Internal and External Causes of business failure
TRB x SJB
Diamond 9 Diagram
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Blue - Financial reasons for failure
Pink - Non Financial reasons for failure
Credit insurers are an obscure but vital part of any supply chain – they insure manufacturers against non-payment by retailers. Over the summer of 2008 a large proportion of Woolworths' 20 credit insurers stopped insuring its suppliers for fear that they would not be paid by the retailer. The meant that Woolworths had to pay its suppliers up front, rather than after the goods had been sold. This setback cost £200m and decimated crucial cash flow reserves.
Its problems were compounded in the summer by the surprise departure of chief executive Trevor Bish-Jones after a six-year run at the chain.
Competition from other retailers; Tesco began selling CDs and electrical goods, things got worse with the entry of Aldi into the low consumer goods market. Customers prefered to shop on the internet to gain better value. The emergance of pound stores was a final nail in the coffin.
Ranges were too broad.
Random diversity of products.
Lack in confdence in the company [shareholders selling shares at 1.35p]
The company had struggled under the weight of £385m of debt.
Recession - slow down in economic activity
Company spent 100million rejuvinating stores but it was getting them nowhere. Huge waste of money.
Too many stores 807, new cheif executive believed they needed 350
The deteriorating state of the economy was worrying the chain's credit insurers.
