Case 5

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Competition in the Movie Rental Industry in 2008:
Netflix & Block buster Battle for Market Leadership

1. How strong are the competitive forces in the movie rental marketplace? Do a five-forces analysis to support your answer.

2. What forces are driving change in the movie rental industry and are the combined impacts of these driving forces likely to be favorable or unfavorable in term of their effects on competitive intensity and future industry profitability?

3. What does your strategic group map of this industry look like? Which company is best-positioned—Netflix or Blockbuster? Why?

4. What key factors will determine a company’s success in the movie rental industry in the next 3-5 years?

5. What is Netflix’s strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fit the competitive approach that Netflix is taking? What type of competitive advantage is Netflix trying to achieve?

6. What does a SWOT analysis of Netflix reveal about the overall attractiveness of its situation?

7. What is your appraisal of Netflix’s operating and financial performance based on the data in case Exhibits 2, 3, and 4? What positives and negatives do you see in Netflix’s performance? Use the financial ratios in Table 4.1 of Chapter 4 as a guide in doing the calculations needed to arrive at an analysis-based answer to your assessment of Netflix’s recent financial performance.

8. What does a SWOT analysis of Blockbuster reveal about the overall attractiveness of its situation?

9. What is your appraisal of Blockbuster’s performance as shown in case Exhibit 5? What pluses and minuses do you see? Use the financial ratios in Table 4.1 of Chapter 4 as a guide in doing the calculations needed to arrive at an analysis-based answer to your assessment of Blockbuster’s recent performance.

10. How does Netflix’s competitive strength compare against that of Blockbuster? Do a weighted competitive strength...
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