Introduction 1.0 Strategicdecision making is thought to be the process of delivering business strategy inaim of achieving organisational success and survival (Papuloya and Gazova,2016). Such process is considered to be central to organisational competivenessand is regarded as a crucial element to tackling key issues (Calabretta, Gemserand Wijnberg, 2016). When operating in a rapidly changing environment, it iscrucial that organisations adapt and respond to their industries environment.
Environments are becoming more dynamic, and less predictable for contemporaryorganisations therefore it is emphasized that strategies are put in place tokeep pace with the changing demands (Payuloya and Gazova, 2016). With changesin the environment becoming increasingly difficult to keep up with, it iscrucial for organisations to persistently monitor any changes in their currentindustry (Papuloya and Gazova, 2016). This is to avoid any potential threats thatmay interfere with the business strategy. It is highlighted that throughstrategic analysis, organisations may be in a better position to combat anypotential threats and will therefore have the ability to compete in the everchanging environments (Papulova and Gazova, 2016).Mbuya (2009) suggests that strategic planning is the traditional way ofstrategic decision making. It is thought that planning may be a useful conceptto consider in strategic decision making, as it allows for the organisation tonote any complex issues that may arise (Mbuya, 2009). Strategic planning willalso assist an organisation with strategic analysis, allowing them to implementfurther effective strategies (Mbuya, 2009).
Therefore, when considering thestrategic decision making process, organisations must understand that “strategyformulation needs to be understood in terms of a mix of processes” (Mbuya,2009, p.74). Thisstudy will apply a strategic analysis to Blockbuster, to explore and criticallyevaluate the strategic processes used by such company. By applying a strategicanalysis to Blockbuster, we will be given the opportunity to assess theorganisations internal and external environment, and will therefore highlighthow the environment changed, and what strategies Blockbuster may have used tocombat these (Papuloya and Gazova, 2016). “Strategic analysis therefore shouldhave an important role in strategic decision-making” (Papuloya and Gazova,2016, p. 573). A History of Blockbuster 1.
1DavidCook, founder of Blockbuster, opened up his first store in Dallas, Texas in1985 (Davis and Higgins, 2013). It is noted that Cook’s prior expertise incomputing is what secured Blockbuster’s ability to manage its inventory, totherefore provide customers with the films that they wanted (Davis and Higgins,2013). Within a year, the company began to grow, and ultimately needed capitalinvestments, a public offering was then cancelled and in 1986 Blockbuster hadlost $3.
2 million (Spector, 2010). Early 1987 however, Wayne Huizenga; founderof Waste Management, bought one third of the company and within months, Cookhanded the organisation over to him (Spector, 2010). Huizenga held strongbeliefs that Blockbuster had immense potential and held significant responsesfrom the nation (Davis and Higgins, 2013). Fast forward to 1993, andBlockbuster had a mast of over 3,400 stores. Still wanting to seek growth, thecompany began to venture into the music industry, partnering with severalchains to establish ‘Blockbuster Music’, other business ventures included; computertechnology, Spelling Entertainment and Republic Pictures (Spector, 2010). Itwas later in the year when Viacom bought Blockbuster for $8.
4 million, but withthe loss of Huizenga’s guidance, the company had seen almost a 50 per cent lossin value (Davis and Higgins, 2013). Davis and Higgins (2013) believe thatthrough the merger of Viacom, Blockbuster’s focus shifted toward the trading of’Paramount’ and ‘MTV’ merchandise, therefore accounting for the sufficientloss. In 1994 Huizenga decided to leaveand was then replaced by Steven Berrard, again a year later Berrard was thenreplaced 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 videorental (Davis and Higgins, 2013). This brief encounter of profitability did notlast long, as Blockbuster struggled to keep up with the changing demands of theconsumer and the new innovations of the media.
The company then began to losebusiness, and as a result Viacom sold the company in 2004 with a loss of $984million (Davis and Higgins, 2013). It was in 1997 when Blockbuster’s biggestrival came about; Netflix, introducing the mail subscription service (Davis andHiggins, 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 thecompany had discontinued the ‘fee’ it was rather a case of ‘too little toolate’ and in 2010, Blockbuster filed for bankruptcy.
Environmental Analysis 2.0 Analysing anorganisations environment is believed to be one of the most critical aspects tostrategic management (Pickton and Wright, 1998). Thomas (1974) suggests that environmentalanalysis largely stems from the general systems theory, and is split betweenthe open systems approach and the closed systems approach.
That is to say thatbased on the open system theory, organisations operate in an already existingdynamic environment and therefore it is the