Business management is the study that equips students with the knowledge and skills to manage and adapt to a diverse range of constantly changing business environments. Business management allows students to develop core business skills and effectively utilise these skills in specialist areas such as, business economics, human resources, advertising, international business, real estate, marketing and sustainability. If you have undertaken a course in Business Management, it is likely that you must have come across business management assignments. These assignments are developed to bring forward your understanding of different theories and practices used in management of a business and how you utilise these theories and knowledge to implement sustainable business practices in different industries. Writing a business management assignment requires a lot of research and analysis. Students would be expected to demonstrate their knowledge of business terms and concepts, analyse data to examine the accuracy of conclusions, and describe the concepts that are used in making business related decisions. Business management assignments are often challenging and require a lot of time for research and analysis. Students are often burdened with multiple projects and stringent timelines for submission. This leads to late submission of the assignments and penalties.
Contents Background. 1 Business Performance Review.. 1 Competitive and Technological Analysis. 3 Disruptive technology. 4 Video Champ and block buster comparative analysis. 5 Conclusion. 5 References. 6
Background Video Champ is a movie rental company in Australia. It has only 1 outlet in Doncaster suburb in Melbourne. In order to rent a video, customers have o travel to the store outlet to rent videos. Although many rental companies have closed down their store outlets which includes VideoEzy, Video Champ business is still profitable, despite an obvious decline in the movie rental industry due to the upcoming form so entertainment and gadget. The company is still serving due to its operations and the technology that it offers in the movie rental business. The purpose of the report is to examine the internal and external competitive environment that the company faces and hence base its strategy to maintain his position in the given industry. The competitive analysis will help the company to gauge its competition and understand the changes that the company may need to do in order to service in the industry. The report uses Porters five forces to illustrate various types of influences that the company faces from different types of competitors and the impact of disruptive technology on the company.
Business Performance Review By looking at the above chart, it can be seen that the company made maximum sales in the adventure section mainly due to the popularity of adventure movies and series within the public. Also the least sales were in the documentary sector with $335.25 in 2015 and 270 in 2016 and the sales decline was -19.46% from 2015 to 2016. The tote cumulative sales in 2015 was $3,91,258.25 while in 2016 it was $3,88,237.63 which was decline of -0.77% from the previous year. By looking at the above categories the decline rate of adventure posed as awarding for the company as well as the product category since both of them experienced a decline of -5%. The other product category which came in the warning area was Thriller/Crime and horror since both these segments too experienced a growth decline of -5% compared to 2015. The two areas which are risky for the company is romance and cdcumentary since they too experienced a product decline of -15.57% and - -19.46% respectively. The area of danger for the company is musical since the growth decline was at -38.93% for the company. Two areas which experienced a growth was action and animation both which grew by 12.59% and 5.48% respectively. These rentals mainly grew due to the increased in demand by the customer base since action and animation movies have gained popularity in the past year due to which their demand is more
The sales trend is shown in the figure above and the difference in various categories pertaining to sale can be seen where adventure is making the most sales in both years followed by action and then documentary. By looking at the both the charts even though the video rental company is operational but it seeing a decline in sales which is undesirable for the company. This is mainly due to the limited survival options that the video rental industry has and it is essential that the competition in the company is analyzed (Luckerson & Karnani, 2006).
Competitive and Technological Analysis The porters five forces tool is used to analyze the level of competition that is there is an industry. There are five types of forces which are defined in this tool and they are analyzed in the following manner wit respect to Video champ.
Bargaining power of supplier The main suppliers of the video parlours are the production houses and since the company cannot switch from one distributor to another the supplier power is relatively high in this industry. Also there is no concentration of suppliers and the volume is important to them. Also the vendor for the particular movie or content has the sole rights hence if a particular product is in demand then the rental company has to purchase it from the vendor at the given price. Hence supplier power is said to be high in the industry (Porter, 2008a).
Bargaining power of customer The bargaining power of customers for this industry is high. In today’s times consumers have number of options where they can watch the content and they have a number of option hens it come to renting movies. First of all there are tradition movie rental stores like Blockbuster which is a chain of stores and them kiosk lies Red box along with the cable options where they can rent a movie as per their liking form the TV itself. Other than that online portals especially Netflix and other subscription through play store and ITunes gives the customers a plethora of options to choose from the switching cost from one type to another is extremely low and the customer looks at convenience since it becomes more convenient for customers to access the videos that they like and the movies from wherever instead of going to the parlour for renting the movies. If a company fails to please their customers then it will lead to their downfall for the company (Grundy, 2006).
