...1148 – GEB6896 – Case Analysis “Blockbuster” Session 4 – Case Analysis Student: | Tarkan Koçoğlu | Date: | 02/21/2015 | Answer the following 10 questions, using the financial statement data from Blockbuster Entertainment Corporation. 1. What is Blockbuster's amortization timetable? Do you think it is appropriate? Based on Blockbuster Entertainment Corporation and Subsidiaries consolidated financial statements, the amortization period for intangible assets related to acquired businesses is 40 years on a straight-line basis. There are two areas that are against a 40 years amortization timetable: 1. 25 years term for company franchise agreements, which is less than the amortization period. 2. Typical high-tech industry assets have a short lifecycle and current practice, which is required by the SEC is around five to seven years and it needs to be related to the nature of business acquired; in this case video stores. 2. What would be the impact on Blockbuster's 1988 earnings per share if 5-year amortization were applied to this goodwill? The application of a 5-year amortization timetable impacts the amounts that would have to be recognized as the goodwill, which would decrease Blockbuster’s net income and hence their 1988 earnings per share. 3. What would have been the effect on earnings per share if Video Superstore purchases were not included in 1988 revenues? The exclusion of the Video Superstore revenues would have reduced the earnings...
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...Blockbuster Meaning A thing of great power or size, in particular a film, book, or other product that is a great commercial success About Blockbuster: Blockbuster Inc. is a leading global provider of in-home movies and games entertainment. Introduction: provides Blockbuster Video stores and Online rental services. worldwide brand operating in more than 20 countries majority in USA Its stores are ubiquitous more than 8,000 stores Slogan: "The Movie Store at Your Door" PRODUCTS: Retailing and renting of DVD Blu-ray Video games. SIGNIFICANCE: Easily available Unlimited selection Wide variety of movies from different genre Small stores cannot compete Changes: 2004: launched online rental service Gain market share No late fees Video rental stores Important change was hiring a new CEO, James W. Keyes. CEO: James W. Keyes(since july 2007) former CEO of 7-Eleven(2000-2005) Vise president and chief operating officer of 7-Eleven DOWN FALL: unable to determine profitable goods missed sales opportunities financial difficulties Lost customer to Netflix REVIVAL: Quantitative approach JAMES W. KEYESQUANTITATIVE APPROACH: 1) computer models to figure out the best way by saving both money and time. 2) Inventory model 3) Queuing theory 4) Capital budgeting 5) Production scheduling 6) Planning for manpower development programs. 7) Transportation and aircraft scheduling 8) Preventive control and replacement problems ...
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...An Organizational Failure: Blockbuster Rana Fawad 1. Describe and discuss how the organization’s culture facilitated the failure. Philips (2011) believes that success or failure of any great company depends on “Events, internal and external” (p. 3). Blockbuster also appears to be a victim of certain events at internal as well as external level. Based in McKinney, Texas, Blockbuster and founded in 1985 (Blockbuster Corporate, 2012) and it ushered in a new era as far as video rental retail industry was concerned. The company gave birth to video rental places that had significant amount of movies under one roof (the first store had 8,000 movies) and were not associated with bad movies or bad neighborhoods (Greenberg, 2008). Initially, the company’s strategy was to expand aggressively and the leadership defined Blockbuster’s vision to become McDonald’s of the video rental business. Referring to the company leadership’s ambitious goals, Greenberg writes: The Blockbuster strategy was simple – pump as much money as possible into buying local and regional chains while keeping centralized control over the look and feel of the individual stores. By the VSDA convention the following year, Blockbuster had acquired two other chains and its more than 250 stores dotted the country. At the convention, Huizenga’s marketing executive Tom Gruber outlined vision for the future of the company, and it was expansive. Gruber had spent eighteen years working for McDonald’s before...
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...Blockbuster: Movie Rentals in the Digital Era SWOT Analysis Internal Strengths If a strength or a weakness is ambiguous, explain the reasons that you have to classify it as a strength or a weakness. * Overall size of the company: Blockbuster is #1 in the industry. In the entertainment industry size is very important. Large companies are able to get better deals from movie studios. * Management team is open change. The management of the company appears to be open to new ideas. This will allow the company to adopt to new challenges. * Aggressive expansion and acquisition performance. The company seems willing to expand to new areas. They have a successful record of successfully acquiring other businesses. * Established name and customer loyalty. The company has a very widely recognized name. Many consumers are very loyal to Blockbuster. It is very likely that they will purchase the company’s products if they are offered through a different format. * Offers rentals via stores and online * Strong international presence. Blockbuster has established a very strong brand equity in many countries of the world. This is a major strength if the company wants to expand internationally. Internal Weaknesses * Many format changes over its history has created consistency issues. This has resulted in confusion among consumers. Many consumers have negative feelings towards Blockbuster based on their past experiences. * Lack of first mover...
