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Strategies class

Ray Mack

on 26 January 2011

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Transcript of Blockbuster

Presented By Amber Rich
Amber Armendarez
Raymond Markey
Kristy Tanner
Gabby Edwards "We believe that we will compete effectively as an independant company" Blockbuster Timeline Products Internal Analysis External Analysis 97% of children play video games –
99% of young males and 94% young females $905,600,000
Special Dividend $1,150,000,000
Note $738,000,000 Financials Divedend to 2004: Viacom sells its remaining interest in Blockbuster. Launched its own online rental service. 2007: James W. Keys became the new chairman and CEO of Blockbuster. 2009: Blockbuster partnered with CinemaNow, NCR, TiVo, and Samsung. 2010: Blockbuster has planned to close 500 retail stores to try and save $200 million. 1988: Blockbuster buys Video-Library chain 1990: Blockbuster adds Applause Video, Video Express, Movie Emporium, and other chains 1992: Blockbuster becomes largest video renter in UK 2001: Blockbuster debuts on the New York Stock Exchange. 2005: The Company pays $630,000 to settle litigation related to its new "no late fees" policy. 2006: The company had a marker value of almost $500 million. 1985: The first Blockbuster video store opens 1986: Blockbuster goes public 1987: Founder David Cook leaves the company 1994: Media giant Viacom Inc. acquires Blockbuster. 1996: Company headquarters moved back to Dallas. "The seperation from Viacom has better positioned us to pursue our unique corporate goals and growth opportunities" Rental/Sales of Video Games & Movies Sale of Entertainment Related Merchandise 26% 73% Markets & Customers We want it NOW! Piracy Strong Competition Competitive Analysis Problems Debt & Operations
Lack of Innovation Alternative Strategies Remain Unchanged - 1.55
Capitalize on Gaming Market - 1.65
Chapter 11 Bankruptcy - 1.975 Restructuring 1985 1990 1994 2001 2010 Variety of rental options
Market saturation
Brand recognition
Information Management Systems
Exclusive relationship with suppliers/distributors Organizational Chart Company Overview Debt/Lack of financial resources
Capital intensive operations
Lack of innovation/technical development Strengths Weaknesses Geographics
A 15 mile radius of Blockbuster services. Demographics
Male and female
Ages 18-55
Ethnically diverse
Education levels consist of high school and college graduates.
Income range of Lower-Mid to Upper-Mid (approximately $30-60,000). Behavior Factors
Working-class with modest lifestyles.
Enjoy commercial, more mainstream, movie options. Implementation Chapter 11 Bankruptcy
File voluntary petition with U.S. Bankruptcy Court
Plan of restructuring within first 120 days
Creditors will vote on plan by ballot Reorganization Plan
Negotiate for additional loans and financing
Reorganize capital intensive operational structure
Expand profitable operations
Openly communicate reinvigoration plans Evaluation Measure performance
Quantitative and qualitative criteria
Balanced Scorecard Examine cause-and-effect linkages
Compare expected results with actual results Review strategy
Develop revised Internal Factor Evaluation (IFE) and
External Factor Evaluation (EFE) Matrixes Leverage Leverage Source: MSN Money Data Source: Blockbuster Annual Report Data Source: Blockbuster Annual Report Data Source: Blockbuster Annual Report Chapter 11 Bankruptcy SALES "Our level of indebtedness may make it more difficult for us to pay our debts as they become due and more necessary for us to divert our cash flow from operations to debt service payments” Because of the “increasingly competitive industry conditions” there is “substantial doubt about our ability to continue as a going concern” DEBT
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