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Competition in the Movie Running Head: COMPETITION IN THE MOVIE

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Case Study: Competition in the Movie Rental Industry in 2008: Netflix and Blockbuster Battle for Market Leadership Emilsen Holguin Excelsior College

Competition in the Movie Table of Contents

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I. Overview..................................................................................................................... 3 II. Diagnosis of Strategic Issues ...................................................................................... 4 III. Application of Techniques of Strategic Analysis ................................................... 4 A. Competitive Forces: The Five-Forces Model of Competition ............................... 4 1. Suppliers............................................................................................................. 4 2. Buyer Power........................................................................................................ 5 3. Threat of Substitution ......................................................................................... 5 4. Threat of New Entry........................................................................................... 5 5. Competitive Rivalry ............................................................................................ 5 B. Market Position: Strategic Group Map ................................................................... 6 C. Industry Key Success Factors (KSFs)..................................................................... 7 D. Netflix’s Competitive Strategy............................................................................... 7 E. Netflix SWOT Analysis .......................................................................................... 9 F. Blockbuster SWOT Analysis ................................................................................ 10 G. Financial Ratios.................................................................................................... 11 IV. Analysis and Evaluation ....................................................................................... 13 A. The Rental Movie Industry and Netflix’s Position ............................................... 13 B. Inside Netflix ........................................................................................................ 14 C. Inside Blockbuster................................................................................................ 15 V. Recommendations ..................................................................................................... 17 A. For Netflix............................................................................................................. 17 B. ForBlockbuster..................................................................................................... 18 New Developments: 2010 Update ........................................................................ 19 VI. Reference .......................................................................................................................... 21

List of Figures Figure 1. Strategic Group Map Application for Selected Movie RentalServices .............. 6 Figure 2. Netflix SWOT Analysis ...................................................................................... 9 Figure 3. Blockbuster SWOT Analysis ............................................................................ 10 Figure 4. Comparative chart: Operating profit ................................................................. 12

List of TablesTable 1. Comparative table: Financial Ratios (December 2007)...................................... 11 Table 2. Comparative table: Financial Ratios (December 2009)...................................... 20

Competition in the Movie Case Study: Competition in the Movie Rental Industry in 2008: Netflix and Blockbuster Battle for Market Leadership I. Overview Since founded in 1999, Netflix has grown...