Blockbuster Entertainment Corporation

Résumé du document

Blockbuster video is the undisputed king of the video-rental industry. The following comment made by Fran Bernstein of Merrill Lynch accurately describes Blockbuster's position. "Blockbuster stands alone in the video rental market in both size and ambition. One wonders where is the Burger King to their McDonald's?" However, this statement does not signify that Blockbuster is devoid of threats or problems. The video-rental market is almost mature now and a slow down in growth is forcing Blockbuster to reevaluate its corporate strategy.

Extraits

[...] Video-rental stores must establish a strategy to position their offering against pay-per-view. Like pay-per-view, other technological advances may arise in the future that will compete with videos. The video-rental industry must keep itself up to date on new home entertainment activities. Just as the audiocassette replaced vinyl records, there is always the possibility that a new medium for movies will replace videos. Problem Statement Considering the maturing market in the video-rental industry, how should Blockbuster adapt in order to continue success and sustain growth? [...]

[...] Blockbuster is currently the largest in the industry, standing practically alone. Further growth and acquisitions in the domestic market may be overkill. As the market is quickly approaching maturation, there may not be enough consumers to support these new stores. Blockbuster must consider the changing environment in which they are operating, maybe by altering their current plan for growth. Also, if Blockbuster continues to grow, it could begin competing with its own stores. Despite the negative implementations of current market characteristics, Blockbuster may have room to grow. [...]

[...] Blockbuster could advertise this promotion, as evening of entertainment, delivered to your door”. More strength could be gained by joining forces with the distributors of electronic equipment like Best Buy. Consequently, it could be seen that, strategic alliances combine the competencies of two companies to form a better marketing tool, and Blockbuster could benefit from such an arrangement. The third alternative is a market development strategy by international expansion. This is an opportunity that is important to be considered. This alternative would be very costly to implement for many reasons. [...]

[...] Weakness Although Blockbuster has been very successful, there are areas of weakness. There has been a problem regarding customer satisfaction despite the extensive efforts of the company to cater to the customer's needs. On busy days, it seems to be unlikely that the popular new-releases will be in stock. The rental rates are another cause for customer concern. Currently, Blockbuster rents its videos for more than the industry average of two dollars per night for a film. Blockbuster's gangbuster acquisition style of expansion may also be a cause for concern. [...]

[...] Blockbuster could offer rental coupons with the purchase of VCRs and other entertainment products. Finally, entering into a partnership with a food delivery service like Pizza Hut could provide the possibility of offering a bundled product of pizza and a video delivered to your house. # 3 International Expansion Market Development Blockbuster may consider penetrating other major foreign markets such as Japan to attain an opportunity for growth. Europe and Mexico are also possible regions for expansion. Blockbuster could either penetrate with a strategic alliance with a company in the foreign country or enter by itself; both options need to be considered. [...]