Tuesday, February 27, 2007
Business Strategy
Out of the four possibilities: Cost, Differentiation, Global, and Niche it seems that Blockbuster is implementing a niche strategy. The reason being exactly what the definition of niche is. It is a specialization, and in this case, targeting a specialized market which includes a specific type of customer and providing a specified product to that customer. That is, Blockbuster focuses primarily on renting out movies (and games) to people who like movies (and games). That is their business strategy.
How much power do the five forces have in Blockbuster's industry?
Blockbuster's industry, the video and gaming world, has many different aspects to it when considering the dimensions of its industry, five of which essentially cover everything you need to know about Blockbuster and where it stands in its market. These five corners are known as the Five Forces.
The first of the Five forces is Buyer Power which is high when buyers have many choices. Hollywood Video is Blockbuster's main competitor when you consider a company that rents both movies and games. However Netflix has become a video rental giant and customer's can easily go online and rent. Remaining buyer options include renting a movie "pay-per-view" from their satellite dish or if they have cable they can rent "on-demand." Also, its safe to say that most towns have a local video rental store that buyers can choose from. Buyer Power is relatively high as far as renting movies is concerned. But Hollywood Video isthe only one really giving Blockbuster competition in renting games.Second of the five forces is Supplier Power which is high when buyers dont have many alternative choices.Blockbuster's supplier power used to be high unitl netflix entered the market a couple years ago and amazoned them. Blockbuster still has much power in its game rental corner.Third is the threat of substitute products. Substitute products include Hollywood Video, Satellite, Cable, and Netflix. The only thing about Satellite and cable is that they dont offer as high as a selection as Blockbuster, Netflix, and Hollywood Video. Netflix lets you rent without going to a store, all you do is click your mouse to rent and then leave the video in a mailbox when its time to return. While Netflix is easy, Satellite and Cable are even easier, all you have to do is click your remote and you can view your movie for up to 24 hours. Satellite and Cable mostly offer new releases but its conventient because you never have to leave your couch.Fourth is the threat of new entrants. In order for a new entrant to enter the market they would have to be ready to compete with the thousands of stores that Blockbuster has in place and they would need to warehouse some how the huge product selection they would need to compete. Not only in videos but in games they would need a presence because Blockbuster is generating revenue from both angles.Finally there is Rivalry Among Competitors. This is high when competition among existing competitors is fierce. Competition among Blockbuster and its competitors is high as they battle it out in their their market fearlessly. Blockbuster offers over 2,600 stores outside the US and is still growing.
Which Business initiatives are eing used by Blockbuter?
Blockbuster is using Provia's ViaWare for supply chain management. This includes: packagin, sorting, and distributing rental and retail products. This is a bottomo-line IT as it is a method of keeping costs down.
Wednesday, February 21, 2007
Business Strategy
Blockbuster Video has different strategies to stay competitive in Porter’s Five Forces Model. To limit buyer power, which is a customer having many choices of where to buy a product, Blockbuster offers a rewards program. The program allows the customer to earn benefits for shopping at the stores. This increases the loyalty of the customers and gets return business. To increase supplier power Blockbuster sometimes has contracts to have Blockbuster Only Exclusive movies. They also offer programs that allow the customer to rent unlimited movies for a low monthly fee. The threat of substitute products is rather low. The company is beginning to offer HD-DVD’s and Blue Ray DVD’s which is the newest high definition technology. Keeping up with the times, having the most rental stores in the country, and having a huge marketing budget makes it extremely hard for new companies to enter the industry.
The Supply Chain Management system works as a support system. The mission statement of the company focuses on the store giving the customers a unique and enjoyable experience in the store to increase repeat customers. The majority of the revenue of Blockbuster is in movie rentals not movie sales. To the company they try and increase the loyalty of the customers, so the supply chain management is used to help the customers have a better experience and return on a more frequent basis.
Business Strategy
Tuesday, February 6, 2007
History of Blockbuster with Link
Founded in 1985, blockbuster is a giant in the video and game rental world. This young company was given the breath of life by David Cook who actually started out as a computer software supplier to Texas’ oil and gas industry. When that industry went sour in the mid 80’s Cook’s company went down the drain with it and so he was left to brainstorm something new. His loved ones gave him many suggestions but the one that caught his eye was the idea of launching a video rental business and so David went to work on it and the first store opened up in Dallas in 1985. The company grew quickly as in only four short years Blockbuster stores were opened up in London and Canada although Cook had left the company in 1987. In 1992 Blockbuster bought out Sound Warehouse and Music Plus and two years later Blockbuster was obtained by Viacom. Needless to say Blockbuster has grown a little since then and has over 8,000 stores operating worldwide. Even with all this success brought about by their hard work and strategic operating Blockbuster was challenged by a brand new company that was established in 1998. The name of this bold and intimidating competitor is Netflix. Unfortunately for Blockbuster, in recent years a substantial portion of their revenues have been seized by Netflix, a purely online rental company. In response to this catastrophe, Blockbuster was forced to enter in the online rental business not only to compete but to maintain its very existence. The war between Blockbuster and Netflix is now fully engaged.
Links:
http://www.blockbuster.com/corporate/companyOverview
http://thomashawk.com/2005/11/netflix-presents-at-lehman-brothers.html
-Ronald M. Paraison
Monday, February 5, 2007
John Antioco-CEO
Sunday, February 4, 2007
Introduction

Recently both companies have filed law suites against each other trying to gain the majority market share of online renting. We chose Blockbuster online because we believe they are not getting a fair comparison against Netflix and will triumph in the end. We believe Blockbuster is offering more benefits as compared to Netflix. Both companies offer the same type of plans, from 1 to 3 movies at a time with no difference in price or number of movies mailed to the customer. But, Blockbuster gives you a coupon every month that allows you to rent a movie or games, and they also allow you to rent any movie free when you return the online rentals to a store. So in reality you get coupons and two Blockbuster rentals per Netflix Rental, for the same price.