Blockbuster Case
Background
Blockbuster is an American based company in the business of home video rental services established in 1985. In the early years the company entered the market with a bang which was predominated by single stores. The Blockbuster business model was better than its competitors because of the following points:
• Large number of copies and broad selection of movies
• Conveniently located and highly visible stores
• Superior customer service
• Optimal pricing and lower costs due to self distribution
Every organization goes through following life-cycle stages: Start-up, Growth, Maturity and Decline. The Blockbuster had the highest number of stores in America and had the largest customer share. It had followed rapid expansion policy by opening stores in nine other countries. But with the advent of new technologies like video laser disks, cable television, internet and mature market the company needs to figure out its future growth plan. The company has reached the maturity stage and slowly moving towards the decline stage. The company needs to plan strategically, include flexibility of response and maintain entrepreneurial qualities.
Problem Definition
• The market for video rentals is not expanding. The company need to retain its present customer base and find new avenues.
• The company is facing a threat from the emergence of new technologies and be flexible and innovative to tackle this.
• Business model needs to be revamped because there is a stiff competition in pricing.
Objective
To find new avenues of growth and include flexibility in business model to sustain profitability.
Alternatives
A) Blockbuster can bring a change in its business model to be competitive in pricing
B) It can foray into new businesses like video gaming and audio cassettes to increase its customer base and enter into new laser disks business by gauging the movie watching behaviour
C) Instead of targeting European and other developed countries it can start its
Blockbuster is an American based company in the business of home video rental services established in 1985. In the early years the company entered the market with a bang which was predominated by single stores. The Blockbuster business model was better than its competitors because of the following points:
• Large number of copies and broad selection of movies
• Conveniently located and highly visible stores
• Superior customer service
• Optimal pricing and lower costs due to self distribution
Every organization goes through following life-cycle stages: Start-up, Growth, Maturity and Decline. The Blockbuster had the highest number of stores in America and had the largest customer share. It had followed rapid expansion policy by opening stores in nine other countries. But with the advent of new technologies like video laser disks, cable television, internet and mature market the company needs to figure out its future growth plan. The company has reached the maturity stage and slowly moving towards the decline stage. The company needs to plan strategically, include flexibility of response and maintain entrepreneurial qualities.
Problem Definition
• The market for video rentals is not expanding. The company need to retain its present customer base and find new avenues.
• The company is facing a threat from the emergence of new technologies and be flexible and innovative to tackle this.
• Business model needs to be revamped because there is a stiff competition in pricing.
Objective
To find new avenues of growth and include flexibility in business model to sustain profitability.
Alternatives
A) Blockbuster can bring a change in its business model to be competitive in pricing
B) It can foray into new businesses like video gaming and audio cassettes to increase its customer base and enter into new laser disks business by gauging the movie watching behaviour
C) Instead of targeting European and other developed countries it can start its