When something is being produced by a company, it's essential they research into the current market to see what they will be competing against by producing and marketing said product. First they they must ensure that they will make back what they had to spent to work and produce their product or service otherwise the exercise proves pointless and then they need to see what profit will be made from mass producing.
Whilst some companies are known to have lost money on their business venture,s, the majority of them regain their costs and further themselves to gain the money back.
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An example of a failed business venture would be News Corp buying out Myspace.
Although they will have had to do extensive research into the market to decide whether it was a worthwhile investment, it sadly did not end in a profitable way.
News Corp bought Myspace in 2005 for $580 million and for a a few years it remained quite strong, racking up many more hits than Facebook. However in April 2008, Facebook were far outranking Myspace as it became a universal website, no longer aimed solely at college students.
Myspace began to rapidly decline, members leaving the site as quick as they joined and the majority or suggestions for this were including the fact it was 'stuck to a portal strategy' of building an audience around the concept of entertainment and music. It contrasted to it's competitors of Facebook and Twitter as they were launching new features that were helping improving the experience of social networking media.
In 2011, News Corp sold the website to Specific Media and pop-singer/actor Justin Timberlake for a reported $35 million, a major loss of $545 million.
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