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...Movie Rental Industry: Blockbuster Case David Cook founded Blockbuster video in 1985, opening the first store in Dallas Texas and has grown to become the world's number one video chain. Mr. Cook took the idea of video rental and improved it by creating the video superstore concept. Many family-owned video rental stores could not compete against Blockbuster' stores. Blockbuster stores were highly visible stand-alone structures that appealed to customers. Blockbuster His stores had a wider selection of videos and offered longer hours of operation. He focused on creating a family image for his stores by including a children's section and excluding adult movies. He also made it possible for busy people and people with children the opportunity to view movies for a longer period by starting the 3 day rental period. In 1986, Mr. Cook sold 33% of Blockbuster to h, m & Flynn and in 1987; he decided to leave the company making Mr. Huizenga CEO (Smiley, 2010). Mr. Huizenga had experience growing small companies but no experience in retail, so he hired the best managers who were capable of developing a retail chain. Under Mr. Huizenga's leadership Blockbuster experienced major growth. By 1992, Blockbuster had over 3,000 stores (1,000 franchise and 2,000 company owned). Blockbuster had established 3 operating divisions to manage functional activities. These three divisions cut cost for the company by eliminating the outsourcing of these jobs. Years ago, almost everyone who rented a video...
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...protested and shut down their stores for hours to bring to light the limitations this made for the public to rent videos. The bill was later defeated. Atkinson grew to 42 stores in 20 months and in 7 years had a total of 500 stores. And so began the rise of the video rental market. David P. Cook seeing the opportunities in the video rental industry opened Blockbuster in 1985. Although two years later David sold his stake in the company, Blockbuster continued to grow and became the number one video retailer by 1988. Blockbuster understood video rentals were an impulse buy. For this reason Blockbuster rapidly expanded the firm’s size by strategically placing stores in close proximity to the customers. Acquisition of the third largest video retailer was another way Blockbuster continued to grow. By 1991, fifteen hundred Blockbuster stores existed domestic and internationally. To improve its market position, Blockbuster sold new release videos at $2.99 for a two-day rental. This was the same price for older movies which could be rented for five days. This strategic pricing structure made it easy for customers to come to Blockbuster for their rentals. It was convenient to know the pricing was the same at every store and more time could be spent picking out which movie you wanted to watch versus what kind of movie because both new releases and older movies were priced the same....
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...Blockbuster Case Study How will new competition from Redbox and digital content providers force Blockbuster to alter its strategy? At their physical retail locations, Blockbuster sells movie theatre type food items to enjoy while watching your movie rental. Blockbuster has recently weighed in with kiosks in locations to compete with Redbox. One of the advantages is promoting these new kiosks is promoting the availability of new releases as compared to Redbox or Netflix in addition to the available choices. I believe Blockbuster’s strategy should be one that capitalizes upon availability and choices. I also believe Blockbuster’s strategy should encompass or revising their distribution channels. Retail stores pose higher overhead and therefore cut into the pricing strategy. As technology advances, moviegoers are now looking for access to movies and entertainment that is instant and convenient. Blockbuster has answered this demand with their Total Access online program. What value-added components could Blockbuster offer to the movie studios that might entice them to more closely align with Blockbuster as a distribution channel? The value-added components would be to collaborate with channels such as cable or satellite providers such as Dish Network. The opportunities this present are channels such as pay per view that are offered by satellite and cable companies. The Total Access can then be acclimated online on the cable and satellite companies, which...
