Blockbuster

Introduction

This research paper gives a detailed coverage of Blockbuster Company, a renowned player in the entertainment industry. Of special interest during the survey will be an analysis of the company’s management style and its impact on the performance of the organization. The synthesis will therefore explore management pitfalls that led to the collapse of the company plus some of recovery strategies, which have been adopted to regain the company’s status in the entertainment market.

Company overview

Blockbuster is an American company, specializing in the entertainment industry by providing rental services for video games and home videos. Initially, these services were offered through rental shops, which were principally franchised and under ownership.

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Due to the changing demand and technology, Blockbuster has continuously improved its service delivery and introduced new products like delivery of DVDs through customer emails, streaming of videos that are highly demanded in the market and use of kiosks (Blockbuster Corporate, 2011).

Based on its performance and trends, the company attained its peak in 2009, when it had a total of one thousand seven hundred stores in the United States with branches in seventeen countries around the world. The company’s head office is in McKinney, Texas. Due to stiff competition in the market, Blockbuster has been hit by countless financial crises that have led to severe revenue losses.

This led to the company’s decision to declare the firm bankrupt in September 2010, resulting into an auction that saw Dish Network, win the acquisition at a cost of $233 (Blockbuster Corporate, 2011). Following the auction, the company operates as a subsidiary under Dish Network ownership.

Blockbuster management

There is no doubt that management is a key factor that determines the success of any business organization. Good management allows a firm to align its strategies with goals and objectives for better performance (Rue & Byars, 2008). This segment discusses some of the management styles and principles, which have shaped the performance of Blockbuster Company throughout its history. It is therefore important to mention that the section will highlight negative and positive management styles that have impacted the organization.

With its headquarters in Texas, the company has a stable customer base in the United States of almost forty eight million. In 2002, Blockbuster realized annual revenue of $5.5 billion, with more than 80% of it being generated from America. Importantly, the company was acquired by Viacom in 1994, controlling its voting rights and equity.

Like many other companies in the business world, Blockbusters has witnessed disappointments and failures throughout its business timeline. For instance, Cox enterprise sold more than eighty stores, which belonged to Blockbuster in 1991.

This had direct impact on the performance of the company as it struggled with low prices of its shares, which was 14% below the initial value. The defection of the company’s biggest franchise partner was a source of alarm within Blockbuster’s management. While reacting to the defection, Cox’s chief executive officer expressed his disappointment, noting that the company had made a serious mistake by considering joint ventures with Blockbuster.

As mentioned above, the departure by Cox had detrimental effects on the progress of the organization even though it rose to become a leading provider of DVDs, video games and videos. It can therefore be deduced that the failure was as a result of mistakes, which had been made by the company’s management before recovery strategies were put in place.

To achieve its desired strength, the company implemented a series of overhauls. Additionally, Blockbuster was concerned with establishing and nurturing strong relationships with its customers through sourcing of specialized customer care services from other companies like Acxiom, which played a crucial role in 2003.

Through Acxiom’s input, Blockbuster was able to develop a stable customer relationship management system that would augment the company’s interaction with its customers by proper utilization of available information.

This approach further gave Blockbusters an upper hand in analyzing, mining relevant data and for the marketing department to improve its services through a redefined communication procedure (Rue & Byars, 2008). It was considered as one of the best management decision made, which led to the exponential growth of the company in the United States and in other parts of the world.

Another positive management practice witnessed at Blockbuster was its ability to focus on neutralizing competition threats within the market environment. This was based on the fact that the company realized appealing results despite the fact that video rental business is highly prone to constant changes due to technological advancements being made in the world (Pantes, 2010).

The management’s idea to open over two hundred stores annually was a remarkable strategy and a sales driver for the company in its late 90s. In fact, some observers had projected a saturation state in the American market if the expansion strategy was to be maintained.

As mentioned above, opening of more business stores highly favored the success of Blockbuster. Additionally, this approach aimed at protecting existing units from being cannibalized. Through this expansion of customer base, the company was able to utilize demand for DVDs, which was growing in the market.

This strategy was initiated by John Antioco, while serving as the company’s chief executive officer. During the company’s management crisis time in 1997, John Antioco served as the company’s chairman, CEO and president simultaneously (Pantes, 2010). Nevertheless, it was observed that Blockbuster was extremely concerned with business expansion without considering its corresponding cash flow and the need to improve the efficiency in service delivery.

The acquisition of the company’s 80% equity by Viacom also jeopardized the ability of Blockbuster to make independent decisions since the management was accountable to the buyer. In understanding the management trend and performance of Blockbuster, it is essential to note that the company has experienced inconsistent results, attributed to the management’s ability to establish business plans, strategies and diversification techniques.

