying, "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?" Two years later, after the telephone began to take off, Orten realized the magnitude of his mistake, and spent years (unsuccessfully) challenging Bell's patents.
4. The Eastman Kodak company developed the first digital camera in 1975, then proceeded to sit on it (and the core technology for the cell phone, as well). They decided not to develop it because they were afraid it would cannibalize their film business (at one point they had a 90% share of the US film market.)
5. In the early '80s, Fuji entered the US film marketplace with lower-priced film and supplies, but Kodak management believed that US consumers would never abandon their homegrown brand. In 1984, Kodak passed on the chance to be the official film of the 1984 Los Angeles Olympics. Fuji won the rights, which gave them the strong foothold they needed to catalyze their growth in the US marketplace. Kodak never fully recovered from these and other poor decisions; in 2012 the company filed for Chapter 11 bankruptcy.
6. In 1981 Amblin Productions called the Mars Company and offered a simple cross-promotional opportunity: How about if we use M&Ms in our new film, giving you free publicity, and in return, you can promote our film in your packaging? The advertising and marketing folks at Mars said "No." The film was ET the Extra-Terrestrial, and the rest is history. Reeses Pieces, the not-nearly-as-well-known M&M competitor, saw sales jump 65% in the months after the film was released featuring their product.
7. In 2000, Gerald Levin, the chairman of Time Warner, was so confident in the deal he had made to merge with America Online, that he decided to forego placing a collar on the transaction. A collar enables the seller-in this case Time Warner- to revisit the terms of the transaction if the buyer's stock falls below a certain price. Almost as soon as the merger was announced, and before it was completed, the Internet bubble burst and AOL shares plunged 50%. Without a collar, Time Warner wouldn't be able to renegotiate the deal. Time Warner execs urged Levin to re-think the deal, but he didn't. The rest is history, and Time Warner shareholders are still paying for his stubbornness.
Include:
• Brief statement of decision
• Reasons for the bad decision
• Most likely causes of the bad decision
• Discussion of suggested STRATEGIES that might have prevented the bad decision
• At least 2 ALA-styled references on a second page.