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Redbox has succeeded in the old-fashioned style of renting movies in form of DVDs to its clients through kiosks spread across the United States (US). However, the company operates under a business environment that is threatened by online presence, a strategy used by the current market leader called Netflix. For that reason, the owners of the company along with the companys management have committed great resources to compete against Netflix (Stewart, 2021). The aim is to be the market leader and have the biggest share in the movie rental business.
An expanded market share comes with numerous advantages for the company. The greatest benefit is the opportunity to make the maximum sales in the industry that will translate into more business revenues. Stewart (2021) states that once the company is able to manage the costs effectively, they will enjoy huge profits, which will attract more investors thereby raising the value of the company. Being a dominant player in an industry also leads to the power to determine business trends, set the prices, and enjoy general public acceptance and admiration.
Even as the company may desire to expand their market share and grow the business further, the drive can as well be riddled by several disadvantages. An expanded share of the market may portend serious problems to the business managers. Big companies that have achieved huge market shares consider this alternative both a good move and a bad one at the same time. For instance, Coca-Cola, Gillette, General Motors, IBM, and Xerox are in a tight fix because their businesses are under constant threats (Stewart, 2021). The companies have to relentlessly struggle with business pressures arising from incessant competition from emerging businesses that use unorthodox means bring down established brands in the market.
Therefore, the huge market share will push the company to manage the business and make business decisions in very sensitive ways than the competitors. The desire to pursue greater market share will be limited because it may be risky or may be in form of a double-edged sword that may cut on both sides. Business damaging issues such as antitrust actions will certainly emerge pushing the company to have to cut down on operations in order to manage such incidents. Antitrust cases usually result from smaller players who use such discriminatory options to cut the big corporations down to size. For instance, IBM was forced to pay Telex $259.5 million as settlement against an antitrust claim filed against the company (Stewart, 2021). Consequently the company has to bear huge financial losses.
A dominant industry player is under constant attacks from organizations advocating for better consumer consideration as well as government agencies that relentlessly monitor the business actions. The actions result from the companys greater public visibility, therefore becoming targeted for numerous legal struggles, consumer complaints as well as demonstrations. For example, General Motors found itself in this trouble when it was forced through the campaign GM to initiate several measures for the good of the public but costing the company of their resources, image and reputation (Stewart, 2021). DuPont and Eastman Kodak have faced similar frustrations.
The concept of movie rental kiosks is bound to be in a tight spot amid the budding developments in the online space. Redbox can consider to find innovative ways to sustain the business by leveraging on up-to-date information technology. The company has various technology options including upgrading their hardware component in order to cut back on the time customers spend on the line while taking or returning DVDs. Stewart (2021) argues that the current system is inconvenient to customers especially in returning DVDs at the companys kiosks since they have to spend a lot of time waiting to figure out the correct positioning to insert the DVDs in the return slot. The system is designed in such a way that the DVDs have to be put in in a particular way as there is only one camera fixed on the inside to scan the barcode on returned DVDs.
The company must evaluate the benefits each alternative brings on board for the company in growing the business. The movie rental business is very technical and the economics of the business need to be considered for the business to run feasibly. According to (Stewart, 2021), correct evaluation must be conducted taking into account the complexity of the business and its huge scale of operation. The evaluation also must be aligned against the strengths they add on to the company in enabling it to defeat the existing challenges. There are also great costs linked to the various alternatives that need to be considered as well as their correct implementation to evade any misfortunes that may emerge.
Consequently, a comprehensive cost-and-benefit analysis of the alternatives is obligatory. The analysis needs to take account of the companys financial muscle, competitive edge, and human resource capabilities needed in executing the new alternatives. Redbox must as well conduct a careful assessment of the industry PESTLE (political, economic, social, technological, legal, and ecological) analysis (Stewart, 2021). The pestle model is crucial in helping the company to be aligned with the alternative that provides maximum value and weightiness in solving the difficulty.
Decisions that touch on the core aspects of a company must be made under a clearly defined structure. The structure is formed under a decision criteria developed by the company. In setting the criteria important considerations have to be factored in for the company to realize the ultimate objectives. Important elements to consider include the profitability of the business, sales income, and the competitive edge of the company. Once the criteria is established, the company can be able to easily compare competing alternatives against one another. A scoring metric can also be developed to show the performance of different alternatives from which the best option is chosen. The scoring metric should be able to rank the competing alternatives based on a rating scale from the most favorable to least favorable (Stewart, 2021). In the end, the most favorable option with the highest rating is then selected for implementation.
The financial suppleness of an alternative is one key component of the evaluation process that cannot be overlooked. In todays business environment, companies world over are finding various ways that can enable them to compete effectively at the lowest cost possible. In fact, Redbox has been trying to implement its business strategy of kiosks at the least cost possible by ensuring that they are strategically located and do not require an attendant. In fact the company was able to navigate tough competition by setting the least possible cost of $1 (Stewart, 2021). Most competitors thought that the amount was so little that the company would amount to nothing major of a threat in the movie rental industry in the US.
Therefore, the company needs to constantly consider its financial strengths and weaknesses in finding the best alternative that will enable it to meet the targeted goals and dealing with the problem successfully. In determining the financial impact of an alternative to the company in terms of the costs and benefits, different methods can be used. The techniques help to quantify the alternatives even though it may sometimes be quite difficult due to the large scale nature of operations. Also, quantification may be limited by factors out of the control of the company (Stewart, 2021). Nonetheless, it is required in evaluating the viability of the alternatives especially by quantifying the maximum option in order to advance a strong image and comprehension of the option that will contain the problem.
Moreover, the company options may be disadvantaged by the extra effort that possibly will be required in adopting an alternative to the business problems. The additional expenses must be considered in determining whether an alternative can deal with the problem directly. Moreover, the alternative must be correctly aligned to the companys mission and vision in offering great customer service and experience. The company can consider obtaining diver views from the stakeholders. The feedback can be helpful, given the vast experiences, in assessing the significance of the alternatives and the worth it may afford to the business in the long-term (Stewart, 2021). Open discussions and reviews can enable the company to have a coherent depiction of the final results, leading to healthier selection and execution of the correct alternative.
References
Stewart, K. S. A. B. (2021,). Lessons from a Dying Business. Inc.Com.
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