BMGT 289B
It is hard to imagine a corporate giant like Google, would ever have to resort to going bankrupt. Google is part of our society, how we live our lives. According to Richard N. Foster, an average company lifespan on S&P 500, from the year 1980 until today, is 18 years. Google just turned 17, which is something to consider. However, it doesn’t work that as soon as a company hits that average number, they disappear. If a company is able to innovate and not fall under the incumbents curse, they should be able to prosper and maintain their position. A business that failed at doing so is Blockbuster, who was the leader in the home movie and video game rental services. So how did a company who according to David Presson, …show more content…
The selection that was offered went beyond any of the competitors, both in size and presentation. David Cooks, the founder of Blockbuster, wanted his customers to be able to see the titles on shelves versus behind the counter. He was open for more hours than his rivals. As well as having a quick check out process and not having any adult films in stock. After Blockbuster became a franchise, they spread across the US and overseas in countries such as Japan, Peru and especially had a large presence in Great …show more content…
Interesting enough in the year 2000- Reed Hastings, founder of Netflix approached John Antioco, the CEO of Blockbuster at the time, about buying his company for 50 million dollars. Antioco takes a pass at the offer, not taking it seriously. Only once this “very small and niche business” started to grow did Blockbusters vulnerability open up. When new technology hits the market and creates new and exciting functions, the consumers get excited. For instance, with Netflix’s subscription, there are no late fees. Blockbuster actually counts on the late fees. In the year 2000; Blockbusters had received nearly $800 million dollars in late fees. The decision was made to drop the late fees, which seriously hurt them, since the fees were a decent percentage of the company’s revenue. The idea of the company’s dependence on the penalization of their customers was a sign of weakness in its model. Netflix got Blockbuster to alter their business model, just to keep up. The culture inside a business also takes root for its downfall. There were some issues with Blockbusters leadership. When a new CEO, Jim Keyes, was named he reinstated the late fees, put into play by Antioco, who was fired do to a compensation dispute. But before he left he failed to implement a network that could continue on his ideas of change through the