Borders, a large US retail bookstore chain (650 stores), which employs approximately 20,000 people, filed for bankruptcy this week. The request for bankruptcy protection came after it became clear that the company has a liquidity problem. It did not have the capital resources needed to move forward with its business strategy plan which was designed to reposition the company in the long term.
Borders was founded in 1979 and quickly grew its business becoming a large chain that offers used and new books and music. During the 90’ the company’s growth stopped and the company was moving downhill ever since. There were several main reasons for their deterioration:
- Borders was badly lagging behind its competitors in establishing a viable online book and recently e-book business.
- Shake up at the top management corporate structure contributed to lack of planning, leadership and keeping the company on the right track.
- High spending on opening stores abroad – as a strategy to restore growth
- Industry and market Changes – it is vital to understand the threats to your business, try to limit them as possible and have a plan to make sure they don’t impact your organization.
- Frequent top executive turnover – may have a bad impact on; decision making, planning and taking the right steps in leading the company to delivering results, and staying vital and relevant.