Blockbuster Video free essay sample

The central issue or issues of the Blockbuster Video case that the company faced, can be broken down and represented as three major areas of focus: †¢Financial ? Prevent the continual decline in cash flow and profits. Lower inventory costs. †¢Strategic ? How to react to an ever decreasing video rental market. Promote global marketing to reach and service the international home entertainment market. †¢Technology ? Implement Best practices to utilize Blockbuster? huge customer database. Implement leading edge technology in keeping up with and surpassing their competition? s use of technological innovations. As was clearly seen through systems analysis, each one of these issues is directly related to Blockbuster? s continued success, and was an important area of focus for setting and achieving Blockbuster? s business directives. Financially Blockbuster had been experiencing a steady decrease in cash flow and profits finally resulting in a serious negative cash flow situation by 1994. How to prevent this trend became the number one financial issue that Blockbuster was facing. We will write a custom essay sample on Blockbuster Video or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Other issues for Blockbuster were how to remain profitable within a mature industry, and how to lower their inventory costs (mainly through middleman elimination). Blockbuster? s strategic issue of how to react to an ever decreasing video rental market lead to a corporate merger with Viacom, and subsequently to a partnership with Sony Electronics. These mergers were intended to increase profits by elimination of ? middleman? distributors and expand Blockbuster? s reach within the home entertainment industry as a whole. Blockbuster? s penetration into foreign markets was also a primary strategic issue in directing Blockbuster? s expansion. Another key strategic goal of Blockbuster was to change its image from a ? video? store into a ? total-entertainment store? , primarily by the addition of music and book sections to Blockbuster outlets. Technologically, Blockbuster was first of all trying to understand how technology could improve their business operations efficiencies and lower operating expenses, primarily through utilizing its already huge customer database. Secondly, Blockbuster was trying to find a way to match available technologies to customer needs in the form of state of the art audio and leading edge video product offerings, along with the need to use technology in attaining Blockbuster? s own business goals and objectives. IV. Alternatives: A few steps the managers could take now that the issues have been determined and sufficient analysis has taken place would be; continued focus on technological innovations such as the Web as a means for growth within the domestic market as well as to promote international market penetration. Establishing a name synonymous with video, then wanting to broaden their scope to ? total-entertainment store? , requires staying on top of edge home entertainment technologies such as ? Video on Demand? services. An ES or DSS could greatly assist Blockbuster management in making good decisions regarding which new technologies to invest in, based on market research presented through ES and DSS analysis. Blockbuster should consider building an Expert System in helping to provide solutions regarding future technological investments. Blockbuster should continue with technological innovations such as the 1997 DVD kiosk concept to keep ahead of its competition, and to stay on the leading edge of home entertainment technology. Blockbuster? free CD internet access promotion with Sprint might be used as a model to be used in an ES (Expert System) to help Blockbuster make sound business and promotional decisions through the solutions provided by the ES? s rules-based inference engine. Given the current environment in which the managers are working, and the problems and opportunities that they face, it would seem that the most comprehensive approach that Blockbuster could take would be to continue their Industry leading technological innovations, focused on international distribution as a means of increasing customer satisfaction, market share, and lowering operating costs.This could be implemented by the use of an ES, or even a DSS (Decision Support System), such as a capital investment decision system in helping the management at Blockbuster plan their present and future financial investment strategies.