...Financial Statement Analysis Case Study Blockbuster versus Netflix By Deng Pan December 9, 2013 Financial Statement Analysis is one of the mainly used methods to evaluate a business. The Return of Equity (ROE) basically provides a big picture of how the business runs. This ratio can be decomposed to three parts: 1) Profit margin (Net income / Total revenue) 2) Asset turnover (Total revenue / Assets) 3) Leverage ratio (Assets / Equity) These ratios represent the profitability, activity, and solvency of the business respectively, which are the three main categories that analysts look at to approach the coverall value of the business. In this paper, I would follow this method, and give the vertical and horizontal analysis of Blockbuster Video’s and Netflix’s performance through 2001 to 2009. Blockbuster Video Business Introduction Blockbuster started their home movie and video game rental services business in 1985. They originally provided the rental service through owned franchised video rental shops, and later added DVD-by-mail, streaming, video on demand and cinema theater into the service category. The company generates the revenue from the movie and video rental fees. The main costs of the revenue are the store rental expense, and the inventory cost. After experiencing a fast growth in late 1980’s and 1990’s, the company peaked in 2004 with up to 60,000 employees and more than 9,000 stores. [1][2] However, if we look at their books from 2001 to 2009...
Words: 1713 - Pages: 7
...- i j j j j j j j j j j j j Video Concepts, Inc. cose wos prepared by John Dunkelberg and Tom Goho,Wake Forest niversity. All rights reserved to the authors and the North American Case Research Association. As Chad Rowan, the owner of Video Concepts, Inc., looked over his monthly income statement, he could only shake his head over how it could have been so much different. In many ways he was a very successful entrepreneur, having started and grown a profitable business. In other ways, he felt trapped in a long-term no-win situation. The question now was what should he do given the current business environment. Basically, Chad had a profitable business, but the profits were relatively small and had stopped growing since a strong competitor, Blockbuster Video, had moved into town. The profits, however, were not enough to pay off his long-term debts and provide him with any more than a subsistence living. In addition, the chances of selling his business for enough to pay off his debts and then start another business were not good. In reflecting on what might have been, Chad commented: I had really hoped to expand Video Concepts into several similar-sized towns within a couple of hours' driving distance from here. The financial projections, 'which had been fairly accurate until Blockbuster arrived, indicated expansion was possible. I thought I was growing fast and had put about as much capital into the business as I could afford. I had even hoped to get a partner to go into...
Words: 3480 - Pages: 14
...Research Paper: Netflix Founded in 1997, Reed Hastings observed; noticed and assessed that there was a growing demand for motion picture rentals. Netflix began with an offer for their ever-growing customer base in which competitors like Blockbuster and Hollywood Video had not – the allowance for customers to select and purchase movie rentals from the privacy of their own home. No one needed to wait in a snake like line in a retail store anymore for a secondary movie pick because their primary selection was ‘sold-out’; as such, the rivalry of the Netflix against all other competitors came into existence. In 2010 the conditions that all the home entertainment companies must implement to meet or exceed current standards is more important than any previous time in history. This research paper will address a brief history of Netflix, the competitive industry in which they compete, potential breakdowns, and finally an offer of speculation for how to address forecasted future breakdowns in a way that will turn them into positive possibilities. The vision of Netflix is simplistic: “Our vision is to change the way people access and view the movies that they love.” (Netflix.com, Hastings Reed, 2011). With more than 15 million current members, Netflix is the world’s largest subscription service for the streaming of television and movie picks and sending movies in the mail. New entrants are always a threat to existing companies like Netflix in the industry; however, Netflix continues...
Words: 1365 - Pages: 6
...Abstract This document will present a technology that has changed the way society sees the movie and TV industry. This paper will present details of how this technology impacted its industry, how it is used, how people, and competitors reacted. Examples will be provided of similar scenarios and what new opportunities this technology has presented to its market, plus how the government and legislation reacted toward this new technology advancement. Technology Effects Technology is a powerful tool that over the years it has evolved continuously providing the human with new options to be more precise in every aspect. Technology not only provides us with new emerging advancements, but they also can make a whole industry change with one revolutionary creation. An excellent example that can be provided of how technology can change an industry very fast is the online movie streaming sites and the self serve renting movie machines. These two different technology creations has come to make an impressive change on how the movie and TV industry currently operates compared to a few years ago. Many years ago the movie and TV industry was strictly dedicated to watching TV shows in the big old box we call a Television, and we could only watched movies at a movie theater or in the television. People would visit different store locations to rent their movies and watch them at home but things have changed drastically since then. These new technology advancements have changed how everything...
