Examining a Business Failure

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Examining a Business Failure: Atarti Inc
August 2, 2010

Examining a Business Failure: Atari Inc
The world of technology continues to change for the better. One piece of technology that has made some interesting changes is video games. We’ve come from simple “plug-and-play” video games to systems with motion sensors. One of the first video game systems, the Atari, was introduced in 1972 by Nolan Bushnell, a University of Utah Engineering major. Bushnell’s idea came from working in a pinball arcade during his undergraduate studies to help pay for tuition. The Atari created a new way to play arcade games such as ping pong (or simply “Pong”), space wars, and Pac-man. He started a company with his friend and hired another engineer to develop games for the system. He installed the first version of the system in a small tavern, and public showed great interest in the video game “Pong”. Many said he stole the idea of Pong from another well known video game artist, Ralph Baer, who had patents on his system (the Magnavox Odyssey) a few years before Bushnell’s system came out. In the mid 1970s he paid Magnavox a flat amount of $700,000 for a license to use Baer’s patent. Bushnell and his partners went thru several changes to make the Atari better to keep up with and ahead of competitors. Atari finally went belly up when its manufacturers refused to produce a newer version of the system to keep up with competitors. They were even offered a deal with Nintendo to produce the label under the Atari name, but they declined (Alex, 2008). Although the Atari, Inc was not as large organizations such as Tyco International, or Chrysler, specific organizational behavior theories could have predicted or explained the company’s failure. Bushnell’s first mistake applies to business law: obtaining of a patent to prove his ideas were his, and to keep people from stealing his ideas or prevent him from being accused of stealing someone else’s ideas. Organizational behavior...
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