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...Blockbuster Offers Upside Potential: A Case Analysis 1) Video and DVD rental sales have begun to flatten, and new technology, including digital movies on demand, threatens Blockbuster’s original core business. During the early 1990s, Blockbuster had a competitive advantage over the DVD rental sales. They were able to determine, create, and maintain a competitive advantage over other rivalries like Wal-Mart, Target, and Amazon.com. A competitive advantage is defined as “the ability of a firm to win consistently over the long term in a competitive situation.” Competitive advantage is created through the achievement of five qualities: superiority, inimitability, durability, non-substitutability, and appropriability. I believe that Blockbuster should move aggressively into selling video game players, games, and accessories versus its past focus on rentals. This type of aggressiveness can be called ‘superiority’. An example of superiority is Federal Express. Federal Express was one of the first companies to introduce package tracking capability. It created a system for tracking a package all along its route. Thus, it was better than UPS at knowing where a customer’s package was. Similar to Blockbuster, where if they move into selling video game players, games, and accessories versus its past, they would have the opportunity to invest more customers into the store while rebuilding its DVD sales market from other competitors like Netflix and Hollywood Video today. I believe that...
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...providers force Blockbuster to alter its strategy? At their physical retail locations, Blockbuster sells movie theatre type food items to enjoy while watching your movie rental. Blockbuster has recently weighed in with kiosks in locations to compete with Redbox. One of the advantages is promoting these new kiosks is promoting the availability of new releases as compared to Redbox or Netflix in addition to the available choices. I believe Blockbuster’s strategy should be one that capitalizes upon availability and choices. I also believe Blockbuster’s strategy should encompass or revising their distribution channels. Retail stores pose higher overhead and therefore cut into the pricing strategy. As technology advances, moviegoers are now looking for access to movies and entertainment that is instant and convenient. Blockbuster has answered this demand with their Total Access online program. What value-added components could Blockbuster offer to the movie studios that might entice them to more closely align with Blockbuster as a distribution channel? The value-added components would be to collaborate with channels such as cable or satellite providers such as Dish Network. The opportunities this present are channels such as pay per view that are offered by satellite and cable companies. The Total Access can then be acclimated online on the cable and satellite companies, which provides virtual guarantee for movie studios. In the long term, how can Blockbuster increase...
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...sophisticated technologies in times, and these | | | | | | | | | | | | | | | technologies will be get outdated / obsolete very soon say 3-4 years. Hence it would be ideal to amortize the goodwill for 5-7 years. | | | | | | | | | | | | | | | It won't be appropriate to amortize for 40 years or less. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2) What would be the impact on Blockbuster's 1988 earnings per share be if 5 year amortization were applied to this goodwill? | | | | | | | | | | | | | | | On April 20, Blockbuster announced an agreement to merge with its largest franchisee, Video Superstore. | | | | | | | | | | | | | | | | | Video Superstore was Blockbuster's largest customer for videotapes, accounting for 10% of such sales in 1988, 21% in 1987, and 48% in 1986. | | | | | | | | | | | | | | | If the 5-year amortization were applied instead of the 40-year timetable, | | | | | | | | | | | | | | | | | | | | the company would have to recognize the goodwill in larger amounts, which would increase their tax liability. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |...
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...When people think of the sinking of the Titanic, they will most likely think of the great Hollywood blockbuster movie that was more a love story then a historical movie with documentation of what happened on that cold night of April 14, 1912. Historians like to tell people what happened from the facts that are given to them, and eye witness accounts of what had happened on the ship the night it plunged to its deep dark grave. Everyone knows that the ship sank and that it is gone, but what they don't know is what had happened while people were being loaded into the lifeboats and what was occurring after the ship went down. Men played a big role in all of this; some were looked upon as cowards and others as heroes. There are different view points of what the roles of men were. Not only during the night the Titanic went down, but also the roles they played in society in 1912. For everyone who survived the sinking, should be thankful and happy because more then half the people on the ship that night passed away. The male survivors however had to justify how they survived, because the rule of the sea was women and children got on the life boats first. The men aboard the Titanic had responsibilities after the ship collided with an iceberg. They were looked at as if they knew they weren't going to live, but they had to save the women and children who were aboard the Titanic. As for the men who just wanted to save their own lives and didn't care about anyone else, these men were...