Words: 1854 - Pages: 8
...Background Who is the king of the movie rental industry? Is it Blockbuster, Redbox or Netflix? Blockbuster was the king of VHS rental with their brick and mortar stores for more than 20 years. Netflix was the first to market with the idea of shipping DVDs directly to consumer’s homes but are now focusing their resources and attention to online streaming. Netflix is slowly getting out of the DVD and Blu-ray rental game by raising the prices of their DVDs and Blu-rays. Netflix is spending more money to increase the size of their online library for streaming. The two companies that are battling it out to be the king of the rental industry are Redbox, a company owned by Coinstar Inc., and Blockbuster. This paper will focus on how Redbox entered the market through Disruptive Innovation and what Redbox needs to do to better position themselves in a volatile market place. I will also look at the mistakes Blockbuster made and offer solutions on how Redbox can avoid the organizational decline that Blockbuster experienced. I use Wall Street Journal and peer-reviewed academic journals for my references. To understand the full scope of how Redbox entered the market I will look at the Disruptive Innovation Theory. Disruptive Innovation Theory is a term that was coined by Clayton Christiansen. Clayton Christiansen is a professor at Harvard Business School. He has written a number of books on the subject. In an interview done by Smith, Christensen defines disruptive Innovation...
Words: 1988 - Pages: 8
...Jackalyn C. Majors American Intercontinental University Unit 1 Individual Project MKT640 – A Managerial Approach to Marketing Abstract This paper will follow two specific products and services that have come to development for the global marketplace in the last few years. This paper will discuss the product launch, and the impact of technology on the product along with the legal and ethical implications and how they were handled. The companies being discussed in this paper are Red Box and eHarmony. Understanding a Successful Launch Introduction These two companies discussed in this paper are Red Box movie DVD rental, and eHarmony online dating service. It will be it is important to understand these challenges in today global economy these two strong successful companies endured. Understanding these challenges can teach what is examined in launching new products along with the impact of technology on these products, along with the legal and ethical implication of launch of these products and services. Challenges in New Product Launches When Red box first evolved it was owned and placed in McDonalds fast food restaurants as a subsidiary of McDonalds and soon was sold to Coinstar who quickly moved Red box to grocery stores, drugstores and others including Walmart, Walgreens and 7-Elevens increasing Red box location to over 28000 kiosks in the United States (Augustine, C 2011). In the late 1990’s after 35 years of work as a psychologist and marrage counselor...
Words: 1270 - Pages: 6
...Business Failure Enron xxxxxxxxxx University of Phoenix Online February xx, xxxx xxxxxxxxxxxx Examining a Business Failure: Enron This paper will discuss the contributions of leadership, management, and organizational structures that led to the demise of Enron. The structures will also be compared and contrasted to help better understand why the company failed. Enron Corporation was founded in Omaha Nebraska 1985 and was defunct on December 2, 2001. In the year 2000 Enron had published revenues of $101 billion and employed approximately 22,000 employees. The Company’s founder and CEO was Kenneth Lay Other notable people who lead Enron where Jeffery Skilling, Andres Fastow, Rebecca Mark-Jusbasche. Fortune magazine nominated Enron as “Americas Most Innovative Company” for six consecutive years. At the end of 2001 it was discovered that Enron had been creatively distributing its debt through fraudulent planned Accounting making the company seem very profitable in previous years ("Enron", 2012). Leadership, Management, and Organizational Structures (contributed to the failure) Leadership has many different definitions; one definition is “the behavior of an individual directing the activities of a group toward a shared goal. (Hemphill & Coons, 1957, pg 7). This definition is closely is related and applies to Enron’s leadership, Management and structure. Enron’s leadership...
Words: 950 - Pages: 4
...Table of Contents Company and Background....................................................................................................................................4 Rationale..................................................................................................................................................................4 Target Audience.......................................................................................................................................................4 Company History.....................................................................................................................................................5 Legal Status..............................................................................................................................................................5 Company Issues.......................................................................................................................................................5 Vision Statement......................................................................................................................................................6 Mission Statement....................................................................................................................................................6 Ethics.....................................................................................................................................