From the above analysis, it is evident that something was wrong with the management of Blockbuster. For instance, the company’s leadership failed to notice the presence of a superior technology that would guarantee the organization’s success (Jonas, 2010). On the contrary, the management was overwhelmed by the internal growth of the company at the expense of appreciating opportunities, which presented themselves.

A good example is John Antioco who rejected the idea of partnering with Netflix after he was approached by the company. Instead, John Antioco failed to embrace the idea, arguing that it was aimed at killing the future of Blockbuster. As a result, John Antioco and his management were unable to incorporate new ideas, which were to address the needs of customers and grasp a wide range of opportunities that were present in the market at the moment (Jonas, 2010).

According to some analysts, Blockbuster’s bankruptcy was as a result of poor management strategies. For instance, the company’s leadership defined its activities in a narrow manner that exposed the firm to a financial crisis (Bodey, 2009). By defining its products with simple words and statements, Blockbusters could not convince consumers exhaustively. Consequently, customers had to find satisfaction from other competitors within the industry.

By being insensitive to several innovative ways of connecting with its customers, the company created a loophole for Netflix and other players to exploit direct consumer linkage through the internet and emails (Bodey, 2009). This is mainly because new players in any market always explore areas, which may have been ignored by existing companies. It follows that Blockbuster’s narrow definition limited its ability to gain a competitive advantage that was necessary in stabilizing its revenue.

Furthermore, the company did not invest in communication tactics, which was necessary in denoting the expected value of a given brand for customers. Communication acts as a determinant for customers’ selection over business competitors in a given market.

To make matters worse, the management ignored to include a value promise on the company’s website, creating a gap between the expectations of customers and what they perceived as the company’s capability (Make it a Blockbuster night, 2007). All these shortcomings within the management contributed towards the company’s dwindling performance and the inability to keep pace in a competitive business world.

Following the poor performance of Blockbuster, which led to its bankruptcy, the company has been seen in a recovery mode, with the new management remaining determined to revive the organization’s lost reputation. The firm was acquired in 2010 by Dish Network, a TV operator in the United States (Bodey, 2009).

Since then, the leadership of Dish Network has adopted new strategies, aimed at re-establishing the brand of Blockbuster in the entertainment industry. Among these strategies and new management models was the launch of free in-store memberships, which was to be applicable for ninety days from the time the idea was initiated. Additionally, Dish Network introduced satellite-membership, efforts that were aimed at reassuring customers and winning their confidence (Gruenwedel, 2011).

Blockbuster has adopted workforce and execution management strategy. In a 2011 interview, Blockbuster’s new president admitted that there was still demand for physical media, despite the advancement in technology and the gradual shift to digital media.

This was also based on a wide range of advantages attached to physical media like the quality of Blue-ray discs and the use of DVDs in cars, which made the technology more acceptable (Make it a Blockbuster night, 2007). Additionally, Dish Network believed that kiosks were more user-friendly and offered unique terms of allowing customers to gather with families and friends.

In order to win the confidence of Blockbuster customers, Dish Network has embarked on reminding the public on their commitment towards nurturing the iconic legacy of Blockbuster. To achieve this target, the management focused on establishing new and strong relationships with its customers, giving free emails to new customers and rolling back prices for most of its products in stores distributed around the world.

Moreover, the new management has invested in advertisements to inform its customers about the products available at their nearest video stores. In other words, Blockbuster management is determined to eliminate loopholes, which exposed the company to the wrath of its opponents (Gruenwedel, 2011). Of importance is its focus of customer relationships and exploitation of business opportunities.

Conclusion

From the above analysis, it is evident that management plays a pivotal role in determining the performance of a company. It is therefore important for the leadership to have workable strategies, which augment the realization of set goals of objectives.

References

Blockbuster Corporate. (2011). Retrieved from http://blockbuster.mwnewsroom.com/Company-Overview

Bodey, R. (2009). Blockbuster Analysis. Retrieved from http://voices.yahoo.com/blockbuster-analysis-3761808.html?cat=3

Gruenwedel, E. (2011). Six Questions: Blockbuster LLC President Michael Kelly. Retrieved from http://www.homemediamagazine.com/blockbuster/six-questions-blockbuster-llc-president-michael-kelly-24316

Jonas, I. (2010). Analysis: Blockbuster bankruptcy no surprise to landlords. Retrieved from http://www.reuters.com/article/2010/09/23/us-blockbuster-landlords-idUSTRE68M5NN20100923

Make it a Blockbuster night. (2007). Retrieved from http://judypopov.tripod.com/Blockbuster.pdf

Pantes, K. (2010). Why Blockbuster failed and World Class will win. Retrieved from http://www.plantescompany.com/blog/business-model-strategy-framework/why-blockbuster-failed-and-world-class-will-win/

Rue, L. W., & Byars, L. (2008). Management skills and application. New York, NY: McGraw-Hill Irwin.

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