Block Buster Essays, Book Reports, Term Papers

This essay Block Buster Essays, Book Reports, Term Papers has a total of 1063 words and 9 pages.

block buster BLOCKBUSTER ENTERTAINMENT David P. Cook created the first Blockbuster Video store in October 1985 in Dallas, Texas. Mr. Cook intended to establish " video superstores" that would respond to the on going trends in the video industry during the 1980's because the number or households buying VCRs was increasing very much and so was the number of film titles. He wanted to create a store that would respond to the customer's needs such as: nice facilities, wide selections of videos, fast service, and convenience. A computer system was developed so that the company was able to track specific demographic data, customer's renting patterns, and the number of times a cassette has been rented, and the information was collected through the scanning of the customer's membership card. The primary target market of the superstore was eighteen to forty-nine- year-old adults and six-to-twelve-year-old children. In 1986, it is reported that the company was composed of eight stores and eleven franchises in cities with a minimum population of 100,000; for example: Houston, Chicago, Detroit… In May of 1986, the company officially became Blockbuster Entertainment Corporation (BEC). In 1987, David Cook, founder and chief executive officer (CEO), left BEC after selling 35% of Blockbuster common shares to John Melk, Donald Flynn, and H. Wayne Huizenga. The latter became the new CEO of BEC. Under the new management team BEC has expanded into the West Coast, Midwest, Southwest, and Eastern regions of the country; by the end of 1992 the company had a total of 3,127 video stores. BEC wanted to open many more stores in 1993 because it wanted to acquire 25% to 30% of the market shares within the following two years; at that time BEC had revenues of $868 million. BEC was growing fast and so were technology and competition. It faced competition from other video rental stores like West Coast video, Kroger, and Winn in different regions. In addition, new technology brought in cable TV with the pay- per-view or video-on-demand concept; consequently, customers are able to order their favorite movies from the comfort of their homes. However, BEC continued to expand and went international as far as Japan, United Kingdom, Chile, Venezuela, and Spain. The company entered into film entertainment programming, music retailing, and other new ventures. Finally, in 1995, Blockbuster Entertainment Corporation merged with Viacom, " major provider of entertainment programming", to "reduce the threat to Blockbuster from changes in technology." In 1996, BEC became a wholly owned subsidiary of Viacom with new leadership and unclear prospects. Chapter seven of the Strategic Management textbook is about competitive strategy and the industry environment with focus on strategies in fragmented industries, strategies in the different lifecycles of an industry, strategies to deter entry in the industry, and supply-and-distribution strategy. This relates to the Blockbuster video case because "the video- rental is still very fragmented" which means that the industry is composed of many small companies and barriers to entry are very low. However, the book pointed out that "the returns form consolidating a fragmented industry is often huge…[so that] many companies have developed competitive strategies to consolidate fragmented industries." For example, Wall-Mart pursue a chaining strategy to obt

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