A New Blockbuster

University of the Philippines Los Baños

College of Economics and Management

MGT 201. Organization and Management

Case No. 1

A New Blockbuster Image: H. Wayne Huizenga

Alcalde, Winston

Salvamante, Jacelyn

Tan, Karla Marijoy

Jimmy B. Williams

Associate Professor

September 2, 2017

1. Point of View

In analyzing the case problem, the point of view of Chairman H. Wayne Huizenga was used. He is in the best position to address the problem and has the capability to implement whatever alternative solutions will be implemented.

1. Statement of the Problem

How will Blockbuster sustain its increasing revenue and secure success of the company in the future?

1. Case Facts

Strengths

1. Blockbuster has increased to more than 3,200 stores within the life span of 8 years in 10 countries around the country guaranteeing the availability of new video releases in those markets.
2. Huizenga's ability to delegate responsibilities to others that have greater expertise than he does in certain areas.
3. Tom Gruber, the former McDonald’s marketing executive, now the chief marketing officer of Blockbuster, stated that the key to the company’s success lies in the same marketing principle of McDonald’s “McMarketing”: fast service, convenient locations, family oriented and appealing to the kids.
4. By 1989, Blockbuster capitalized on its image as “America’s Family Video Store.” 
5. More than 66 percent of US households own at least one VCR.
6. During the first half of 1993, revenues in existing Blockbuster locations climbed 6.1 percent, and analysts expect 1993 revenues to soar 75 percent.  

Weaknesses

1. Various business units put in place just in a short period of time that may indicate having no clear direction on its core service in the future.
2. His standard strategy: acquisition on a grand scale. Spending large sums of money that is required in entering different forms of distribution to achieve being a “global entertainment company.”  
3. Blockbuster’s brick and mortar business model. Lacks innovation to face the new threats and understanding dynamic customer preference. The company instead focused on expanding its market at the expense of its primary service.

Opportunities

1. Blockbuster’s sponsorship of Paul McCartney and Rod Stewart’s tour that may signal that the company is a “big-time entertainment company.”
2. Huizenga’s ability to enter and venture with different forms of distribution such as in the music retailing, television and film, “game zones” etc., maximizing its potential of greater market share.  
3. Given the company’s resources, it can easily adapt and compete using the new technologies - altering its business model.

Threats

1. The advent of interactive technologies including 500-channel TV and video-on-demand.
2. Piracy. The retail home video industry is very competitive.
3. Customers’ busier lifestyles, demand and the advancement in the technology calling for alternative methods of content delivery.
4. Huizenga’s style of once he builds that business, he may get out of that, as well. Huizenga tends to move on once most of the growing is done.

1. Alternative Course of Action

1. Decision

Rationale

Copying emerging business trend such as streaming is a profitable and effective strategy because you'll jump into market niche that already exists. Less stress for the company head and produces lower risks. Start up and running the business will cost less because you have other companies as model on how you are going to do it. With the right revisions one may outflank competitors with potentially better products that would win market and generate better profit.