The Failure of
Focus DIY
By Enis Suvari and Ayman Bakali
What is Focus DIY?
-
-
Focus DIY was a privately owned chain of DIY store in the UK.
At its peak in 2002, it was the second-largest diy retailer in the
UK.
They provided home DIY tools and services such as: gardening
tools and wood.
Why did Focus DIY fail?
-
The company fell into debt in 2009 and it struggled to pay back
their loans.
They went into administration on the 5th of may 2011, because
nobody wanted to buy the chain as a whole.
As a result the company was put into a “wind-down process”,
during this period, the administrators sold 55 Focus stores and
warehouses to other businesses such as B&Q, Wickes and B&M
Bargains.
How could Focus DIY have
avoided failure?
-
Focus DIY could have had better cash flow management. By monitoring and
optimizing their cash inflows and outflows, they would have had better
control over the company and had a better judgment as to what debts they
should and shouldn't have taken on. Poor cash flow management and not
being able to pay back debts is a very common reason for large companies to
be forced to liquidate.
-
Another way Focus DIY could have avoided failure is by innovating more
within the company. The DIY sector is extremely competitive and in order to
keep a high market share, companies must be constantly innovating to
sustain a large customer base. Failure to do such will most likely result in
business failure as other competitors overtake.
Glossary
-
-
Failure to innovate (internal):
- loss of productivity
- reduced customer engagement
- inevitable decline in profits
Business failure:
-The end of trading for a business.
Financial failure:
-The end of trading due to mismanagement of finances.