Staying alive

We can all agree that today’s economy is very challenging one, in almost every market companies are trying to keep their head above water. Several things are happening before our eyes, there is the government bailout, and there are bankruptcies and also mergers. But why did this happen? I’m not talking about the economic side of it, because we have been reading and hearing about it; I am referring to the drive to succeed, to take risks and to try innovative things.
Enron, started out in the pipeline business and by the end of 2001, it had tried to tap in several other fields, water, and broadband internet, to name a few. At the same time, to be able to pursue all these risky investments, Enron had to associate themselves with other companies; (I am referring to the real ones) – Citibank, J P Morgan, several other accounting firms, investment bankers and even Blockbuster.
One thing we cannot deny is that Enron was trying to stay ahead of its time, trying to stay on top of what was happening in the world. So, what would have happened if Enron had been satisfied with just the pipeline business? Maybe they would have been successful and made a very good living, but they wanted more, they were not in business to stay alive. They were in business to innovate, and to dare.

What brings me to think…what happen to Blockbuster? They “announced” yesterday that they may be filling for bankruptcy. “Nothing like a bankruptcy rumor to demolish a share price. Blockbuster (BBI) has hired lawyers to look into a possible bankruptcy filing, Bloomberg reports.” But why?

I grew up with Blockbuster, and with 7,500 stores worldwide, one would think that they are a pretty solid company. However, we are living in daring times. Some say that Blockbuster never saw Netflix coming, and even if they did, there was not enough of an effort to stay competitive in the movie business. Instead Blockbuster has been trying to gain a competitive advantage by adding other products to its stores.

Blockbuster was good at the movie rental business; they know this market, why didn’t they change with this market to stay alive?  Yes, they are offering movies by mail, but there were no changes made in the stores, to attract the customers to go into the stores.   

Innovation is good, but a pharmacy should not venture into the catering business.  

5 Responses

  1. Whoa! Bankruptcy?

    Way to be on top of breaking news. if only they had kept that deal with Enron…

  2. This is like a structure agency question. The structure of the industry changed so much, Blockbuster could not exert any agency over its destiny.

    Did they have any competition in walk-in rental? Are they surviving?

  3. American culture is centered around convienience. Honestly, where else can you order a pizza online and 30 minutes latter it arrives at your door while the entire time the only energy you’ve expended is looking at the clock, hoping the pizza arrives in 31 minutes so its free. Business’s today need to adapt their business stratagies quickly in order to keep up with the demand for convinienve and speed. I feel like Blockbuster failed to deploy a successful marketable model quick enough to compete with NetFlix, thus they were forced to file bankrupcy.

  4. I would venture to guess that VOD actually killed them, ironically. Blockbuster’s largest competitor is probably Netflix. Netflix is cheaper (last time I checked) per movie if you get a few movies of month since it is subscription based. Now that Netflix has a great VOD system, as it can stream to computers and even Xboxes, Blockbuster has been hurting. I believe that Blockbuster has it’s own VOD service but it is nothing compared to Netflix (so I have heard).

    I think that Enron was going in the right direction with its joint venture but it did not have the patience to wait it out. As we see now, it took 5-6 years before VOD really took off but Enron only waited 6 months to a year.

  5. Yes, Evan…it is cheaper, and I agree with you too Ross- convenience…I have Netflix and granted we don’t have a blockbuster around us…but they were not persistent -or did not market enough- their VOD part of the business. I think it’s going to be sad to see them go, but that’s capitalism right?

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