Blockbuster Declares Bankruptcy

smash hit Decl atomic number 18s Bankruptcy Yvonne Dedmore MGT 435 Organizational commute Robert Hamamoto kinsfolk 19, 2011 Shortly before their 25th anniversary, megahit files for bankruptcy protection with a Chapter 11 petition. The failing company couldnt compete in immediatelys market against Netflix, Redbox, Apple, and otherwise net-based furrowes that profferd mail-order postulateals or digital stream. Their cable framework regarded to be revamped to hang in competitive. This paper go out take a look at where the problem was, the measures taken to correct the problem, and how blockbuster john come back and be competitive. blockbuster, Inc. started business in 1985 in Dallas, Texas by David evade. The company accepted exposure cassettes, and later DVDs and motion-picture turn in spunkys, to customers for viewing at home. Mr. Cook was a computer programmer and used this to his advantage. While other film neckcloths had no idea what they had still in or igin, Mr. Cook had reports that showed him which movies were being rented more or less so he could optimize the video selection. He also precious a family environment and had a no-porn policy. (Gandel, 2010). In 1987, Wayne Huizenga bought the business from Mr.Cook, and the company went into an expansion mode, opening line of descents nationwide and fifty-fiftytually everyplaceseas by the mid 1990s. (History. com, n. d. ). Mr. Huizenga k naked that unity day technology was going to put them bring out of business. He leased consultants to help work on a creative plan on antithetic right smarts to deliver movies. The consultants even went as far as recommending Mr. Huizenga buy a c adequate to(p) company. Instead of doing that, Mr. Huizenga sold the company to Viacom in 1994 and got out of the business while the company was still worth more or lessthing. (Gandel, 2010). miserable Viacom, the company was losing money.They brought in antithetic CEOs and tried once again t o focus on movie rentals. (Gandel, 2010). That helped and currently, blockbuster has over 3,500 breeds and over 25,000 employees. These computer memorys are considered brick and howitzer. They are somatogenic buildings that franchise owners must buy or rent, stock with supplies, and hire people to work and run the terminuss. in that respect are bash costs that internet-based businesses dont have. This is one reason why Blockbuster has been losing money these past few years. Blockbuster was the leader in video rentals for over 15 years.That was the thing to do go to the movie store, rent a movie, pop popcorn, and enjoy a good movie from home. Unfortunately, Blockbuster didnt financial support up with technology and didnt take the controversy seriously enough and soon enough to variety show. When change happens in an organization, managers need to develop strategies that benefit the entire organization. The effects of organizational development are to improve the organizat ions ability to cross its internal and out access(a) relationships. Organizational development is intended to change the beliefs, attitudes, values, and structure of an organization.Blockbuster need to concentrate non that on its customers, hardly also on their competition. Instead they ignored both and kept everything status quo. Instead of changing their strategy before the competition got their foot in the door, Blockbuster sit work through on the sidelines. wariness said the business models were different and that Blockbuster could co-exist with the other companies. (Carr, 2010). Blockbuster was just too slow to embrace change and race with immediatelys environment that consisted of convenience and digital delivery.People experiment to cram too much into their days. The convenience of having movies, television shows that got missed because of soccer practice or a late meeting, and even video games at your fingertips is too spelling. People today just dont motive t o drive to the video store after working all day, hotheaded the kids to activities, doing homework, making dinner, and cleaning up. They want the movie or television show to be just a click away. With the busy schedules, they dont want to for she-bop to drop the movie back off at the store and have to deal with late fees.If Blockbuster had deterrented up on trends and realized what was happening with technology, they may have been able to keep the customers that were disconnected and also gain overbold ones. Instead just aboutone else took advantage of this and steal business right out of the video giants hands. Netflix became the biggest rivalry to Blockbuster, even though Blockbuster didnt seem to notice. Netflix created a video rental mail-order gain through their website. This was a monthly subscription service that allowed customers to adopt a movie in the mail, watch it at their leisure, and impart it when they were ideal all with no late fees.When the movie was r eceived back to the Netflix warehouse, a new movie was sent from the customers favorites list. The customer only had to go as far as the mailbox to receive and return a movie. Netflix also initiated the streaming video and television shows through the internet to your television, computer, or gaming system. The selection wasnt as big as the actual DVD mail-order system, but it was faster and more convenient for well-nigh customers who wanted it now. This was all adduceed to the customer in a low monthly fee. Some subscription services even allowed for unlimited rentals per month.Another competitor, in the form of kiosks, offered movies for $1. 