An Organizational Failure - Case Study of Blockbuster
An Organizational Failure: Blockbuster
Rana Fawad
1. Describe and discuss how the organization’s culture facilitated the failure. Philips (2011) believes that success or failure of any great company depends on “Events, internal and external” (p. 3). Blockbuster also appears to be a victim of certain events at internal as well as external level. Based in McKinney, Texas, Blockbuster and founded in 1985 (Blockbuster Corporate, 2012) and it ushered in a new era as far as video rental retail industry was concerned. The company gave birth to video rental places that had significant amount of movies under one roof (the first store had 8,000 movies) and were not associated with bad movies or bad neighborhoods (Greenberg, 2008). Initially, the company’s strategy was to expand aggressively and the leadership defined Blockbuster’s vision to become McDonald’s of the video rental business. Referring to the company leadership’s ambitious goals, Greenberg writes: The Blockbuster strategy was simple – pump as much money as possible into buying local and regional chains while keeping centralized control over the look and feel of the individual stores. By the VSDA convention the following year, Blockbuster had acquired two other chains and its more than 250 stores dotted the country. At the convention, Huizenga’s marketing executive Tom Gruber outlined vision for the future of the company, and it was expansive. Gruber had spent eighteen years working for McDonald’s before joining Blockbuster, and both he and Huizenga were explicit: Blockbuster wanted to be the McDonald’s of home video (the comparison was so deliberate that at one trade show presentation, huge photographs of Huizenga and McDonald’s leader Ray Kroc were projected side-by-side). (p. 128) So, Blockbuster came into being with a big bang and a unique presentation which was reflected in its slogan “Wow, What a difference” (Greenberg, 2008). In the beginning, the company even hired greeters
Rana Fawad
1. Describe and discuss how the organization’s culture facilitated the failure. Philips (2011) believes that success or failure of any great company depends on “Events, internal and external” (p. 3). Blockbuster also appears to be a victim of certain events at internal as well as external level. Based in McKinney, Texas, Blockbuster and founded in 1985 (Blockbuster Corporate, 2012) and it ushered in a new era as far as video rental retail industry was concerned. The company gave birth to video rental places that had significant amount of movies under one roof (the first store had 8,000 movies) and were not associated with bad movies or bad neighborhoods (Greenberg, 2008). Initially, the company’s strategy was to expand aggressively and the leadership defined Blockbuster’s vision to become McDonald’s of the video rental business. Referring to the company leadership’s ambitious goals, Greenberg writes: The Blockbuster strategy was simple – pump as much money as possible into buying local and regional chains while keeping centralized control over the look and feel of the individual stores. By the VSDA convention the following year, Blockbuster had acquired two other chains and its more than 250 stores dotted the country. At the convention, Huizenga’s marketing executive Tom Gruber outlined vision for the future of the company, and it was expansive. Gruber had spent eighteen years working for McDonald’s before joining Blockbuster, and both he and Huizenga were explicit: Blockbuster wanted to be the McDonald’s of home video (the comparison was so deliberate that at one trade show presentation, huge photographs of Huizenga and McDonald’s leader Ray Kroc were projected side-by-side). (p. 128) So, Blockbuster came into being with a big bang and a unique presentation which was reflected in its slogan “Wow, What a difference” (Greenberg, 2008). In the beginning, the company even hired greeters
References: Blockbuster Corporate. (2012). Company Overview. Retrieved January 17, 2012, from http://blockbuster.mwnewsroom.com/Company-Overview Greenberg, J. M. (2008). From BetaMax to Blockbuster: Video stores and the invention of movies on video. Boston, MA: MIT Press. Levy, S. B. (2010, September). Blockbuster Goes Bust – Outfoxed by Redbox, Licked by Netflix. Retrieved January 17, 2012, from http://lexician.com/lexblog/2010/09/blockbuster-goes-bust-outfoxed-by-redbox-licked-by-netflix/ Netflix. (2012). A brief history of the company that revolutionized watching of movies and TV shows. Retrieved January 17, 2012, from https://signup.netflix.com/MediaCenter/ Timeline Phillips, T. (2011). Fit to bust: How great companies fail. Philadelphia, PA: Kogan Page. Rayburn, D. (2009, July 16). Ten Years Later, Blockbuster Still Lacks A Digital Media Strategy (BBI). Retrieved January 17, 2012, from http://blog.streamingmedia.com/the_business_ of_online_vi/2009/07/tens-years-later-blockbuster-still-lacks-a-digital-media-strategy.html Senge, P. M. (2006). The fifth discipline: The art and practice of the learning organization. New York, NY: Doubleday. Woloszynowicz, M. (2010, September 22). Business Lessons from Blockbuster 's Failure. Retrieved January 17, 2012, from http://www.w2lessons.com/2010/09/business-lessons-from-blockbusters.html