Introduction therefore have the ability to compete

Introduction 1.0

Strategic
decision making is thought to be the process of delivering business strategy in
aim of achieving organisational success and survival (Papuloya and Gazova,
2016). Such process is considered to be central to organisational competiveness
and is regarded as a crucial element to tackling key issues (Calabretta, Gemser
and Wijnberg, 2016). When operating in a rapidly changing environment, it is
crucial that organisations adapt and respond to their industries environment.
Environments are becoming more dynamic, and less predictable for contemporary
organisations therefore it is emphasized that strategies are put in place to
keep pace with the changing demands (Payuloya and Gazova, 2016). With changes
in the environment becoming increasingly difficult to keep up with, it is
crucial for organisations to persistently monitor any changes in their current
industry (Papuloya and Gazova, 2016). This is to avoid any potential threats that
may interfere with the business strategy. It is highlighted that through
strategic analysis, organisations may be in a better position to combat any
potential threats and will therefore have the ability to compete in the ever
changing environments (Papulova and Gazova, 2016).
Mbuya (2009) suggests that strategic planning is the traditional way of
strategic decision making. It is thought that planning may be a useful concept
to consider in strategic decision making, as it allows for the organisation to
note any complex issues that may arise (Mbuya, 2009). Strategic planning will
also assist an organisation with strategic analysis, allowing them to implement
further effective strategies (Mbuya, 2009). Therefore, when considering the
strategic decision making process, organisations must understand that “strategy
formulation needs to be understood in terms of a mix of processes” (Mbuya,
2009, p.74).

This
study will apply a strategic analysis to Blockbuster, to explore and critically
evaluate the strategic processes used by such company. By applying a strategic
analysis to Blockbuster, we will be given the opportunity to assess the
organisations internal and external environment, and will therefore highlight
how the environment changed, and what strategies Blockbuster may have used to
combat these (Papuloya and Gazova, 2016). “Strategic analysis therefore should
have an important role in strategic decision-making” (Papuloya and Gazova,
2016, p. 573).

A History of Blockbuster 1.1

David
Cook, founder of Blockbuster, opened up his first store in Dallas, Texas in
1985 (Davis and Higgins, 2013). It is noted that Cook’s prior expertise in
computing is what secured Blockbuster’s ability to manage its inventory, to
therefore provide customers with the films that they wanted (Davis and Higgins,
2013). Within a year, the company began to grow, and ultimately needed capital
investments, a public offering was then cancelled and in 1986 Blockbuster had
lost $3.2 million (Spector, 2010). Early 1987 however, Wayne Huizenga; founder
of Waste Management, bought one third of the company and within months, Cook
handed the organisation over to him (Spector, 2010). Huizenga held strong
beliefs that Blockbuster had immense potential and held significant responses
from the nation (Davis and Higgins, 2013). Fast forward to 1993, and
Blockbuster had a mast of over 3,400 stores. Still wanting to seek growth, the
company began to venture into the music industry, partnering with several
chains to establish ‘Blockbuster Music’, other business ventures included; computer
technology, Spelling Entertainment and Republic Pictures (Spector, 2010). It
was later in the year when Viacom bought Blockbuster for $8.4 million, but with
the loss of Huizenga’s guidance, the company had seen almost a 50 per cent loss
in value (Davis and Higgins, 2013). Davis and Higgins (2013) believe that
through the merger of Viacom, Blockbuster’s focus shifted toward the trading of
‘Paramount’ and ‘MTV’ merchandise, therefore accounting for the sufficient
loss.  In 1994 Huizenga decided to leave
and was then replaced by Steven Berrard, again a year later Berrard was then
replaced by Bill Fields, a former executive of Wal-Mart (Spector, 2010).
Field’s time at Blockbuster was short lived and his resignation in 1997,
introduced John Antioco, who refocused the company back to its origins of video
rental (Davis and Higgins, 2013). This brief encounter of profitability did not
last long, as Blockbuster struggled to keep up with the changing demands of the
consumer and the new innovations of the media. The company then began to lose
business, and as a result Viacom sold the company in 2004 with a loss of $984
million (Davis and Higgins, 2013). It was in 1997 when Blockbuster’s biggest
rival came about; Netflix, introducing the mail subscription service (Davis and
Higgins, 2013). Netflix was based on the premise of a monthly subscription fee,
which did not include the ‘late fee’ charge from Blockbuster. Subsequently,
Blockbuster had lost much of their custom to competition, but by the time the
company had discontinued the ‘fee’ it was rather a case of ‘too little too
late’ and in 2010, Blockbuster filed for bankruptcy. 

Environmental Analysis 2.0

Analysing an
organisations environment is believed to be one of the most critical aspects to
strategic management (Pickton and Wright, 1998). Thomas (1974) suggests that environmental
analysis largely stems from the general systems theory, and is split between
the open systems approach and the closed systems approach. That is to say that
based on the open system theory, organisations operate in an already existing
dynamic environment and therefore it is the