Video Concepts, Inc.

Only available on StudyMode
  • Topic: Blockbuster Inc., Video rental services, Marketing
  • Pages : 6 (1417 words )
  • Download(s) : 1116
  • Published : February 6, 2011
Open Document
Text Preview
Video Concepts Inc.

Written Analysis and Communication - I

Instructor
Nitin Parmar

Submitted by
Manisha Kabra
GMCS - Batch No. 25

Date
January 20, 2011

Date: January 20, 2011

To:
Chad Rowan,
Owner, Video Concepts, Inc.,
Lexington, North Carolina, United States.

From:
Manisha Kabra,
Consultant

Subject: Advice on alternative to select on account of no bright future growth in video rental business. This report is a summary and analysis of current situation on Video Concepts, Inc. The analysis is based upon the basic objective of economics that is profit maximization. Based upon the current trend of revenues, it is recommended that you should accept the alternative of hiring someone to manage the business and find a job for yourself preferably in corporate.

As a student of ICAI, I thank you for providing me opportunity to learn about the situation at Video Concepts, Inc. This has taught me a lot as a learning process through Brain Development. EXECUTIVE SUMMARY

Whether to accept the alternative of hiring someone to manage the business and find a corporate job for yourself, thereby continuing the revenue generation at price $1.99, has to be evaluated on the main objective of the firm, which is to maximize the profit. The suggestion for selecting this alternative is that, in future, growth prospects do not look bright as certainly in many years away, new technology which is presently in development stages could render video-store rentals obsolete. Moreover, looking to the future, the net income from the Video Concepts operation would not provide you high return on your time and capital. Hence, accepting the proposal is recommended.

Word Count: 109

Table of content
SITUATION ANALYSIS.................................................................................................1 THE PROBLEM STATEMENT….....................................................................................2 OPTIONS....................................................................................................................3 CRITERIA FOR EVALUATION........................................................................................3 EVALUATION OF OPTIONS..........................................................................................3 RECOMMENDATION...................................................................................................5 ACTION PLAN..............................................................................................................5 CONTINGENCY PLAN………………………………………………………………………………………………...5

Situation Analysis
Position of Video-rental store in Lexington, United States
The market for Video-rental store in Lexington is quiet competitive. There is large number of firms having small market share. Video Concepts had three stores in the main shopping areas of Lexington. The products of Video Concepts, Inc. are rental videos, game videos, popcorn and soda. Excellent customer service and innovative marketing techniques enables Video Concepts, Inc. to compete with other firms in three areas: aggressive pricing strategy, high-quality service and good selection of new releases. All its stores were doing quite well until Blockbuster Video, the largest video-rental chain store in the United States moved to town. Hence, this resulted into decrease in profitability of the operation on account of revenues dropped considerably. Price plays a major role

Price is considered to be an important benchmark in business. Video Concepts, Inc. major marketing strength was its lower rental price i.e. $1.99 as compared to $3.00 of Blockbuster Video inspite of very similar operating and personnel costs and computer checkout equipment costs. Growth in Lexington

In the year 1987, the video rental business was a relatively new industry. Video Concepts, Inc. had started three stores in the three main shopping areas of Lexington, out of which original two stores saw little growth in...
tracking img