Why Blockbuster Failed

Failure Analysis/Change Strategy

Prof. Eric Heard

Kaleah Daniels, Tameka Pritchard, Misty Vathis, and York Wilborn

LDR/531

May 25, 2015

Abstract

 Team E will discuss analyzes Blockbuster, Inc., a video rental company that failed and comparing it to a successful company Netflix.  Team E will also discuss leading organizational change at including the role of politics and power in businesses.

Blockbuster Inc.

Objectives, Values, Mission

Blockbuster Inc. was a global business with 8,000 brick and mortar stores.  The stores offered movie and game rentals for home use by consumers. Blockbuster identifies its vision as to be a complete source for movies and games and summarizes its mission as: to grow our core rental business while continuing to use our brand, our massive database, our stores and our studio relationships to deliver an even broader array of home entertainment to both existing and new audiences.  Blockbuster tries to satisfy customers’ needs of renting movies and games, as well as buying and trading them.  Blockbuster’s vision was too narrowly focused. A more broadly defined theme, like connecting viewers to films and games they’ll love would have been better ("Why blockbuster failed," 2010). Blockbuster did not understand the business it was in.  They thought they were in the entertainment distribution business but it was actually more to do with the retail customer experience (Baskin, 2013).  Blockbuster failed to see the big picture and recognize the Hollywood’s box office receipts were failing yet consumers need something to do with their time (Baskin, 2013).  The company faced new competitors with different offerings such as Netflix and Redbox. After 2000 cable and satellite companies offered video on demand movies, online rentals were available, and retailers such as Wal-Mart and Target were selling affordable movies and games.  Company leadership attempted to change with the market demands but in most instances the strategies were not fully implemented or not implemented swiftly enough to remain competitive.

Organizational Behavior Theories

        The organization made many mistakes over the decades.  It would have been easy to predict the eventual downfall as their vision and mission was not clear and company strategies were never carried out nor shared with the employees.  Blockbuster was not sufficiently forward thinking and did not see the threats from outside forces.  When they did realize the threats from competitors they were slow to react.  They changed their business model several times over the years but did not properly plan, communicate, and execute the new strategies during each transformation period.  With each ensuing transition, the company appeared to be desperate and grasping at the success that came so easily to them in the early years.