Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry
Provides a comprehensive background of the video rental industry and home entertainment giant, Blockbuster Inc. Follows the life of Blockbuster Inc. from its first days under founder Wayne Huizenga to its most recent developments under 2003 CEO John Antioco. By looking at various strategic decisions its leaders have made throughout the past few decades, students come to understand better how Blockbuster Inc. has become the industry's dominant player. Also explores the fascinating economics of the home video industry, paying particular attention to the unique revenue-sharing model that has developed in recent years. Understanding Blockbuster Inc. and the video industry's background also allows students to analyze better the various technological substitution threats (such as DVD, DIVX, sell-through, home delivery services, Internet subscription services, personal video recorders, pay-per-view, and video-on-demand).
Swot Analysis of "Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry" written by Peter J. Coughlan, Jennifer L. Illes includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Blockbuster Video facing as an external strategic factors. Some of the topics covered in Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry case study are - Strategic Management Strategies, Competitive strategy, Decision making, Disruptive innovation, Internet, Strategic planning and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry casestudy better are - – cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs, there is backlash against globalization, technology disruption, competitive advantages are harder to sustain because of technology dispersion, central banks are concerned over increasing inflation, increasing energy prices,
wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, etc
Introduction to SWOT Analysis of Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Blockbuster Video, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Blockbuster Video operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry can be done for the following purposes –
1. Strategic planning using facts provided in Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry case study
2. Improving business portfolio management of Blockbuster Video
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Blockbuster Video
Strengths Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Blockbuster Video in Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry Harvard Business Review case study are -
Organizational Resilience of Blockbuster Video
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Blockbuster Video does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Cross disciplinary teams
– Horizontal connected teams at the Blockbuster Video are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Operational resilience
– The operational resilience strategy in the Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High switching costs
– The high switching costs that Blockbuster Video has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
High brand equity
– Blockbuster Video has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Blockbuster Video to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Blockbuster Video is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Blockbuster Video is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Blockbuster Video in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Highly skilled collaborators
– Blockbuster Video has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Blockbuster Video digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Blockbuster Video has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Low bargaining power of suppliers
– Suppliers of Blockbuster Video in the sector have low bargaining power. Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Blockbuster Video to manage not only supply disruptions but also source products at highly competitive prices.
Effective Research and Development (R&D)
– Blockbuster Video has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Blockbuster Video is present in almost all the verticals within the industry. This has provided firm in Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Weaknesses Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry are -
High bargaining power of channel partners
– Because of the regulatory requirements, Peter J. Coughlan, Jennifer L. Illes suggests that, Blockbuster Video is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Low market penetration in new markets
– Outside its home market of Blockbuster Video, firm in the HBR case study Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Need for greater diversity
– Blockbuster Video has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry, in the dynamic environment Blockbuster Video has struggled to respond to the nimble upstart competition. Blockbuster Video has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Skills based hiring
– The stress on hiring functional specialists at Blockbuster Video has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Increasing silos among functional specialists
– The organizational structure of Blockbuster Video is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Blockbuster Video needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Blockbuster Video to focus more on services rather than just following the product oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry, it seems that company is thinking about the frontier risks that can impact Strategy & Execution strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High cash cycle compare to competitors
Blockbuster Video has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Blockbuster Video is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Interest costs
– Compare to the competition, Blockbuster Video has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Aligning sales with marketing
– It come across in the case study Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry can leverage the sales team experience to cultivate customer relationships as Blockbuster Video is planning to shift buying processes online.
Opportunities Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry are -
Creating value in data economy
– The success of analytics program of Blockbuster Video has opened avenues for new revenue streams for the organization in the industry. This can help Blockbuster Video to build a more holistic ecosystem as suggested in the Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry case study. Blockbuster Video can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Blockbuster Video in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Blockbuster Video can use these opportunities to build new business models that can help the communities that Blockbuster Video operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Blockbuster Video can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Blockbuster Video can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Buying journey improvements
– Blockbuster Video can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Learning at scale
– Online learning technologies has now opened space for Blockbuster Video to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Blockbuster Video can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Blockbuster Video to increase its market reach. Blockbuster Video will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Blockbuster Video to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Blockbuster Video to hire the very best people irrespective of their geographical location.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Blockbuster Video can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Blockbuster Video to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Loyalty marketing
– Blockbuster Video has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry are -
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Blockbuster Video in the Strategy & Execution sector and impact the bottomline of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry, Blockbuster Video may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Stagnating economy with rate increase
– Blockbuster Video can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Blockbuster Video needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Environmental challenges
– Blockbuster Video needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Blockbuster Video can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Blockbuster Video with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Consumer confidence and its impact on Blockbuster Video demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology acceleration in Forth Industrial Revolution
– Blockbuster Video has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Blockbuster Video needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Blockbuster Video can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Blockbuster Video needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
High dependence on third party suppliers
– Blockbuster Video high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Weighted SWOT Analysis of Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Blockbuster Inc. & Technological Substitution (A): Achieving Dominance in the Video Rental Industry is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Blockbuster Video needs to make to build a sustainable competitive advantage.
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