netflix case study(4)

netflix case study(4) - 1. Would you have been long or...

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1. Would you have been long or short on Blockbuster stock at the time of the case? How about Netflix? Why? In January 2007, the Netflix’s case was addressed and analyzed by Harvard Business School. In my opinion, I would have been short on Blockbuster Stock because Blockbuster business was out of touch with industry trends. Their model of in-store DVD rentals was inconvenient and their late fee charges were a major source of client dissatisfaction. The store had a complicated membership situation (you had to have a membership to rent and when you applied for a membership you had to provide all of your personal information) that made it difficult for customers. Moreover customers were frustrated by the fact that they would often go to the store to look for a specific new release (the core focus of the company) and find that all of the DVDs had run out of stock. Even when Blockbuster offered an on-line service to compete with Netflix they were too late to compete with Netflix online customer base. Having an on-line and an in- store account was confusing to most consumers. Also, Blockbuster’s core competency was in-store customers where customers wanted DVDs in hand. Blockbuster had lost its core competency to compete in trends they were not good at. Blockbuster also faced many complaints about their unsatisfactory customer service. On the other hand, I would have been long on Netflix stocks knowing what was known at the time. Netflix had a simple membership form that was fast and straightforward. It also had a far superior customer database and customer service. Netflix has the most amazing movie selection. Almost every movie imaginable could be found in their inventory. The convenience of fast shipping and fast returns through mail order was the strongest competition point for Netflix. At Blockbuster, a consumer would have to drive to the store, find a movie (if it was even available), wait in a frequently long
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This note was uploaded on 05/18/2011 for the course MATH 40 taught by Professor Clark during the Spring '11 term at Golden Gate.

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netflix case study(4) - 1. Would you have been long or...

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