Words: 22386 - Pages: 90
...explain the general pattern of change of the particular market model. The industry I chose to research is the movie rental industry. An industry, which at one time was dominated by Blockbuster Video, has gone through enormous change over the past five to ten years. Blockbuster Video had very little competition when brick and mortar stores were the only way to rent movies. Hollywood Video was their only national competitor; however, they did compete with many regional and local movie rental companies. New technology, along with multiple competitors, have changed the way consumers purchase movie rentals and other video. Once considered a monopoly by many, Blockbuster Video fought the many pressures affecting brick and mortar stores today. The company had stores on every corner, which resulted in high costs. Once the industry started evolving with new technologies, these stores became sunk costs for the retailer. Online-only retailers who enjoyed much lower costs than the brick and mortar stores were able to profitably charge customers a lower rate; however, at the same time, Blockbuster Video was saddled with the high costs of labor as well as the physical stores. It was not long before Blockbuster’s costs became too much for the retailer, as they were forced into bankruptcy. Today’s market landscape looks much differently than it did when Blockbuster Video was at its peak. Many more competitors fight for the consumer’s dollar; however, there are still...
Words: 2560 - Pages: 11
...Research Paper AstraZeneca Pharmaceuticals, (AZN) is one of the world's leading pharmaceutical companies with 57,000 employees worldwide in over 100 countries. Its corporate headquarters are in London, research and development headquarters are in Södertälje, Sweden, and its manufacturing facilities employ 9,600 people in 16 different countries. The company operates fourteen research and development sites in eight countries and has sales in over 100 countries around the world. AstraZeneca focuses its pharmaceutical business on seven key therapeutic areas: anesthesia and pain control, cardiovascular, central nervous system, gastrointestinal (it is a world leader in this therapeutic area), infection, oncology, and respiratory. Its product range includes such blockbusters as Nexium, Crestor, Seroquel, and Symbicort. AstraZeneca was formed as the result of the 1999 merger of two European pharmaceuticals companies: Astra AB of Sweden, a maker of pharmaceutical products and medical devices, and Zeneca PLC of the United Kingdom, a bioscience company focusing on pharmaceuticals, agricultural and specialty chemicals, and disease-specific healthcare services. One year after its merger, the company achieved sales of US$15.8 billion, with an operating profit of US$4 billion. In 2011, company sales and operating profit were $33.6 billion and $13.2 billion respectively. AstraZeneca is one of the world's largest pharmaceutical companies, with FY2011 sales of $33.27 billion and $10...
Words: 1230 - Pages: 5
...The Closing of Blockbuster Video’s Stores The Closing of Blockbuster Video’s Stores Hanna, Peter Southern New Hampshire University OL-500 Hanna, Peter Southern New Hampshire University OL-500 Abstract: With increasing competition and the growth of technology, it is important that organizations maintain focus on an innovative and clear strategic direction as well as always striving for customer satisfaction. There are four major issues, inefficient and arrogant strategic direction, customer dissatisfaction, fiscal irresponsibility and a lack of innovation that ultimately led to the demise of the video rental “Kingpin” also known as Blockbuster Video. Introduction: Organizational strength relies on its infrastructure and strategic management. The study of organizational behavior within any organization is intriguing. Success relies on many factors that involve leadership, strategic vision and a motivated team poised for the challenges of the day to day operations of the organization. Blockbuster Video skyrocketed to the top of the movie entertainment empire. A Leader in the entertainment industry, Blockbuster Video was plagued by challenges and failures that eventually led to their ultimate demise after a short lived 25 years. This research paper will attempt to answer how the King of the video entertainment empire withered away, even after years of company acquisitions and finally merging with Dish Network. Blockbuster Video faced fierce competition...