Threat of Substitutes The threat of substitutes is extremely high for the video rental company. At the price for the ownership of the digital content decreases and the popularity of file sharing sites have created a huge threat of substitutes. Also the movie studios have started getting into the movie rental industry which has threatened the rental company. Also the rental companies must remain conscious about the switching cost of according to convenience. For example Apple has created an ecosystem with building up the ITunes and it has done a far superior job of ensuring there ecosystem remains extremely convenient to consumers which helps it to create a loyal customer base (Porter, 2008b).
Threat of new entrants The entry to this industry has number of obstacles which is the website ability, content contractors distributor relationships etc which keeps the new entrants out. Also the declining sales of the rental industry are not alluring for new entrants to enter this industry. Websites like Amazon too have entered this industry and they produce their own content and many television series. They have created their own customer base and have started the online streaming video rental in order to gain more viewers. Overall it can be said that the threat if new entrants is low since the variables to enter this industry are dynamic and it’s not easy for a new entrant to enter the industry
Competitive rivalry The rivalry among the existing comepetition in this industry is extremely high. There is a fierce competition from companies like Blockbuster, Netflix, Amazon, red box and they all have theory own competitive advantage in the industry. They compete with the Video Champ by providing customers the convenience of streaming the content online duet to which they do not have to go to the parlour and get the CD. Also companies provide subscriptions where new content made by the companies themselves can be showcased to customers like Netflix makes its own content. However, in order for the rental businesses to create their own television series or movies they must invest into this strategy in a considerable manner.
Disruptive technology Disruptive technology is an innovate term in the field of business which refers to the creation of a new market and a value network and eventually disrupts an existing market and the value network that displaces established leading firms in the market and their products and alliances. With disruptive technology, the video rental company can decrease buyer power by giving them an experience where the switching cost for the customers is high and also they become a loyal customer base. When the company launches technology such as Netflix which disrupts the entire video rental industry, it makes the buying power of customer lesser since companies are drawn to this new technology. Also sustaining a particular technology like online steaming and give them a good quality experience will help the company to decrease the buyer power (Kamani, 2006)
Video Champ and block buster comparative analysis Block buster is a provider of home movie and video rental game which provides rental services through video rental shops, DVD-by-mail, streaming, video on demand, and cinema theatre .Competition from the Netflix mail-order service, Red box automated kiosks, and video on demand services were the major reason behind the down fall of Blockbuster (Kew & Stredwick, 2017) The main difference between Video champ and blockbuster was that Video champ is a Melbourne based video rental company that has a shop only in Melbourne while Blockbuster was company which had its presence all over the world and its peak time had over 9000 stores. The backing of Blockbuster was much larger than that of Video Champ. Also Video Champ was able to survive due to its loyal customer base especially around the Doncaster Region who are used to renting movies from the company and find it a convenient option unlike Block Buster which had shut shop in many parts of Australia (McGrath, 2010). Video champ being a small company in front of Block Buster had a personalized relationship with its customers but the collection that was offered by Block buster was much larger mainly due to its distribution network which was extremely large and it stocked movies and video in many other languages compared to Video Champ which has content only in English, Spanish, French and Chinese. Also Video Champ was quick in adapting newer technology; like bar-coding and RFID tagging in its system compared to Block Buster which used this technology at a later stage (Sylvia, 2006).
Conclusion In conclusion it can be said that the video rental company is experiencing a decline in growth and its sales are lesser than the previous year which is undesirable for any company. Video Champ has managed to survive for so long due to its operational efficiency and customer base but due to the advent of new companies and technologies in the industry, the survival of the video rental companies have become increasingly difficult. There are a number of competitive factors which threaten the distance of the company and it is important that it updated its strategy in order to maintain its position in the markets. Companies like Netflix have completely disrupted the market with its online rental schemes and it is important that Video Champ too comes up with similar services where it can retain its customer base and ensure that it maintains its position in the market. It is recommended that Video Champ should enter the online rental business and give services to customers which currently no other provider is giving like free delivery of Blue Ray and hi tech version of the videos which the company stocks at their residence which can be enjoyed by customers. The company can also tie up with distributors and launch a new vertical which involves gaming and other entertainment through the introduction of a phone application. Overall the company has ensure a static advantage in the industry.
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