BLOCKBUSTER

Environmental Analysis of Blockbuster

Environmental Analysis of Blockbuster

Introduction

Blockbuster Entertainment Limited is an American based Video Retail Chain Company, which is also registered in other major countries including England and Wales. It has been one of the largest video retail chains of the world. The company is operating business in more than 20 countries, with having over 8300 stores worldwide. It has a large network with having more than a billion videos, DVD's and games been rented by its customers each year. The company had enjoyed good success and growth during his heydays.

However, it has received major setback due to lack of management and poor strategic planning. Due to this, the company suffered significant loss in its revenue. The loss was so severe that it had led the company to file for bankruptcy. The company's US operations were acquired by Dish Network; however, the subsidiaries in UK were not affected by this acquisition, as they kept running. According to the recent developments, numerous stores in UK have been shut down, and the future of the company is still uncertain as there are no chances of them being improved.

This paper is focusing on the environmental analysis of Blockbuster. This includes assessing the PESTLE analysis and the opportunities and threats the company is suffering from. It will also identify the key drivers of change which influence the strategic decisions of the company. In addition to that, the internal analysis will also be conducted through assessing strengths and weaknesses of the company. Furthermore, value chain analysis will also be conducted and core competencies of the company will be identified. Lastly, a financial analysis of the company will be presented including relevant financial ratios to support the analysis.

Discussion

PESTLE Analysis

The PESTLE analysis is the external environmental analysis of any specific industry, and is one of the main components of strategic management. It provides a framework to scan macro environmental factors and their impact on the overall industry (Hitt, Ireland, & Hoskisson, 2007). The components include Political, Economic, Social, Technological, Legal, and Environmental factors.

Political

Internet is made a tax-free environment by WTO, which allows the companies and individuals to sell their goods and services online to their target customers. It has also being confirmed by the officials of WTO that no other tax policies will be imposed on this fastest growing internet commerce industry. This will help in developing a Uniform Commercial Code for the entire industry including electronic commerce. This tax-free environment is deemed to be a positive sign for the industry, which will help in its growth.

Economic

The economic condition of the country is going through a recessionary period, as is also being witnessed in almost all the countries across the globe. This allows the consumer spending to fall. This does not generally mean that it has drastic impacts on the movie rental industry (Jeffs, 2008). This actually provides movie rental industry to steal revenue and shares from the movie theater industry, because of the two major reasons; a) the prices of movie tickets continue to increase, and b) ...