BSS042-3 Operations Management: Analyzing Blockbuster's Downfall

This report explores the complexities of operations management, highlighting the importance of balancing operational efficiency and innovation, using the case study of Blockbuster and its failure to compete with Netflix. It discusses key concepts such as quality assurance, waiting line management, project management, and supply chain management, analyzing how Blockbuster prioritized operational performance over innovation, leading to its downfall. The report also suggests potential innovations Blockbuster could have implemented to remain competitive, such as developing an e-commerce platform, removing late fees, focusing on diverse movie offerings, and building a sense of community. Ultimately, the report concludes that Blockbuster's failure stemmed from its inability to adapt to changing customer needs and embrace innovation, emphasizing the need for businesses to continuously evolve and prioritize both operational efficiency and innovative capabilities.

Management and
administration of
operations

Executive Summary
The main motive and purpose of this report is highlight the complexity of operations
management and why it is delicate to maintain a balance between focusing operational efficiency
and developing innovative capabilities by firm as lack of either one of them can critical harm the
company's positioning in the market. In this report the above mentioned concept is described in
detail manner and it covers explaining the situation which was generated between the Netflix and
blockbuster. Different types of operations management concept, reasons for the failure of
blockbuster and what are the steps taken to remain afloat all are mentioned in detail in this
report.

Table of Contents
Executive Summary...................................................................................................................................2
INTRODUCTION.....................................................................................................................................4
MAIN BODY.............................................................................................................................................4
Key concepts and applications of operational management.....................................................................4
Reasons due to which operational performance was prioritised over innovation.....................................5
The innovations that Blockbuster could have bring in to remain competitive without serious operational
impact......................................................................................................................................................7
CONCLUSION..........................................................................................................................................9
REFERENCES........................................................................................................................................10

INTRODUCTION
In recent years the business landscape has become very difficult and turbulent to succeed in as
there is a clear competition in each market segment. Firm has made lot of investment in the form
of money and time and due this their operational activities are run in smooth manner (Addo,
2021). Operations management is defined as an administrative procedure where organization
converts their procured goods and raw materials and undertake the procedure of value creation to
develop full-fledged services and products with best quality according to customer needs and
wants. This report will cover the key concept and applications of operational management,
reasons due to which operational performance was prioritized over innovation, the innovations
that blockbuster could have bring into remain competitive without serious operational impact.
This report will be based on a case study detailing the operational management processes of
Blockbuster which was a successful retailer and renter of various forms of entertainment media
who was driven out of the market by Netflix.
MAIN BODY
Key concepts and applications of operational management
Operation management are dealing with large number of interconnected and complicated
process where business firms are used to undertake its routine activities which are described
below –
 Quality assurance – It refers to always maintain in their workplace area with help of
talented or qualified employees. With help of talented employee’s quality are also
ensured in their product for long time. Due to this customer easily received best quality
product and service from organization which leads to develop strong positive
relationship between firm and customer for long term. In aspect of Blockbuster they
took special about DVD demands of it's customers and had separate quality checks for
different variants such as Ultra HD, VHS and later on, Blu-rays and it was successful in
servicing a lot of people.
 Waiting line management – It is a highly important function for operation
management which is concerned with the control and reduction in time for those
customers who are wait and form queues and waiting lines to purchase their wanted

goods and services. When the time is reduced for consumers then definitely they avail
their desired service and goods easily with in low time. In context to blockbuster
operate their functions in time but when the social media and digital age boom wasn't
full-fledged and people formed long lines to buy their favourite video games and movies
which made management of queues and freeing the lines quickly a priority.
 Project management – Each business has its own objectives and goals which are
accomplished for ensuring its success at large scale in target market and project
management. In context to Blockbuster business model is mainly developed for
enticing consumers to rent or buy the newest and popular movies and principles of
project management. These are highly essential for guiding the store staff effectively
and also ensures that availability of such movies despite the large demand to reach
profit targets.
 Supply chain management - It is a highly exhaustive and complicated procedure in
operation management and also consists of regulation, streaming and quality control of
a wide spectrum of activities (Alnajem, Mostafa and ElMelegy, 2021). These activities
include maintaining healthy inventory levels transportation and storage of raw materials,
warehousing and establishing points of delivery at various locations to provide
seamless delivery of finished goods to the final consumers. In context to Blockbuster in
starting days, faced a lot of problems for sell their DVD’s of various movies. It however
bounced back by focusing entirely on focusing on optimizing it's supply chain by
sharing it's sales profit with major movie studios.
 Production System – In this stage firm are highly focused on run their functions
smoothly with help various advanced equipment’s systems and tools. Due to the use of
updated machines their services and products are easily delivered to customers in time.
There are different types of production systems which are used by firm like batch
system, job shop system, continuous and mass forms of production. In context to
Blockbuster they mainly focused on it's operational systems rather than innovation. It
leads to increase the sales and buying of DVD's was a continuous process.
Reasons due to which operational performance was prioritised over innovation
There are various reasons which is considered by organization for achieving the success and
excellence in its target market. Due to applying those reasons company are able to sustain their

