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SCM Assignment 1

Netflix and Redbox achieved better strategic fit than Blockbuster through: 1) Targeting customer priorities like convenience, variety and affordability 2) Developing efficient supply chain models like home delivery, kiosks and recommendation engines 3) Optimizing costs through effective market segmentation, lower SG&A expenses, and inventory management

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193 views6 pages

SCM Assignment 1

Netflix and Redbox achieved better strategic fit than Blockbuster through: 1) Targeting customer priorities like convenience, variety and affordability 2) Developing efficient supply chain models like home delivery, kiosks and recommendation engines 3) Optimizing costs through effective market segmentation, lower SG&A expenses, and inventory management

Uploaded by

Arjun Jos
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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• The Demise of Blockbuster- A Case Study

SCM assignment
The rise of Blockbuster (1990s)

The fall of Blockbuster and emergence of online DVD


rentals (2000s)

Overview Netflix- online DVD rentals to world’s largest


subscription service

Redbox’s strategy

Concepts used – Strategic fit and Implied uncertainty


1. In what
ways did • Large stores offered greater availability and
Blockbuster better choice
• Aggregation of demand of wider area met with
achieve better large stores
strategic fit • Streamlined store operations with
computerized inventory control and checkout
than local
stores?
2. How much implied uncertainty do Netflix and Redbox
face? What levers do they use to deal with this uncertainty?

Netflix
• Older movies - demand can be difficult to predict. This increases the level of implied uncertainty,
• Newer movies – customer had to wait a bit to get them, allowing it to lower the implied uncertainty.
• Netflix further reduced the uncertainty by serving its customers using inventory that is stored in centralized warehouses.
• They kept the subscription at $8.99 per month.
Redbox
• They strategized on quick rentals for immediate use and relatively new releases.
• The demand for these movies is large and relatively predictable.
• So they have a relatively low level of implied uncertainty that was served using inventory that is easily accessible to customers
using decentralized warehouses.
• They charged only $1 per night.
3. How did Netflix and Redbox achieve better strategic fit than
blockbuster?

• Analysis of competitive strategy – customer priorities


- shift to DVD online rentals due to convenience and updation
- variety and late fee concerns ( Netflix)
- affordability ( Redbox)
• Supply chain capabilities
- low cost operating models
- home delivery and online streaming (Netflix)
- distribution centers—recommendation engine—process automation
- 23000 kiosks for Redbox, bundled benefits
3. How did Netflix and Redbox achieve better
strategic fit than blockbuster?

• Market segmentation effectiveness


- Netflix targeting old movies
- Redbox targeting new movies through vending machines
• SG&A costs optimisation
- Blockbuster(49.7%), Netflix(17.3%),Redbox(13.1%)
- Blockbuster 6500 titles- 3400 stores
- Netflix 100,000 titles – 60 DCs
- Redbox 23,000 kiosks
• Inventory costs optimisation
-Blockbuster(15.7%), Netflix(2.2%),Redbox(9%)

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