The Fall of Blockbuster Video

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The Closing of Blockbuster Video’s Stores The Closing of Blockbuster Video’s Stores Hanna, Peter Southern New Hampshire University OL-500 Hanna, Peter Southern New Hampshire University OL-500 Abstract: With increasing competition and the growth of technology, it is important that organizations maintain focus on an innovative and clear strategic direction as well as always striving for customer satisfaction. There are four major issues, inefficient and arrogant strategic direction, customer dissatisfaction, fiscal irresponsibility and a lack of innovation that ultimately led to the demise of the video rental “Kingpin” also known as Blockbuster Video. Introduction: Organizational strength relies on its…show more content…
In September 1993, Huizenga proposed a $4.7 billion merger with media giant Viacom Inc. The merger did not prove to be fruitful. By April 1994, Blockbuster's and Viacom's stock had tumbled dramatically. The failure of the merger caused disdain in the organization, beleaguered for financial losses and lack of clearly defined leadership, Huizenga eventually stepped down as CEO in 1994. Over the next few years Steven Berrard, took over as President and took the company on a terrible trajectory focusing on major expansion. He only lasted for 2 years in the organization and Bill Fields in March 1996. Fields wanted to transform the image of the organization, but also failed. 1996, Blockbuster’s worth was estimated at $4.6 billion which is half the value it had thirteen years prior. Blockbuster could not develop a clearly defined path for excellence and the infrastructure was lacking; this was foretelling of the future. Bhidé discusses that “an organization’s capacity to execute its strategy depends on its ‘hard’ infrastructure – its organizational structure and systems – and on its ‘soft’ infrastructure – its culture and norms.” (Bhidé, 1999) without stability, the company was poised for long term failure. It appeared that in Blockbuster’s hankering for growth, a strong and strategic organizational infrastructure was lacking. Blockbuster did not have a stable in structure of leadership and management to sustain itself. This is most likely the reason that there

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