Netflix vs Blockbuster Hbs Case Stufy

Topics: Netflix, Blockbuster Inc., Innovation Pages: 3 (848 words) Published: January 21, 2012
1. When evaluating stock decisions for Blockbuster, should be divided into 2 separate decisions could have been made, depending on the period in the test case. At the starting period of the text, 1997-2002, Blockbuster is the undisputed market leader (2, 1) of a giant, fragmented and steady industry, it has superior access to suppliers (brought the hottest titles faster than anyone in the industry) , this was its core business. Blockbuster had a wide coverage on a national level of stores (2, 2) , reaching almost 70% of the U.S population within a short drive length, and were recognized as the most powerful brand in the industry by 90% of the population. Furthermore it sustained a growing rate of sales growth within stores within that period along with a stable income from late fees (3,1). In light of these facts, at this period going long for the Blockbuster stock is a very confident and solid decision. However the tide is changing at 2002 following the rise of Netflix, Blockbuster strategy to ignore and mock at the treat instead of tackling it (9, 4), the failure to understand the Netflix is giving customers feature which are lacking in Blockbuster’s stores (Recommendation, no late fees, a wider selection of movies) show of a company which lacks the innovation to face the new treat and the ability to understand the new customer taste (Movies as entertainment rather than special occasion). The late response in entering the online rental business caused severe financial losses to the company due to stiff learning curve (stock, suppliers), marketing expenses, price war and giving up on late fees (10,1), all along while keeping its conventional cost structure, with an expensive 10 people per store staff (2,2) . Therefore I would hold the stock at short starting 2002 , Blockbuster just doesn’t seem like its understanding the new market, instead of being innovative they are fighting a losing battle and react lately instead of initiating in the areas where Netflix...
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