This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

5 Biggest Business Mistakes

Stocks in this article: BBI NFLX SHLD BGP BP

NEW YORK ( TheStreet) -- Blockbuster's (BBI) bankruptcy filing and search for a new CEO are the latest examples of how companies are struggling to find effective leaders and how some boards of directors wait too long to make needed changes.

Opportunities for improving the bottom line are being lost and value left on the table because the upper echelons of management and boards of directors are either unwilling or not insightful enough to make tough, timely decisions. As a result, companies in a wide variety of industries are suffering from the effects of five critical business mistakes, including:

1. Failing to recognize and respond to a changing environment: Blockbuster sat on its hands as Netflix (NFLX - Get Report), Redbox and cable companies made aggressive inroads into the movie rental business. Business experts and consumers have long realized that technology changes would require business-model changes for this industry. How did Blockbuster's board and the CEO miss this message?

2. Not paying adequate attention to customer experience: In this regard, Toys"R"Us (Toys"R"Us, Babies"R"Us) has two key problems: First, its main stores provide an overwhelming array of merchandise, making selection difficult for people who are in a hurry and may not know what they want. The retailer may be trying to address this with "pop-up" stores, but that doesn't address the second, systemic issue: it can be difficult to find things. Complaints about the baby registry, for one, persist. It may be broken or, if working, may not show where items can be found or whether they are in stock. Even the item name on the registry may be different from the name on the item, itself. Departmental signage is often either lacking or hard to see. Even salespeople sometimes have trouble locating products. The results? Lost sales because customers' time is wasted and excessive labor costs because employees must answer questions that improved software and greater attention to store layout and signage could handle.

3. Failing to develop a cost-effective, customer-centric infrastructure: Sears' (SHLD - Get Report) hodge-podge of trained service technicians, substandard software systems, and inadequate training of customer service reps are diluting its brand. For example, complaints abound about the system for obtaining and installing replacement parts for appliances. Such issues suggest problems with inventory systems and, like Toys"R"Us, the outcome is almost surely lost sales and excess personnel costs.

4. Using inadequate hiring practices: Since 2005, Borders (BGP) has had four CEOs. Its board either failed to understand the skills required, to recognize which candidate had those skills, or to give the CEO authority to make needed changes. Faced with unprecedented industry upheaval, Borders lost valuable time and advantage.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs