Second Case Fall Case Studies

Second Case Fall- 5 pages
Ocean case Study- 5 pages
Do the SWOT Analysis first, then answer the questions
Use the Format below…Exec. Summary, outline, paper, references. APA Format.
These papers are for a different person.

Blockbuster: Movie Rentals in the Digital Era

SWOT Analysis
Internal Strengths
If a strength or a weakness is ambiguous, explain the reasons that you have to classify it as
a strength or a weakness.
 Overall size of the company: Blockbuster is #1 in the industry. In the entertainment
industry size is very important. Large companies are able to get better deals from movie
studios.
 Management team is open to change. The management of the company appears to be
open to new ideas. This will allow the company to adopt to new challenges.
 Aggressive expansion and acquisition performance. The company seems willing to
expand to new areas. They have a successful record of successfully acquiring other
businesses.
 Established name and customer loyalty. The company has a very widely recognized
name. Many consumers are very loyal to Blockbuster. It is very likely that they will
purchase the company’s products if they are offered through a different format.
 Offers rentals via stores and online. This allows the company to service consumers that
prefer online rentals without abandoning the consumers that prefer the store experience.
 Strong international presence. Blockbuster has established a very strong brand equity in
many countries of the world. This is a major strength if the company wants to expand
internationally.
Internal Weaknesses
 Many format changes over its history has created consistency issues. This has resulted in
confusion among consumers. Many consumers have negative feelings towards
Blockbuster based on their past experiences.
 Lack of first mover advantage in online rentals. Most consumers do not associate the
Blockbuster name with online rentals. This may make it harder for the company to move
into new markets.
 Struggling with the success of its online business. The company does not seem to be
willing to allow the online business to grow. It still remains a “store-based” company.
This mentality inhibits the company from growing new businesses.
 Struggling with failed marketing initiatives in response to competition. It appears to be a
“reactive” company and not a “proactive” one. It does not have many innovative ideas
but it waits for the competition to introduce a new product and then it follows.
External Opportunities
As you can see these opportunities are not controlled by the company. These are
environmental trends that are favorable for the company

 Continuing growth home theater and watching movies at home. This growth ensures
growing demand for dvd and internet rentals in the future.
 Rapid advancement of broadband technology and its delivery capabilities. This
advancement in technology makes downloading movies through the internet a very
attractive possibility for consumers.
 Lack of competitive movement in the technology area
External Threats
As you can see these are external unfavorable trends. Blockbuster, may decide to take
certain actions based on these trends.
 Current and future competition (MovieLink, CinemaNow, IPTV, iTunes, Zune, etc.).
This is a very competitive market and new companies will enter this market in the near
future.
 Upcoming burn-to-DVD technology and DVR technology. These options may allow
consumers to record movies in high quality. As a result they may not want to rent
movies.
 Streaming technology and pay per view. Consumers may decide to use the new
streaming technology to watch movies, instead of going to the movie store.

Teaching Questions
1. What role has Netflix played in the development of Blockbuster’s strategic planning?
How important is Netflix to Blockbuster’s future strategic plans?
Based on the information presented in the case, Netflix has been one of the major catalysts
forcing Blockbuster to change its business practices. Until Netflix entered the industry,
Blockbuster faced no national competitors and had to compete only with regional companies.
Netflix will remain a major influencer in Blockbuster’s future strategic plans, especially if
Netflix enters the burn-to-DVD or broadband distribution markets prior to Blockbuster.
2. As an advisor to Antioco, what strategic options would you recommend for Blockbuster
as the company moves forward? In particular, how would you approach the technology
issues facing the company?
Many potential options were discussed above. With respect to technology, the simple answer is
that Blockbuster must evolve along with technology or face extinction. If Blockbuster cannot
acquire technology competency on its own, it should create alliances with firms that can help
Blockbuster achieve its strategic objectives.
3. What value-added components could Blockbuster offer to the movie studios that might
entice them to more closely align with Blockbuster as a distribution channel?

Currently, movie studios—especially smaller studios—do not have the infrastructure to
distribute movies to the end consumer. The studios have always relied on third-party distributors
to complete this task. Through an alliance with Blockbuster, the studios would not have to make
major resource allocations for the development of distribution channels. Blockbuster has a solid
reputation and working relationship with the movie industry. Blockbuster can provide the movie
studios with key point-of-sale consumer information due to its brick-and-mortar format.
Blockbuster also has an extensive database that can be used by the movie studios for promotion
and other purposes. The major value-added component Blockbuster offers is the access to end
user and end user data.
4. In the long term, how can Blockbuster increase the value-added components of its
product offering in order to offset the inconveniences associated with its traditional brick-
and-mortar movie rental business? Will Blockbuster survive as we know it today?
Explain.
This is a very complex question and the answer is evolving daily. Blockbuster recently launched
a program where customers can rent online, and then return movies to the store in order to
expedite the shipment of the next movie. Online customers do not have to wait for the movie to
ship back to Blockbuster and be processed. Blockbuster has to continue to move into the online
arena, and should look at other companies for ideas. For example, students might recommend
that Blockbuster adopt fast-food practices such as drive-thru windows and home delivery.
If Blockbuster takes no action in terms of current technology changes, it will continue to exist for
a short time. Ultimately, physical movie distribution will be replaced by electronic delivery. To
survive as a store-based company, Blockbuster would have to focus on value-added services,
one-of-a-kind product offerings, and the loyalty of its key customers.