00 a night, and these kiosks were conveniently located in grocery and drug stores. Pick a movie and drop it off the next term you were shopping. No late fees or membership necessary. Why not rent a movie after you checked out from the grocery store with dinner already in the cart? What a great way to drop a line cadence, money, and spen d quality time at home with the family. Redbox, plump for by Coinstar, is the main competitor of movie rental kiosks. They have over 24,000 conveniently located kiosks.Redbox not only is in grocery stores and drug stores, but expanded into fast-food restaurants. (Newman, 2010). Due to these new technology inventions, Blockbuster stores were seeing less foot traffic at the brick and mortar stores. People were feeling for convenience while trying to save money in todays economy. This should have been a clear sign for Blockbusters management to make a change. Blockbuster did downsize by closing some of the existing brick and mortar stores, but continued to do business as usual. They needed to conduct an organizational diagnosis to find out not only what needed to be changed, but also why.The diagnosis is a chance for management to strategize where the company is now, what the skills set is, and where do they see the company going in the future. It consists of data collection which m ay include questionnaires, interviews and observations. (Spector, 2010). These shifts in external realities usually need a new pattern of port which Blockbuster didnt seem to possess. It appeared as if the CEOs didnt want to change their strategy or they really didnt notice what was happening in the world of technology. Its hard to say at this point.Blockbusters management needed to focus on a strategic surrogate which would alter the current strategy with the intent of gaining an advantage over the competition. (Spector, 2010). It took Blockbuster over six years to enter the mail-order movie rental business. With the financial support and connections Blockbuster had, it shouldnt have taken them that long. By the time Blockbuster entered into the streaming environment, Netflix already had over three million customers. (Gandel, 2010). Could Blockbusters big name compete with that? It depends on how they structure their business model.Blockbusters business model appeared too narrow video rental. They left the door wide open for competitors to come in and create a new market. Blockbuster held on too long to their retail strategy even though trends were showing that consumers were not future(a). Netflix had a slow start, but no one was competing with them. It took Netflix a little time to work out some of the kinks, but Blockbuster wasnt there to challenge them. (Newman, 2010). In the writers viewpoint, Blockbuster almost set themselves up for failure by not taking advantage of changing their business model to keep up with technology.In this company analysis, it wasnt a matter of employees resisting a change because management wasnt proposing a change. Sometimes companies struggle to go across a cultural change only to meet resistance from employees. commonly the resistance happens for a few reasons forcing the change from the top down, not communication with employees, and not offering essential training for the change, to name a few. This wasnt the case with Blockbuster. They needed an organizational redesign to respond to the changing environment of technology.Behind the scenes this may have been happening, but it never materialized into a mental process strategic plan. Blockbuster had bombarded their customers with late fees, tried to go in the committee of mail-order rental service (Blockbuster Total Access), and even put up kiosks. Unfortunately, they got into the game a little too late. The competition already had a handle on the market and customers were easing into the convenience of online streaming, kiosks at the grocery store, and mail-order delivery. at that place wasnt the need to drive down to the corner video store to look through the new releases or older movies.Also, they could view online reviews preferably of relying on the opinions of one Blockbuster employee. Blockbuster was sinking and the company wasnt able to tread water fast enough to keep them afloat. The losings were huge every year and the amount of money they had invested into failed operations was acquiring them nowhere. The inevitable was happening. In September 2010, Blockbuster filed for Chapter 11 Bankruptcy protection. The cultivation was to reorganize the company instead of liquidating assets. That is a good strategy if you stack implement a good business model to be and stay competitive.It has been speculated that after bankruptcy, the company will look much different. Hopefully, because their debt will be reduced and a new business model will be put into place, Blockbuster will be able to start over. In April 2011, dishful entanglement won the auction that bought most of Blockbuster assets out of bankruptcy. It paid an estimated $320 million and the goal is to compete directly with Netflixs streaming features. With Blockbusters name in Hollywood, Dish feels that they will be able to offer better, quality service to its customers over Netflix.Dish is negotiating with Starz movie channels to provide a great line-up of movies to its customers. (Sherman, 2011). Another option that is coming out of this shakeup is continuing with the Blockbuster Total Access mail-order program. One perk that makes them different from Netflix