Micro and Macroeconomic Factors : Analysis of Failure of Blockbuster

Running head: ANALYSIS OF FAILURE OF BLOCKBUSTER
Programme Title
Module Code and Title
Analysis of Failure of Blockbuster
Student Details

ANALYSIS OF FAILURE OF BLOCKBUSTER1
Executive Summary
The report studies the contribution of the micro and macroeconomic factors that led Blockbuster
to certain failure. After thorough analysis of the concerned factors, the report found that the
contribution of macroeconomic factors like change in technology played the crucial role. The
company failed to adopt with the changed technology and could not compete with the new
organizations that uses the new technology and offers online streaming of movies. Inability to
adopt, failing to anticipate the change in market caused the organization to fail, The only thing
the company could do to avoid the failure was to adopt to the new business model based on the
changed technology.

ANALYSIS OF FAILURE OF BLOCKBUSTER2
Table of Contents
Introduction......................................................................................................................................3
Economic impact on business organizations...................................................................................3
Impact of micro and macroeconomic factors on Blockbuster.........................................................5
Background..................................................................................................................................5
Microeconomic analysis..............................................................................................................5
Macroeconomic analysis.............................................................................................................6
Recommendation.............................................................................................................................8
Conclusion.......................................................................................................................................9
Reference.......................................................................................................................................10

ANALYSIS OF FAILURE OF BLOCKBUSTER3
Introduction
Sustainability and strategic decisions of business organizations are dependent on various
factors of an economy. The economic factors on which a business organization depends are
divided into micro and macroeconomic factors. Microeconomic factors that influence business
organizations are cost structure, fluctuation in market demand, supply of factors production,
competition and rivalry, consumer taste and structure of market. Macroeconomic factors include
political and socio-economic condition of a country and the factors like technology, laws and
environment. Therefore, the report analyses the above mentioned factors using PESTLE, SWOT
and Porter’s five forces to understand reasons for failure of Blockbuster in the UK (Perera 2017).
Blockbuster was a video game and movie rental service provider founded in the United States.
The models have been selected because they provide understanding of the entire economic
condition of the country and thereby helps to understand the effective policies that could help the
organization to sustain.
Economic impact on business organizations
Analysis of macroeconomic and microeconomic factors are necessary as they
significantly impact the operation of a business organization and in addition to that influences the
stability of the organization. Macroeconomic factors is going to be analyzed using PESTLE
model since factors are political, economic, social, technological, legal and environmental.
Political condition of country has large influence on business organizations because under
political factors comes government structure, international relationship policies, stability of the
government, corruption and trade policies (Gürel and Tat 2017). It is the necessary for a business
organization to understand the factors before making entry in a country’s market. Economic
factors like gross domestic product (GDP), unemployment rate, inflation and balance of payment