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...I. Strategic Profile and Case Analysis Purpose Blockbuster L.L.C., as it is known today, was opened in October of 1985 before access of the internet had become hugely successful (Blockbuster, 2013). By the end of the century, the video rental industry was seeing signs of extinction. In 2004, Blockbuster offered its first online DVD rental, and attempted to offer its own streaming by purchasing Movielink (Hitt, Ireland, & Hoskisson, 2011). Per this case analysis, the Movielink strategy failed to attract the immediate cash-flow Blockbuster had expected which resulted in bankruptcy. By April of 2011, Dish Network, with14 million subscribers, acquired Blockbuster for $320 million in a court auction (Blockbuster, 2013). Products and services include; Blockbuster, Blockbuster Video, Blockbuster online, Blockbuster Night, Blockbuster GiftCard’s, Blockbuster Game Pass, Blockbuster Movie Pass, Blockbuster Rewards and in 2006, the Blockbuster Total Access Program. The strategy of this program was based on returning the disc through a prepaid envelope or exchange at a retail location. The retail stores offer rewards and special promotions for visiting retail stores. Blockbuster Movie Pass is tied to a Dish subscription; “the company can offer content to which it already has the rights to through program deals for its satellite TV business” (Fritz, 2011). The purpose of this case study is to analyze the current internal and external factors of the evolving home entertainment industry...
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...Closing of Blockbuster Alimatu Asumah Organizational Behavior Southern New Hampshire University I. Introduction a. Closing of Blockbuster b. Challenges faced by Block c. Filling for bankruptcy II. Dish Takeover and Tactics a. Dish Purchase and Layoffs at Blockbuster b. Exploring new channels c. Blockbuster need for innovation III. Employment and Morale a. Compensation and Quality of work b. Morale and Job Satisfaction c. Corporation Image IV. Conclusion I. Introduction Founded by David Cook and Wayne Huizenga in the mid 1980’s, in the late 1980's and early 1990’s, Blockbuster Inc. was the leading in the video rental industry. Which grew quickly maintaining interest in the entertainment industry, including retailing music. Also growing nationwide, many American families were turning all over to movie rentals as a form of in-home entertainment. I propose that an organizational behavior theory that leads to a company’s success includes a rational system perspective and the most important things within these theories are formalization and specific it y of goals. Organizational behavior becomes standardize. Through formalization, organizational behavior becomes standardize making training of new employees easier for both management and the employee. Goal specification allows procedures for specific tasks to be performed along with a structured way for resources to be allotted (Kreitner 2012). When companies have a rational structure, expectations...
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...10-23-13 Blockbuster Video Swot Analysis Blockbuster Inc. is an American-based chain of VHS, DVD, Blu-ray, and video game rental stores currently under Chapter 11 bankruptcy. As of January 3, 2010, there were over 5000 Blockbuster stores in the U.S. and 17 countries worldwide. It is headquartered in the Renaissance Tower in Downtown Dallas, Texas.[1] Because of competition from other video rental companies like Netflix, Blockbuster has seen significant revenue losses. The company filed for bankruptcy on September 23, 2010. Strengths * Lead market share of online rentals * Low fixed costs * Worlds largest selection of DVDs * Fastest delivery time of any online DVD rental company with over 35 DCs * Service: over 90% of DVD's are received by customers within one day of ordering * Strong website (shopability, navigation, reviews) Weaknesses * Can't control most important expense: shipping expenses * Older demographic has a hard time understanding their concept * Watch instantly feature only allows a small selection of DVD's * Distribution time * presence in only DVD segment Opportunities * Pricing segmentation (i.e., different plans) * Online distribution * Other types of rentals (Video games, educational, institutional, etc) * Internationalization * Expanding to Video Game rental Threats Rising stamp costs, Other larger retailers launching into similar space (i.e., Wal-Mart, Online digital distribution iTunes, Napster Redbox, Blockbuster allowing...
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...In order to assess the attractiveness of the video rental business, the industry necessitates an evaluation through the analytical lens of the five contending forces of competition. First, there is a significantly low threat of new entrants mainly due to high barriers of entry and economies of scale. For example, there are substantial capital requirements in construction of fixed facilities in strategic locations in order to distribute DVDs; there are also unrecoverable expenditures in up-front R&D and advertising costs, both of which are emphasized in order to differentiate service and build brand equity. There are also government policies to reinforce the barrier. For example, in addition to its red envelops, Netflix has patents to protect essential characteristics of its business model such as its “Max Out” and “Max Turns” approaches. This creates cost disadvantages through a greater learning curve for new entrants, especially when competing against algorithmic programs such as Netflix’s CineMatch, which becomes more effective at recommending movies as more subscribers provide feedback. Another governmental restriction is seen specifically with Amazon.com, whereby distribution channels are choked out in the US unless Amazon sacrifices its competitive advantage of avoiding sales tax. The second force of competition, the bargaining power of the supplier, is assessed as moderate to high. The movie studios and independent movie distributors provide the rights to distribute...
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