I. Strategic Profile and Case Analysis Purpose: The Blockbuster firm is a leading provider of rental movie and game entertainment with approximately 8,000 stores. The company operates in the US, Europe, Latin America, Australia, Canada, Mexico and Asia. Blockbuster is headquartered in Dallas, Texas and employs 58,561 people; this figure includes full-time, part-time and seasonal employees. The company recorded revenues of $5,287.9 million during the financial year (FY) ended January 2009, a decrease of 4.6% over 2008. The operating loss of the company was $293.3 million during FY2009, as against an operating profit of $39.1 million in 2008. The net loss was $374.1 million in FY2009, compared to a net loss of $73.8 million in 2008. Blockbuster attributes the decline in profits largely to non-cash impairment charges to its goodwill and other long-lived assets. By offering both DVD by mail and downloadable, or streaming, rentals. Blockbuster is also currently undergoing an organization-wide overhaul and divesting from foreign interest and refocusing on their core businesses in the United States. To increase its business, Blockbuster launched advertising campaigns and also undertook joint promotions with fast food outlets such as Dominoes Pizza and McDonald’s.
II. Situation Analysis
A. General environmental analysis: Initially Blockbuster business revenues consisted on movie rentals from stores and late fees charged for rentals. In August 2004, Blockbuster introduced an online DVD rental service to compete with the established market leader, Netflix, and to be able to keep up with the current trends and technology.
B. Industry Analysis: Despite the emergence of new technologies such as movie downloads and online movie purchases, the online rental business remains popular. Against other competitors, being the only company that can truly compete with Netflix is a sustainable competitive advantage in the online... [continues]
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