Management Blockbuster Case Study

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Chapter Turo Man,agernent

History

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good manager.

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and complete self-knowledge can be a powerful learning tool. Go to mymanagementlab to Turbulent Chanse? How ;;;;ih;;* J'er"assbssmenteNetoise-ut 1,o#Wat no f 'Hespond Welt,no t i.tanOte Rmbiguiti?,and,WlatDo,l Val:ue? Using the resuhs o{ Vour,aseessments, your strengths identifrf perrcnaiitrenfith$land"weaknes*;e' What Will you do to rejnforce ' :: and imprqve,yourwea*no5sg:glr': '-

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Fast-Forwarding Elockbuster What nanre comes to n-rind when you tlrink of renting movies on the weekend? Maybe it's Blockbuster' lf so, in the United States,

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you're not alone. AlihouEh Blockbuster is still {he world's largest video rental company, with nrore than 5,000 stores

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the past few years have not been for this company. Blockl:irster has posted

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losses in 9 of the past 11 years, closed hurrdreds of stores.

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and lost many customers to Netflix' The whole business of renting DVDs is changir-rg, and Blockbuster is making changes in order to rernain competitive' One of the most irnportant changes was hiring a new CEO,

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James W. l(eyes' As the forrner CEO of 7-Eleven Stores, Keyes faced a similar situation as tlte convenience store industry went througtl a difficult transition in the 1980s and 1990s. By 1990,7-Eleven was in bankruptcy' tive quarters of revenue growth and a profit of $106 million. How? What Keyes did at 7-Eleven was to rely on numbers. He implernented an approach in which quantitative clata collected by each store dictated the product mix carriecl irr that store. For instance, a store in one However, by 20A4, his company had achieved 36 consecu-

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Blockbuster CEO, Jantes W. Keyes must meet competttiotl Netflix, video-on-dernand services, and 1lVo.

neighborhood might carry more Corona compared to

another store acr.oss town that stocked nrore Coors Lite. An enthusiastic treliever irr the power of data, Keyes took into account all kinds of factors, caiculating, for example, which doughnttts soicl best in hot and coid weather'

2. How rnight knowleclge of organizatiorral behavior help the company's frontline store supervisors mariage their employees? Would Mr. Keyes and other top managers neecl to understand OB? Why or why not? 3. Using Exhibit 2-7, describe Blockbuster a$ a systein.

Now, keyes is doing the same for Blockbuster. Among other things, he lropes to cr-tstcnrize titles at each store based on renta! patterlls. Alihougtr selling video rentals inay be clifferent than seiling Slurpees, Keyes is unfazerj. He says, "lthink an Internel company, even if it is selling a service, is stiil another fr:rin of retail. lt cclmes down to the ability to understand tlre needs of customers and satisfy those needs in a way that is better and tJifferent frrtm the cornpetitors." Discussion Ouestions 1. Mr. Keyes obviously is a big fan of the quantitative approach. l-1ow might principles of scientific management [:e r,rseful to Blockhruster?

4. Based on itrformation from Eiccktruster's Web site (www.blocktru$ter.cofili, what values cjoes this company ernbrace lhat might be impr:rtanl for successful organizations in the twenty-first century? (Hint: t-ook at ihe Ab*r-rt Lis link and the Culture link fcund in Careers.i 5. lVhat do ycu think Mr. Keyes's quote (iast senterlce in last paragraph) is saying? Do you agree or disagree with his statenreirt? Expla!rr' sr:urces: Blorjklluslel Weli: site, ww',v.blocki:t.tsier.conr, Feilrtrcry ?8, 2008; A. Aciarn Nevu'rnan, "lJew Boss Aims to Apply Slonre .Taotics to Blocki-:uster," New York TJme-s cnlirie, vvww' 7-Eleven nytirnes.corn, July 17, 2007; anC N4. Herbst,...
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