Blockbuster: Leadership & Strategic Failures Essay

2055 WordsNov 18, 20119 Pages
Blockbuster: Leadership & Strategic Failures Scott E. Morris MGT 460 Professor Robin McCart-Brown May 30th, 2011 Abstract This research paper will explore and analyze the leadership and strategic failures that occurred within Blockbuster Incorporated. The paper will look at leadership and strategic theories that could have assisted Blockbuster. In addition the paper will discuss the importance of leadership within an organization, and its necessity for the company to survive. Blockbuster: Leadership & Strategic Failures Overview Blockbuster started as an idea by David Cook who owned a company called Cook Data Services that provided computer software to the oil and gas industry in Texas. In the early 80’s the oil…show more content…
Pay-Per-View movies were now being offer by many cable companies. Pay-per-view first originated as a means to offer closed-circuit premium sporting events into the home. The cable company’s strategy was to start offering movies to their customers without the need for them to leave their home to purchase or return the movie. In addition the pay-per-view marketing strategy used an “always in stock”, to indicate that the new popular titles would be available, and going to your local rental store, they could be out of stock. Blockbuster aimed to combat the pay-per-view by offering more titles, and claiming convenience by having the ability to “pause” the movie for bathroom breaks which was not available to pay-per-view. This problem brought about an inventory nightmare for Blockbuster. They had to increase their inventory holding on what they believed to be strong movie titles, and after the spike of popularity, the stores had an abundance of inventory that they had to sell off at significantly reduced prices. The management of Blockbuster never viewed pay-per-view as a viable competitor and continued with their expansion plans. “Although Blockbuster rapidly expanded nationally and experienced astronomical growth (company earnings in 1988, 1989, and 1990 were 113%, 93%, and 48% respectively), the rental industry was beginning to reach maturity.” (Hit, Ireland, Hoskisson, 2009, p278) This technology advance of pay-per-view and the ignorance of their

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