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Using Rumelt's Criteria for Evaluating Strategies, evaluate the strategies of Blockbuster that led to its failure.

Using Rumelt's Criteria for Evaluating Strategies, evaluate the strategies of Blockbuster that led to its failure.

Understanding Business
Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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5. Blockbuster - Before the advent of digital streaming, video rental stores were the place to go when you fancied a night-in watching a movie or box set. This was a new phenomenon in the 1980s as more and more people purchased home VHS players. By the time the first Blockbuster store opened in Dallas in 1985, the video rental industry was taking shape - helping to create a huge new income stream for film distributors. Over the years, Blockbuster became the industry leader, growing in size to have over 9,000 stores around the world and revenues of $5.9 billion at its peak in 2004. In the UK, it had over 4,000 stores and its blue and yellow signage was familiar sight on the high street. At the turn of the century, Blockbuster still dominated the video and DVD rental market. However, internet speeds were improving. This carried the potential to radically alter how we consume all forms of media. The idea of streaming a feature-length movie online was now a reality. Some had this foresight, others did not. Whilst the fledgling Netflix proactively evolved its business model from a mail-order DVD subscription service to an online streaming service, Blockbuster was slow to respond. The company did develop its own streaming services but none of these caught on. It was even slow to adopt Netflix's popular and convenient mail-order service. Added to the competitive challenge, was the operating cost of running bricks and mortar video stores. Blockbuster placed faith, as well as millions of dollars, in keeping these stores going. All the while this was a cost its competitors needn't worry about. Coupled with the dwindling demand for its services, by the late 2000s it was clear Blockbuster's days were numbered. Blockbuster went into administration in 2013. Using Rumelt's Criteria for Evaluating Strategies, evaluate the strategies of Blockbuster that led to its failure.
Transcribed Image Text:5. Blockbuster - Before the advent of digital streaming, video rental stores were the place to go when you fancied a night-in watching a movie or box set. This was a new phenomenon in the 1980s as more and more people purchased home VHS players. By the time the first Blockbuster store opened in Dallas in 1985, the video rental industry was taking shape - helping to create a huge new income stream for film distributors. Over the years, Blockbuster became the industry leader, growing in size to have over 9,000 stores around the world and revenues of $5.9 billion at its peak in 2004. In the UK, it had over 4,000 stores and its blue and yellow signage was familiar sight on the high street. At the turn of the century, Blockbuster still dominated the video and DVD rental market. However, internet speeds were improving. This carried the potential to radically alter how we consume all forms of media. The idea of streaming a feature-length movie online was now a reality. Some had this foresight, others did not. Whilst the fledgling Netflix proactively evolved its business model from a mail-order DVD subscription service to an online streaming service, Blockbuster was slow to respond. The company did develop its own streaming services but none of these caught on. It was even slow to adopt Netflix's popular and convenient mail-order service. Added to the competitive challenge, was the operating cost of running bricks and mortar video stores. Blockbuster placed faith, as well as millions of dollars, in keeping these stores going. All the while this was a cost its competitors needn't worry about. Coupled with the dwindling demand for its services, by the late 2000s it was clear Blockbuster's days were numbered. Blockbuster went into administration in 2013. Using Rumelt's Criteria for Evaluating Strategies, evaluate the strategies of Blockbuster that led to its failure.
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