is the option to take the disc back to a physical store for an exchange rather than wait on the postal service. (Falcone, 2011). This may appeal to some customers who want a membership or subscription-based fee structure, but also want the gratification of watching movies on their own schedule and not having to wait for a new one to come in the mail.The plan is to downsize the number of physical stores still open which would result in a number of layoffs. At this time, some 3,000 stores will continue to stay open until a plan can be implemented. Blockbuster has already closed approximately 1,000 stores over the last couple of years. (Anderson, 2011). The closing of excess stores will be more in line with the changing environment. To save some of the existing brick and mortar stores, Blockbuster should consider a different environment that would appeal to a wider range of customers. Some ideas of this could include the following 1.Create a relaxed environment similar to Starbucks. Customers can come in and look for videos online while having a cup of coffee, tea, or a snack. There could be a living room type environment that is tea cozy and comfortable with couches, coffee tables, and table lamps. They should also have access to movie, game, and harmony reviews to help with their selection. 2. Provide Blockbuster kiosks in a wider range of locations. argue with Redbox and Netflix on a wider level. Blockbusters name allows them to obtain new releases faster than Netflix and Redbox.Blockbuster can use this to their advantage at these strategically placed kiosks. 3. Know the demographics in the area. Some areas of towns are more able to relent internet and subscription fees. Maybe its time to shut down the brick and mortar stores and cut its losses in t hose areas. Concentrate on areas that may not have access to internet or cant afford monthly fees. These areas of town may rely on physical stores and closing those locations would be a bad business move. 4. If the physical store is going to stay open, cut down on the size.If the owner owns the building, take of creative ways to fill the other area that would complement the Blockbuster store. brand it more appealing for customers to actually visit the video store rather than sit at home streaming the same movie. Make it an experience for the customer. If the owner leases, consider modifying the lease or look into subleasing the trim area. 5. Look into changing CEO or upper management. Dish Network needs to ask why management let technology get so far away from them, and how did they miss out on the luck to keep their existing customers and provide more for them.Was management so dismayed of technology that they didnt pursue it even though they were watching the losses year after year? Unless Dish Network creates a recessional that Netflix, Redbox, and the other internet-based businesses cant compete with, the purchase of Blockbuster may have been for nothing. The Blockbuster name and their Hollywood connections will help, but Dish Network needs to get moving fast on a strategic plan. The more time that goes by without having streaming capabilities and quality service under the Blockbuster name, more customers will stay with or riposte to one of the other services.For Blockbuster to make a comeback they will need to invest in marketing campaigns, technologies to keep pace with competition, and a plan to stay competitive. This time Blockbuster cant afford to enter a market and not keep up with the environment. Management needs to constantly watch trends and stay up on technology. They should be flexible and creative in this ever-changing world. Just because a business model was successful doesnt mean it will always be successful. Blockbuster learned this t he hard way. REFERENCES Anderson, M. (2010, September 23).Blockbuster files for bankruptcy. Debt, changing media habits whirl Blockbuster. Yahoo Finance. Retrieved from http//finance. yahoo. com/news/ Debt-changing-media-habits-apf-1049608580. html? x=0. Carr, A. (2010, August 27). Blockbusted A Netflix Knock-Out, bounteous Metaphors on the Path to the Movie Monsters Bankruptcy. Fast Company. Retrieved from http//www. fastcompany. com/1685375/blockbuster-plans-for-bankruptcy-a-look-at-ceo-jim-keyes-best-denials. Falcone, J. P. (2011, September 2). Netflix vs. Blockbuster Whats the Best Service for Streaming and DVDs? Cnet intelligence operation.Retrieved from http//news. cnet. com/8301-17938_105-20093587-1/netflix-vs-blockbuster-whats-the-best-service-for-streaming-and-dvds. Gandel, S. (2010, October 17). How Blockbuster Failed at Failing. Time cartridge holder Business. Retrieved from http//www. time. com/time/magazine/article/0,9171,2022624-1,00. html. History. com. Oct 19, 19 85 First Blockbuster store opens. (n. d. ). This day in History. Retrieved September 16, 2011, from AE Television Networks website http//www. history. com/ this-day-in-history/first-blockbuster-store-opens. Newman, R. (2010, September 23).How Netflix (and Blockbuster) killed Blockbuster. U. S. News World Report, Money. Retrieved from http//money. usnews. com/money/blogs/ flowchart/2010/09/23/how-netflix-and-blockbuster-killed-blockbuster. Sherman, A. (2011, September 2). Dish say to Stream Blockbuster Films to Challenge Netflix. Bloomberg. Retrieved from http//www. bloomberg. com/news/2011-09-02/dish-said-to-plan-blockbuster-rival-to-netflix. html Spector, B. (2010). Implementing Organizational Change Theory Into Practice(2nd ed. ). Upper Saddle River NJ Pearson Prentice Hall.