STRATEGIC MANAGEMENT

Final Assignment

Final Assignment

Blockbuster Entertainment: A brief history

Blockbuster Entertainment Limited distributes DVDs, videotapes, and video games through a chain of stores in UK. It is headquartered in London, UK. The company is a subsidiary of Blockbuster, Inc. in America. The company's last good performance had been in 2009, and since then it had been declining due to the inability to keep up with new competition. A filing was made for bankruptcy in 2010 (Steiner 2013, pp.1-16). Some 600 stores in the United Kingdom offer wine, beer, etc (Hoovers 2013, p.n.d.). Blockbuster Entertainment also offers doorstep delivery to its online customers. But its huge competitors like Love film International Limited have stolen competition resulting in a constant decline in the company's profits. It was brought out by Gordon Brothers (Europe) earlier this year, leading to safety for some 2,000 jobs which were at risk (Iqbal 2013, pp.1-2). In addition to rental movies, the company also sells games on DVDs (Blocbuster.co.uk 2013, p.n.d.).

Competitive Strategy Adopted by the company

The company pursued a number of business strategies, which included opening up a lot of stores in the country, in order to gain market share; keeping more of current releases as compared to older ones; high pricing.

The main strategy of the company was to launch as many exclusive distribution outlets as possible, at different locations. Blockbuster Entertainment viewed this to be the ideal manner of capturing market share. This strategy did work for some time, but it did not last long term, because its operating costs were constantly rising. The profit from the strategies did not go a long way, and the profits were being consumed by the increasing costs. And coordination amongst all the stores was not easier as the chain was a large one. This strategy did not turn out to be effective (Ferrell & Hartline 2010, pp.152-160)

Apart from opening up exclusive outlets, Blockbuster Entertainment also started stocking up latest releases of movies instead of older ones. It viewed this as better and beneficial to its sales growth and the shelf spaces that old movies previously occupied was now taken over by the latest flicks and releases. Although this makes logical sense, this move failed in essence because the demand for classic movies did not subside due to latest releases. Also, the stores did not have a huge variety of games, and the copies of movies were limited as well. Customers usually had to wait and most of them started getting frustrated and left out to other stores, and hence the company started losing market share by losing customers. This also negatively affected its corporate image, reputation, and credibility. It should have considered that the demand for classic movies stays constant since they belonged to the golden age of moviemaking. Competitors of the company took advantage of this shortfall and rose above it; customer satisfaction was higher for Netflix and Love film International Limited due to availability of enough copies of both latest releases as well as classic ...