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    Perform a STEEP analysis to understand the general environment facing Blockbuster; Use Porter's Five Forces Model to analyze the industry

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    1. Perform a STEEP analysis to understand the general environment facing Blockbuster. How will Blockbuster be affected by external factors?
    2. Use Porter's Five Forces Model to analyze the mail rental and video-on-demand industries in the US. Given this analysis, are these industries attractive or unattractive?
    3. Entering the video-on-demand business requires Blockbuster to shift its corporate business strategy and compete in a new space. Discuss this shift and the key challenges associated with it?
    4. Who are Blockbuster's main competitors and how does Blockbuster measure up against these competitors? (It may be helpful to chart competitors and product offerings) What advantages does Blockbuster have and what advantages do competitors hold?
    5. What are the main capabilities of Blockbuster? Does Blockbuster have a core competence?
    6. Create a SWOT analysis to understand Blockbuster's strengths and weaknesses. Does Blockbuster have a sustainable competitive advantage in the mail rental and video-on-demand industries? If so, what is the source? What about Blockbuster's evolution and current business strategy may pose problems going forward?
    7. What is Blockbuster's business-level strategy? Is the strategy appropriate to offset the forces in the industries? How has Blockbuster attempted to overcome obstacles posed by being a late player in a rapidly changing marketplace? Do you recommend any changes and/or foresee any challenges?

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    Solution Preview

    Blockbuster was once a cultural phenomenon and a major force behind home entertainment. At one point blockbuster-type brick and mortar organizations were more prevalent in every neighborhood, and just as common as a 711 convenient store. As time progresses, the once common video store franchises are becoming a thing of the past. In some cases there are a few Blockbuster franchises in various neighborhoods. However the current social trends in our society today would deem Blockbuster franchises as unnecessary, especially during times when technology is accelerated thus making it much more difficult to compete.

    New movies and old classic movies, and television shows are currently at the fingertips of the consumers, making it easier to watch a movie without going to the nearest video store or video kiosk. Most television networks enable viewers to watch their most recent shows or original content online for free. I remember when the most popular video stores were Blockbuster, Video Time (it was spelled Tyme, back then), and Hollywood Video. Blockbuster is greatly impacted by external forces. During my daily commute, all that's left of those stores aforementioned are an empty shell of where the stores use to be. The rapid changes in technology and video-on-demand marketplaces, has led to the suffering of significant losses. Blockbuster lost revenue, in 2009 the company reported a dramatic decrease in revenue at 21%, and was forced to close 216 stores in 2008 and were expected to close 115 more stores (Mitchell, 2009).

    Blockbuster competitors carry a diverse range of products within the industry that are attractive to consumers in various ways such as competitive pricing, enabling consumers to consolidate, low switching cost, etc. Blockbuster stores and other stores alike at one point would charge consumers late service fees for neglecting to turn movies in on time. The mail rental system allows consumers to take control of the billing aspect by enabling them to rent movies from home and have them shipped directly to the consumer with automatic bill pay. Blockbuster recently changed their product offerings in order to compete in the mail rental services and stated that there are no "more late fees." I am skeptical as to whether or not this move was an acceptable strategy at this late ...