Business Strategy

Blockbuster Video uses its supply chain management to increase the top line initiatives and support bottom line initiatives. Blockbuster uses the just in time system to try and always have the new and popular movies on hand for sale and rent, so they don’t have to turn any customers away. At the same time all orders for movies are automatic. The inventory is updated with every transaction and sent to the corporate offices. If the individual stores need a shipment all that is done is the corporate offices O.K. the order and the distributors send the movies to the store.

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.