LDR 531/Organizational Leadership
Business Failure Analysis
Businesses are created with the intention to be successful, achieve goals, and create profits. The continuity of business success depends on the capability to forecast changes on markets and economies, and create a plan to adapt to change, if management failure to forecast changes, the business welfare will be unstable. Blockbuster was a leader on the movies rental business, and failure to reinvent as company, leading to failure. Business Failure Analysis determined Blockbuster’s vision and mission, indicators of the business failure and success from research, how organizational behaviors lead company’s failure, and how the role of leadership, management and culture of the organization in business failure. Business Failure Analysis explained techniques that Blockbuster must used to prevent the impending failure, identified potential barriers during the change process, evaluated the power and political issues within the organization, and described the steps followed to implement the organizational change based on John Kotter’s 8-step plan for implementing change. BUSINESS FAILURE ANALYSIS
Blockbuster Inc. was an American-based home movie rental provider, and at its peak in the 2000’s had up to 60,000 employees and more than 9,000 stores. Companies objectives were achieved, become number one movie rental provider in United States of America, and spread their branch thru the world with stores in Canada, Brazil, United Kingdom, Japan, Ireland, Denmark, Peru, and Australia. Blockbuster’s mission statement changed from the original to “Our corporate mission is to provide our customers with the most convenient access to media entertainment, including movie and game entertainment delivered through multiple distribution channels such as our stores, by-mail, vending and kiosks, online and at home. We believe Blockbuster offers customers a value-prices entertainment experience, combining the broad product depth of a specialty retailer with local neighborhood convenience” (www.Blocbuster.com, 2013) Leadership role is crucial to a company failure or success. Leaders influence people to reach a common goal. Blockbuster was a company with a solid corporate image, brand recognition, and leader in the video rental industry. People used to say “tonight is a blockbuster night” when they want to stay and have a movie night at home. Their marketing involves a rewards points card that allowed their members to get special offers every month. Unfortunately, Blockbuster administration failed to keep the technology pace of new products and services (Brownsell, 2008). The video streaming industry is growing every day since the last 10 years. Blockbuster leaders and managers did not had the vision or anticipate the direction of the video rental industry. They react late to the launching of Netflix, Apple TV, Hulu, Google Play, and the streaming devices available. Without vision the objectives and goals of Blockbuster were on the wrong direction. Blockbuster got into a transition from a rental business to become part of the technology business. They did not foresee this change and could not create on time products and services to satisfy their customer’s needs. The organizational structure of Blockbuster plays a role in the company’s failure. According to Lisa Welchman in her article What can small business learn from Blockbuster’s failure?, Blockbuster had a “deep and nested organizational structure” that do not allow the company to realize changes, be dynamic or do adaptations to make operational changes needed to compete in their market (Welchman, 2013) . Blockbuster’s business culture of top customer service and keep their employees in a fun and interesting environment also play a role in making difficult change. People where very important for the core of the business since the foundation of Blockbuster (Welchman, 2013). One of the much needed changes implies to eliminate people and substitute them with machine stations and the computer systems. Making this change on time would have affected the culture and organizational structure of the business. Their manager and leaders fail in making hard decisions for the benefit of business and their profits. On the other side it can be explore a company like ATT with a brilliant success in the communication industry. A well trained customer service, innovation in their products, the best network, best worldwide coverage, and greater value in offers are reasons for this company to be so successful. According to their CEO, Randall Stephenson, their growth in the market is a consequence of detailed planning, marketing strategies, vision, the workforce, and an inclusive business culture. ATT are successful in anticipate new trends and customer’s needs. They react quickly to the market needs and pursue innovation to provide their customers the best technology available and exclusivity in their products. Decision making and direction are well manage by managers and leaders at ATT. That is the secret of their success. Blockbuster will face potential barriers through the needed change process. The first potential barrier could be a financial barrier. Change implies restructuring and those process cost money. Technology cost money also. Competing in the industry requires an investment of design and creation of new systems that will substitute people. Employee reduction will cause negativity on the company. They will be reluctant to change unless the leaders present the situation analysis of the business, propose a new vision and mission for Blockbuster and present the changes needed to take the company to another level. Another potential barrier could be credibility on market. Competitors like Apple, Redbox, Google, Netflix, and Hulu control the market. Perception of consumers could be a huge barrier. Blockbuster use to have brand recognition but they need to change the consumer perception of their business. They need to be perceived as leaders in the video and streaming market. Consumers need to know the new platform and recognize improvement to support Blockbuster again. References
Brownsell, A. (2008, May). Blockbuster. Marketing, 20. Retrieved from http://search.proquest.com/docview/214953322?accountid=458 Welchman, L. (2013). What can small business learn from Blockbuster’s failure? Plenty. Retrieved from http://cbsnews.com/8301-505143_162-41841288/what-can-small-business-learn-from-blockbusters-failure-plenty/ Robbins, S. P., & Judge, T. A. (2013). Organizational Behavior (15th Ed.). Retrieved from The University of Phoenix eBook Collection database.