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Blockbuster Organizational Failure - Research Paper Example

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Blockbuster Organizational Failure Introduction The global economy has undergone through substantial transformation in the last two decades. The advent of globalization paved a way for many businesses to operate their business beyond their national borders…
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Blockbuster Organizational Failure
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Download file to see previous pages At the same time, it also created numerous challenges in the market place regarding competitiveness, innovativeness as well as sustainability, which has greatly influenced company sustainability in many sectors. Focused on a similar notion, this paper will entail critical analyzes regarding the failure of Blockbuster LLC, which was formerly recognized as Blockbuster Inc. Overview of Blockbuster Organization Blockbuster is a global retail chain, which offers a vivid array of video games, home movie and rental services for DVDs and VCDs at reasonable price to its discriminating global customers. Besides, the organization is also dedicated to provide its customers with adequate product choices and unique purchasing experiences. Currently, Blockbuster is operating with more than 2,500 retail stores spread worldwide. Being an American MNC, the company owns its maximum number of retail stores in the US, apart from Europe, Asia and Australia. The primary objectives of the company over the years have been to provide a world class entertainment experience to the consumers with a vivid assortment of movie and game genres, serving to around 90 million people all around the world (Blockbuster, 2013). Irrespective of its success since its establishment, with the increasing pressure of competition in the global platform, the company had to witness a decline in its revenue structure. It was in the year 2010 that the organization filed for bankruptcy and was consequently acquired by Dish Network (Almeida, 2011). Analysis of the Organizational Failure Factors In order to analyze the reasons behind the failure of Blockbuster, the following subject areas will be taken into consideration, which shall be helpful to obtain an in-depth understanding of the role played by various external and internal business environment factors to secure the sustainability of a company in the long-run. Competitive Advantage According to Michael E. Porter (2008) competitive advantage is a strategy of gaining benefit over competitors by offering customers high value through reasonable price, good product quality, product variety, innovativeness as along with other value added services (Porter, 2008). In the current phenomenon, competitive advantages are not only necessary to assist a company in obtaining larger market share, greater profit and brand value, but it is also necessary to assure long-term leadership position of the company, in the modern era. However, when studying the incident of Blockbuster’s failure, it can be observed that the most significant aspect of competitive advantage is to guarantee the sustenance of a company, apart from the aforementioned benefits. It is in this context that apparently, due to its business model limitations, Blockbuster was in a competitively disadvantageous position. The industry context can be accounted as responsible in this regard, to a large extent. The current market structure of the entertainment industry tends to be highly volatile, where both the suppliers and the customers possess high degree of bargaining power, majorly due to the availability of close substitutes. Additionally, with frequent occurrences of forward and backward acquisition and mergers, Blockbuster also had to witness the threat of new entrants. Hence, given the limitations of the business model followed by the organization in terms of ill fit with external environmental changes, rigidness to adapt innovative ideas and cost as well as time intensive characteristic, the organization failed to preserve its ...Download file to see next pagesRead More
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