Words: 3480 - Pages: 14
...party-er, did I say keg? You know I meant cake, and going to the big premiere of "Spider-man." Friday night at the movies with your buds was a sure-fire way to pass two or three hours of your endless free time. What else did you have to do? Fill out the MIT application? Most teenagers, myself included, probably look at movies as entertainment, rather than as art, and most directors will confirm this. The movie industry has capitalized on this "entertainment" view of movies. More than ever, the movies industry is dominated by blockbusters and, to many's dismay, sequels to previous blockbusters. According to the website of the Motion Pictures Association of America (MPAA), from 1999 to 2002, the average theatrical cost of an MPAA film rose over 80%. Over this 3-year period, a whopping 25 out of the top 50 highest grossing movies in the American film history were produced, all of which made over 200 million dollars. Among these blockbusters were "Spider-man," "Finding Nemo," and "Star Wars: The Phantom Menace." We all know why "Star Wars: The Phantom Menace" exploded at the box office. But why did the other two gross over $340 million each? Because they were thought-provoking? Hardly. "Spider-man" has the tired old theme of damsel-in-distress-as-hero-saves-the-day. "Finding Nemo" finds a rebellious fish wandering off into an adventure as his parent desperately searches for him (can you say underwater Home Alone?). What makes these movies such great sellers is their...
Words: 1012 - Pages: 5
...Apple Computer, Inc.: Maintaining the Music Business while Introducing iPhone and Apple TV Overview/Introduction Through an analysis of the case study of Apple, Inc. this paper will describe key elements that helped make Apple the successful company it is today. The analysis of the three key environments of a business will be examined, including; general, industry, and competitor environments. Also explored will be the available lessons that readers and other companies can garner from Apple’s success. Apple’s Success Story Apple’s success rests squarely on the shoulders of innovation. In the beginning, the founders of Apple, Stephen Wozniak and Steve Jobs focused on providing something new to the market. They not only brought innovative products to consumers like the Mac computer and iPod, they did it in an innovative manner. Memorable advertising campaigns based on consumer reaction rather than technological jargon made the beginnings of a cult-like following. Apple lost its way in the mid to late eighties as it struggled to find its focus and protect its core competencies, resources, and capabilities. Steve Jobs returned to the company after a decade removed, recognized the speed with which technology moves and took steps to insure that Apple, Inc. was strategically focused to be the leader in new technology. The key to Apple’s success is their mission to make the Mac “the hub of the consumers’ digital lifestyle” (Ireland, 2009, p. C-16). From this point...
Words: 3066 - Pages: 13
...INFORMATION TECHNOLOGY AND ORGANIZATION DEVELOPMENT Abstract Over the years information technology (IT), has increasingly become an important factor and fundamental to support organizational processes and development. When one hears the terms Information Technology and Organizational Development, one may think of two different completely opposite entities and industries. However, there are many theories that recognize information technology (IT) as a critical infrastructure in many organizations and also developing as an effective contributor to organizational performance. In this paper, I will determine if there’s an association between the two industries as it relates to organization development efforts of an organization. I will also determine the effects information technology has on organization development. Introduction Information Technology What is Information Technology? According to Dictionary.com, Information Technology (IT) is “the development, implementation, and maintenance of computer hardware and software systems to organize and communicate information electronically.” It is referred to as anything that relates to computing technology, such as networking, hardware, software, the Internet and etc. It is very obvious that we live in a technology driven world. Information technology (IT) is recognized as a critical infrastructure in many organizations. IT is also emerging as an effective contributor to organizational performance. It is often argued that success...
Words: 2715 - Pages: 11
...Points Possible: 150 Due Date: 3/25/2012 11:59:59 PM Description: Marketing plans are tools used by managers to guide the process of marketing. They contain strategies and consider many environmental aspects that work together to affect the success of the product or service being marketed. Marketers must learn to do solid research in support of upcoming projects. The Unit 1 Individual Project is a research paper and should address the following: Provide a quick definition of marketing plans using your text. Include the following: Using an article from the library’s full-text databases, discuss an example of how a marketing plan helped make a product or service successful. On the other hand (using an article from the library’s full-text databases), discuss an example of how decisions in a marketing plan led to failure. Analyze what was different in the 2 examples. This section of the paper should be at least 2 pages in length. In a marketing plan, objectives are created that can be used to gauge progress. You can have some fun with the concept. Movie studios pay stars a lot of money to star in what they hope is a blockbuster. But as you know, there are lots of box office failures. Consider the following: Using an Internet search, find a movie that failed. Provide a quick overview of why the movie was considered a failure. Applying what you have learned about the concept of market plans, extrapolate what could have gone wrong in the studio’s...
Words: 465 - Pages: 2
