Blockbuster Declares Bankruptcy
Blockbuster Declares Bankruptcy
Yvonne Dedmore
MGT 435 – Organizational Change
Robert Hamamoto
September 19, 2011
Shortly before their 25th anniversary, Blockbuster files for bankruptcy protection with a Chapter 11 petition. The failing company couldn’t compete in today’s market against Netflix, Redbox, Apple, and other internet-based businesses that provided mail-order rentals or digital streaming. Their business model needed to be revamped to stay competitive. This paper will take a look at where the problem was, the measures taken to correct the problem, and how Blockbuster can come back and be competitive.
Blockbuster, Inc. started business in 1985 in Dallas, Texas by David Cook. The company rented video cassettes, and later DVDs and video games, to customers for viewing at home. Mr. Cook was a computer programmer and used this to his advantage. While other video stores had no idea what they had still in stock, Mr. Cook had reports that showed him which movies were being rented most so he could optimize the video selection. He also wanted a family environment and had a no-porn policy. (Gandel, 2010).
In 1987, Wayne Huizenga bought the business from Mr. Cook, and the company went into an expansion mode, opening stores nationwide and eventually overseas by the mid 1990s. (History.com, n.d.). Mr. Huizenga knew that one day technology was going to put them out of business. He hired consultants to help work on a creative plan on different ways to deliver movies. The consultants even went as far as recommending Mr. Huizenga buy a cable company. Instead of doing that, Mr. Huizenga sold the company to Viacom in 1994 and got out of the business while the company was still worth something. (Gandel, 2010).
Under Viacom, the company was losing money. They brought in different CEOs and tried once again to focus on movie rentals. (Gandel, 2010). That helped and currently, Blockbuster has over 3,500 stores and over 25,000 employees. These stores
Yvonne Dedmore
MGT 435 – Organizational Change
Robert Hamamoto
September 19, 2011
Shortly before their 25th anniversary, Blockbuster files for bankruptcy protection with a Chapter 11 petition. The failing company couldn’t compete in today’s market against Netflix, Redbox, Apple, and other internet-based businesses that provided mail-order rentals or digital streaming. Their business model needed to be revamped to stay competitive. This paper will take a look at where the problem was, the measures taken to correct the problem, and how Blockbuster can come back and be competitive.
Blockbuster, Inc. started business in 1985 in Dallas, Texas by David Cook. The company rented video cassettes, and later DVDs and video games, to customers for viewing at home. Mr. Cook was a computer programmer and used this to his advantage. While other video stores had no idea what they had still in stock, Mr. Cook had reports that showed him which movies were being rented most so he could optimize the video selection. He also wanted a family environment and had a no-porn policy. (Gandel, 2010).
In 1987, Wayne Huizenga bought the business from Mr. Cook, and the company went into an expansion mode, opening stores nationwide and eventually overseas by the mid 1990s. (History.com, n.d.). Mr. Huizenga knew that one day technology was going to put them out of business. He hired consultants to help work on a creative plan on different ways to deliver movies. The consultants even went as far as recommending Mr. Huizenga buy a cable company. Instead of doing that, Mr. Huizenga sold the company to Viacom in 1994 and got out of the business while the company was still worth something. (Gandel, 2010).
Under Viacom, the company was losing money. They brought in different CEOs and tried once again to focus on movie rentals. (Gandel, 2010). That helped and currently, Blockbuster has over 3,500 stores and over 25,000 employees. These stores
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