Blockbuster case study
... Blockbuster was founded in Dallas, Texas and seemed to be an instant success. ... Wayne Huizenga, a former waste management colleague, purchased 33 percent of Blockbuster with the goal of making it a national industry leader. ... • Blockbuster developed a “cluster strategy” when selecting store locations. ... This allowed Blockbuster to focus on each individual market before moving on to the next. • In order to reinforce Blockbuster’s family-orientated claim, Blockbuster Kids was introduced. ... This gave Blockbuster the ability to indirectly gain more business in the family sector. • Youth-Restricted Viewing was another program implemented by Blockbuster. ... • Blockbuster’s top management was made up of experienced executives, most of which came straight from McDonalds. ... • In 1986, Blockbuster opened an extensive distribution center in Dallas with the goals of improving inventory management and providing customers with a fast checkout. The distribution center allowed Blockbuster to store up to 200,000 tapes at one time. ... • Blockbuster’s large buying power gave them a competitive advantage in cassette prices. ... • When expanding globally, Blockbuster established an international home-video division to oversee the project. ... • In 1990, Blockbuster sponsored its first bowl game in an attempt to gain support. This was soon followed by the opening of the first Blockbuster Amphitheater in Phoenix Arizona. ... • Blockbuster formed a revenue-sharing agreement with a large movie studio where in the studio would supply them with tapes at cost. This allowed Blockbuster to purchase 800% more of a single title then share the revenues 50-50 with the movie studio, benefiting both parties. • A strategic alliance with DIRECTTV allowed Blockbuster to tap into the satellite TV market and focus more on home entertainment. ... Blockbuster became more efficient which allowed them to focus more on customer service. • Blockbuster had success in brand awareness through a number of ventures which led to strong brand loyalty from their customers. ... • Game Rush allowed Blockbuster to offer unlimited video game rentals for a monthly fee. This gave Blockbuster an edge when competing in the video game industry. ... • Although franchising was seen as the best way to achieve rapid growth and gain market share, it forced Blockbuster to forgo total profits from those stores. • Blockbuster chose incorrectly to enter into the music retail business with little knowledge of the industry. ... • Its distribution system was becoming inefficient for the size Blockbuster had grown to. This caused Blockbuster’s overhead cost to be high. • Blockbuster’s biggest asset was also their biggest expense, video tapes. ... Opportunities • Blockbuster in a member of a constantly changing industry with new advances in technology around every corner. ... • Blockbuster has the capabilities to expand on a global level and efficiently compete in different regions. By utilizing joint ventures and acquisitions, Blockbuster could grow to the size of that in America overseas. ... Threats • With technology constantly becoming more advanced, Blockbuster must “do or decline” meaning they have keep up with the times or prepare to be overtaken. • Large movie studio such as Disney and MGM are attempting increase sales by going directly to the customer and bypass the need for video-rental companies such as Blockbuster as middle men. • With so many alternatives available to consumers such as pay-per-view, on-demand, and home delivery, Blockbuster faces the challenge of competing in entirely new markets. • With new discount superstores entering the market Blockbuster is forced to lower prices or sacrifice profits. ... The two market segments Blockbuster chose to focus on were adults from age eighteen to forty-nine and children from age six to twelve. ... Having such a wide array of customers, Blockbuster wanted to make it convenient for everyone to rent and return tapes at less restrictive times. ... Putting customers first and giving them the convenience they deserve has made Blockbuster a power house of video rental stores. ... Companies such as Sony, Time Warner, Universal, MGM, and Paramount were announcing plans to bypass middlemen like Blockbuster and HBO and offer their own pay-per-view service directly to interested customers. ... This new technology had become a threat to Blockbuster. The fact that these major companies would now offer the service straight to their customers would terminate the goal of Antioco that Blockbuster should provide this pivotal role.