Blockbuster Case Analysis
External Analysis
Define the industry Blockbuster is operating in.
John Antioco said when he was CEO of Blockbuster in 2007 that the company was a word-class brand and was a highly regarded leader in the home entertainment industry. However, Blockbuster opened its first store after the founder did a analysis of the changing forces in the video rental industry. (
Is it a fragmented or consolidated industry (substantiate)?
According to Hill and Jones (2008) a fragmented industry is an industry that consists of large number of small or medium-sized companies, none of of which is in a position to determine industry prices. A consolidated industry is the opposite of a fragmented industry. So the industry is dominated by a small numbers of large companies, or even sometimes, by one company, that are in the position to determine industry prices. (Misschien iets meer in eigen woorden). Hill, Schilling and Jones (2015) mention a few examples of fragmented industries, these include the dry-cleaning, hair salon, health club, restaurant, massage and legal services industries.
Video rental industry was eerst fragmented, omdat er veel kleine lokale verhuurders waren, maar met de opkomst van blockbuster sloten veel van deze kleine verhuurders als ere en blockbuster bij hen in de buurt kwam omdat zij niet zo’n groot aanbod hadden als blockbuster. Blockbuster was het enige bedrijf dat boven regionaal niveau opereerde. Echter was de concurrentie wel fierce omdat het binnentreden van de markt relatief makkelijk was.
Analyse the different stages of the industry life cycle the industry is going through.
The industry life cycle is a model for analysing the evolution that the industry had gone through and what the effects are on competitive forces. It identifies five stages in the evolution of an industry that lead to five different kinds of industry environment. The stages are: embryonic, growth, shakeout, mature and decline.
An embryonic industry is one that just started to develop. The growth is very slow because buyers are unfamiliar with the industry’s product, the high prices and the bad distribution levels.