Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution 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 (D): The Threat of Direct Digital Distribution
Examines the emergence of technologies for delivering video content to consumer homes via direct digital distribution and investigates the strategic options facing video rental giant Blockbuster Inc. as it tries to respond to the new technological substitutes. Examines the impact of personal video recorders (or digital video recorders) on the market for Blockbuster's main complementary products, the VCR and DVD player, and explores how this technology might ultimately impact Blockbuster. Addresses the current and future impact of video-on-demand, the latest incarnation of the long enduring pay-per-view technology, and analyzes Blockbuster's potential and actual response to the threat. In times of technological change, firms continuously face decisions regarding the extent to which they should embrace a technologically advanced substitute at the possible expense of their existing products and services.
Swot Analysis of "Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution" 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 (D): The Threat of Direct Digital Distribution 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 (D): The Threat of Direct Digital Distribution casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, cloud computing is disrupting traditional business models, digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, increasing government debt because of Covid-19 spendings, increasing household debt because of falling income levels,
competitive advantages are harder to sustain because of technology dispersion, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution 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 (D): The Threat of Direct Digital Distribution can be done for the following purposes –
1. Strategic planning using facts provided in Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution 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 (D): The Threat of Direct Digital Distribution | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Blockbuster Video in Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution 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.
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 (D): The Threat of Direct Digital Distribution Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
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.
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 (D): The Threat of Direct Digital Distribution HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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 (D): The Threat of Direct Digital Distribution - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Strong track record of project management
– Blockbuster Video is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution 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.
Diverse revenue streams
– Blockbuster Video is present in almost all the verticals within the industry. This has provided firm in Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution 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.
Ability to recruit top talent
– Blockbuster Video is one of the leading recruiters in the industry. Managers in the Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Strategy & Execution industry
– Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution firm has clearly differentiated products in the market place. This has enabled Blockbuster Video to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Blockbuster Video to invest into research and development (R&D) and innovation.
Weaknesses Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution are -
Aligning sales with marketing
– It come across in the case study Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution 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 (D): The Threat of Direct Digital Distribution can leverage the sales team experience to cultivate customer relationships as Blockbuster Video is planning to shift buying processes online.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Blockbuster Video has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Blockbuster Video has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Blockbuster Video even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
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.
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.
Products dominated business model
– Even though Blockbuster Video has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution should strive to include more intangible value offerings along with its core products and services.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution, is just above the industry average. Blockbuster Video needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
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 (D): The Threat of Direct Digital Distribution, 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Blockbuster Video needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Lack of clear differentiation of Blockbuster Video products
– To increase the profitability and margins on the products, Blockbuster Video needs to provide more differentiated products than what it is currently offering in the marketplace.
Opportunities Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution | 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 (D): The Threat of Direct Digital Distribution are -
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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Blockbuster Video in the consumer business. Now Blockbuster Video can target international markets with far fewer capital restrictions requirements than the existing system.
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.
Using analytics as competitive advantage
– Blockbuster Video has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Blockbuster Video to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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.
Developing new processes and practices
– Blockbuster Video can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
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.
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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Strategy & Execution industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Blockbuster Video can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Blockbuster Video can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
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.
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.
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 (D): The Threat of Direct Digital Distribution case study. Blockbuster Video can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution 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 (D): The Threat of Direct Digital Distribution are -
Shortening product life cycle
– it is one of the major threat that Blockbuster Video is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Blockbuster Video can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution .
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.
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.
Increasing wage structure of Blockbuster Video
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Blockbuster Video.
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.
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.
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.
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.
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 (D): The Threat of Direct Digital Distribution, 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 .
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Blockbuster Video in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
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.
Weighted SWOT Analysis of Blockbuster Inc. & Technological Substitution (D): The Threat of Direct Digital Distribution 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 (D): The Threat of Direct Digital Distribution 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 (D): The Threat of Direct Digital Distribution 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 (D): The Threat of Direct Digital Distribution 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 (D): The Threat of Direct Digital Distribution 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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