Block Buster

Topics: Strategic management, Renting / Pages: 19 (4592 words) / Published: Feb 3rd, 2012

The case covers Blockbuster’s emergence in the video rentals market. After detailing the intricacies of the video rental market, the case takes a deeper dive into Blockbuster’s business model, based on brick-and-mortar locations throughout the US. This costly infrastructure has slowed the entertainment giant’s growth in an industry that has rapidly transitioned from the traditional store-based model, to mail rental and video-on-demand alternatives. The rapid transition of customer demand and the emergence of Netflix (Blockbuster’s main competitor) has incited Blockbuster’s rapid entrance into the video-on-demand market through the acquisition of Movielink.

The key challenges that Blockbuster faces in 2009 include: rising consumer expectations, increases in media piracy, the impact of rising fuel costs on systems based on the distribution of physical media, and the intricacies of competing in a rapidly changing technology industry where new entry is enabled by low infrastructure costs.

Summary of key learning points and strategic issues
1. Understanding the challenges associated with a rapidly changing technology based industry
2. Flexibility in the face of a evolving market with high competition and new technology
3. The role of acquisitions in company growth
4. The importance of brand image and marketing in an increasingly tech-savvy market
5. Adjusting business-level strategy in light of disruptive business models

Discussion Questions

1. Perform a STEEP analysis to understand the general environment facing Blockbuster. How will Blockbuster be affected by external factors?
2. Use Porter’s Five Forces Model to analyze the mail rental and video-on-demand industries in the US. Given this analysis, are these industries attractive or unattractive?
3. Entering the video-on-demand business requires Blockbuster to shift its corporate business strategy and compete in a new

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