Articles & Case Studies:
Blockbuster Video case study:
I. Issue: The central issue or issues of the Blockbuster Video case that the company faced, can be broken down and represented as three major areas of focus: •
Financial ? Prevent the continual decline in cash flow and profits. Lower inventory costs. •
Strategic ? How to react to an ever decreasing video rental market. Promote global marketing to reach and service the international home entertainment market. •
Technology ? Implement Best practices to utilize Blockbuster?s huge customer database. Implement leading edge technology in keeping up with and surpassing their competition?s use of technological innovations. As was clearly seen through systems analysis, each one of these issues is directly related to Blockbuster?s continued success, and was an important area of focus for setting and achieving Blockbuster?s business directives. Financially Blockbuster had been experiencing a steady decrease in cash flow and profits finally resulting in a serious negative cash flow situation by 1994. How to prevent this trend became the number one financial issue that Blockbuster was facing. Other issues for Blockbuster were how to remain profitable within a mature industry, and how to lower their inventory costs (mainly through middleman elimination). Blockbuster?s strategic issue of how to react to an ever decreasing video rental market lead to a corporate merger with Viacom, and subsequently to a partnership with Sony Electronics. These mergers were intended to increase profits by elimination of ?middleman? distributors and expand Blockbuster?s reach within the home entertainment industry as a whole. Blockbuster?s penetration into foreign markets was also a primary strategic issue in directing Blockbuster?s expansion. Another key strategic goal of Blockbuster was to change its image from a ?video? store into a ?total-entertainment store?, primarily by the addition of music and book sections to Blockbuster...
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