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Case Analysis Report: “Blockbus Vs. Netflix: Which Will Win Out?

Case Analysis Report (CAR): “Blockbuster vs. Netflix: Which Will Win Out?”

Case Overview

This case shows how a U.S. video rental store (Blockbuster) competes with another online video rental Netflix after 2000. Blockbuster tried to transform from tradition physical stores to online rental system, but used the wrong price strategy and failed to manage the cost of operation, and thereby faced serious financial rocky problems. Also, the new technologies appear, the DVDs face elimination. Blockbuster and Netflix face the same problem.
Below, we first outline the organization’s context involved, and identify the major problems and focal systems found in the case. Our analysis mainly focuses on Blockbuster’s online renal system and the physical stores system. We also point out some alternatives that Blockbuster should have considered. Our analysis lists several possible approaches that could have avoided or solved the problems that we have pointed out. Finally, we provide some recommendations based on our analysis.

Organizational Context

The case is mainly talking about Blockbuster (video rental business), its strong competitor Netflix Inc, and some new threats or challenges that they face. Major feature of thee organizations are outlined below:
• Blockbuster, Inc.: An old organization mainly conducts video rental business. First formed in 1985, it grows to industry giant with 9,100 stores in 25 countries.
By 2004, Blockbuster possessed a 40-percent share of the U.S. video rental market, estimated to range from 7B to 9B per year.
a. Competition & Strategy: Blockbuster faces the great challenge from Netflix when a new business model in the video rental market appeared. A model that does not need physical store, allows customers subscribe on the internet, and deliveries video through the postal service.
To compete with Netflix, the Blockbuster makes a decision that build up its own online rental service, Movie Pass. Furthermore, it...