work efficiency and productivity for long duration in the form of manufacturing best quality
product according to customer wants and desires. In context to Blockbuster they are mainly
focused on its effective supply chain and physical channel rather innovation. It means renting
media which led to it's demise and total eradication from the modern content streaming
marketplace. The reasons for blockbuster priories over building new procedure and new product
are described below –
 Brand perception and strength came in the way of innovation – Blockbuster is truly
a giant market which has ability to control to huge customer base through offline mode
and are recognized everywhere as the best place to rent and purchase the games and
movies easily. But after some time they entered into online service channel with help of
Netflix and other source. Due to the use of online strategy strength and brand image of
the company are easily increased at maximum level in the form of millions of
subscribers with in short duration. The other main reason for prioritizing operational
performance is that most of the revenue blockbuster generated from taking penalties
and fees from its physical rental sales rather than focusing on facilitating them with
better experience.
 Too much operational cost and debt – From the above analysis it is understood that
due to high investment in their operating and service cost company are able to maintain
stability in their performance (Audretsch, D. B. and Belitski, 2021). Due to this
Blockbuster and its entire it's entire business at the end of the day as it was a poorly
thought out strategic approach which failed to drive Netflix out of the market. Opening
of their new stores in various locations are increased their maintenance cost which
resulted in the firm incurring a massive amount of debt. the economic recession
coupled with this large debt really restricted the innovative aspirations of Blockbuster
and it had to prioritize it's operational performance to remove the debts and remain
afloat.
 Blockbuster are not able to understand the need of modern customer – In aspect of
blockbuster they did not have the ability to predict the growing change in the buying
behavior and outlook of customers. Without effective predictions of the customer’s
company are not able to initiate effective policies and strategies for run their business
smoothly. In aspect of Blockbuster the starting sales figures from offline mode is very

promising and it led the company to undertake rapid expansions with more than 7500
stores across America. It also allows the firm for effective development with other
channels and also have the chance to buy Netflix.
The innovations that Blockbuster could have bring in to remain competitive without serious
operational impact
Blockbuster is basically an entertainment media which is effectively utilized by firm in
the form of Netflix. Being a market leader it is one of the most popular example for lacking in
innovation which results in damaging the well reputed business. The highly entertaining
development in this market situation that occurred between Netflix and Blockbuster is that the
former could have easily saved itself as it's operations died not because of any external factor but
the company itself. In aspect of blockbuster they run in the form of tight oiled machine which
are made for bring rapid changes in their strategies when they required and it could have
undertaken various innovative measures to combat Netflix and hold on to it's large customer base
without changing much of it's already existing physical operations.
 Development of e commerce platform allowing easy rental of media – In 2000,
Netflix is one of the platform which facilitates positive result to Blockbuster in the form
of dominating the streaming and it is one of biggest missed opportunity in modern
business landscape. In early years both Netflix and Blockbuster easily achieved new
subscribers in large amount but difference is that both have different approaches. In
comparison with online presence and services offline services are highly effective in
various locations of America. Blockbuster should have developed avenues an features
which enabled their customers to rent their choice of movies from the internet
 Removing late fees model and focus on facilitating diverse variety of movies –
There are some specific reasons which are considered for the failure of the Blockbuster
and massive success of Netflix in same market segment (Beznosov, A. G., Skvortsov,
E. A. and Skvortsova, 2021). That reason is that business model did not depend on
causing the customer inconvenience and was instead focused on giving them a truly
customized and satisfying experience. Blockbuster should have removed the process of
late fee from late delivery of rentals as it pissed off a lot of it's loyal customers as it
lacked ethics and empathy and it should have catered to different niche by cataloguing
different movie offerings.

 Building sense of community and focusing on live movie experiences – Blockbuster
is really having loyal and large customer base. Due to their large customer base they
easily advocate for its return in any time of it declaring bankruptcy which is a
testament that it could have used the community to facilitate better and more
innovative approaches. Therefore, it is necessary for the firm that they must use famous
and local celebrities or actors in their store for promoting their movies and strengthen
their brand image between public effectively for long duration. Blockbuster could have
also arranged local movie shows and ventured into making it's own low budget films
for extra revenue and better publicity.

CONCLUSION
After the analysis of above information, it is concluded that different approaches and
complicated dimensions plays crucial for increasing and decreasing the productivity of firm.
The report also highlighted the various market situations and reasons which lead reputable
firms which innovative capabilities to focus on improving their operational performance
instead along with suggestions and innovative recommendations. The various key concepts of
operations management were all listed and described in detail such as queue management,
quality checks, project and supply chain management.

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