Blockbuster and Netflix Firms’ Failure and Success

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Table of Contents

The Organizational Structure and Culture
The Mode of Communication
Leadership Style and Management
Relation to the Success and Failure
HR Strategy, Recruitment, and Selection
Recommendations
References

The Organizational Structure and Culture

Netflix’s unitary organizational structure allows it to maintain control over departments. Despite the seemingly hierarchical way of power, the design is flat compared to similar companies. It is due to the presence of many employees of different cultures and the influx of young people into the ranks of the company’s employees. A relatively flat structure allows people to maintain a relationship of trust within the company. In addition to being the key to success for Netflix, this structure enables the company to avoid market rigidity, as all departments and employees can participate in driving innovation (Burroughs, 2018). Within Netflix, culture is the values of multiculturalism, digital technologies, and consumer comfort (Wayne, 2019). Customer-oriented service thus remains always on top, maintaining popularity.

Blockbuster’s management has always used a vertical integration model, which did not allow many staff members to participate in decision-making directly. Accordingly, innovative proposals remained unnoticed by the immediate superiors (Vučeković & Gavrilović, 2021). Blockbuster had severe problems with expatriates, as management aimed primarily at the US market. The corporate culture did not consider the development of information technology in other countries and the gradual involvement of many nations in the global network. In addition, Blockbuster lacked a customer focus in the 2000s, while the company started with customer satisfaction. Customer needs have changed along with their values, but Blockbuster’s culture hasn’t evolved.

The Mode of Communication

The Netflix craft has been reflected in the way of communication that workers currently use. By showing films worldwide from different producers, employees respect the values of multiculturalism, diversity, and transparency. Communication is not limited to individual actors, and departments exchange information in understandable ways with each other. Netflix was able to be at the forefront of the wave in the early 2000s (Anindita, 2021). Now, with the development of social networks (Twitter, Facebook), they continue to communicate with their customers, learning their priorities and interests.

Blockbuster was mired in financial transactions and the desire to get as much benefit as possible while continuing to provide the same product. However, time passed, and those products for which 15 years ago customers were ready to pay fines, high rental prices now did not deserve it (Blockbuster: Leadership & strategic failures, 2018). Competitors appeared on the market, offering much more exciting conditions. Due to a lack of communication within and outside the company (with competitors), Blockbuster suffered a significant market crisis. A particularly notable example is the dialogue between the directors of Netflix and Blockbuster when Blockbuster could easily buy out Netflix at an affordable price. However, the company’s management refused to enter into a dialogue on an equal footing with the leadership of Netflix, as they did not see point-blank how the market was developing.

Leadership Style and Management

Currently, Netflix’s management can afford to put very high demands on employees, as this is fully justified. The leadership style is based on detailed and obligatory feedback, which may seem overly critical to some; and it is the essence of Netflix’s thirst for innovation. Each proposal must defend itself with complicated arguments, and only after confirmation can the initiative be accepted (González-Chans et al., 2020). The management values in Netflix are also transparency, multiculturalism, and constructiveness.

Blockbuster’s management was entirely based on internal success and greed. Leaders lacked market insight and responsiveness, while their competitors devised new ways to please customers. Technology was changing quickly, but Blockbuster seemed to be stuck with the old problem of pirated versions of movies, while Netflix was already advertising a monthly subscription with might and main. Blockbuster management was not ready to take responsibility for new decisions and take risks. It seemed to them that a paid subscription would be an inappropriate offer, and therefore they did not even accept the attempt to change their services. By 2006, when Blockbuster officially introduced a monthly subscription and made its service the most client-oriented, it was already too late; only four years left before filing for bankruptcy.

Relation to the Success and Failure

All of the above was the key to success for Netflix, as the company could keep abreast and willingly take risks by offering new services to customers. Customers saw that Netflix wanted to be a helpful service and not just get paid to provide entertainment (Lobato & Lotz, 2020). Many customers who were tempted by the prospect of paying fines for late rentals became Netflix users with pleasure. Netflix has shown flexibility and willingness to change for the sake of consumer demand.

A critical, albeit unpopular opinion about the bankruptcy and collapse of Blockbuster, is the change in the world and cultural space with the advent of new information technologies. People’s leisure has changed, the same as their communication with each other has changed. The Blockbuster remained at the level of the early 1990s when the world of each family was fixed only on friends and other relatives. Information technology has changed how people consume content in general, and Blockbuster has not been able to adapt to this. Blockbuster, being a provider of content for entertainment (games and movies), remained strict and dictated inflexible terms to its customers.

HR Strategy, Recruitment, and Selection

Netflix is focused on high standards; therefore, the requirements for employees are always the most elevated, especially if it is not a member of a large team but a manager. Recruiters will refuse a candidate if they think he does not suit them according to at least one criterion, since many people want to work in Netflix now (Neira et al., 2021). Among the values presented to candidates during selection are responsibility, a thirst for self-development, maturity, and the ability to make independent decisions. The more valuable an employee is in terms of his skills and corporate behavior, the more his superiors can afford him, and the more they will be glad to show loyalty. The attitude towards employees in Netflix remains very strict due to the competition in the labor market. There is a risk of reputational costs since it will be complicated for the company to justify itself in the event of a scandal.

The Blockbuster hiring system was rigid and did not allow superiors and other employees to pay attention to essential skills. This system was based on mechanical data, such as scoring skills on a 5-point or 10-point scale (Okami et al., 2020). Blockbuster did not have its corporate philosophy, which could become the foundation for its culture and help find loyal supporters when hiring. The inefficient work of employees and the impossibility of fair remuneration (and training for them) became one of the reasons for the collapse of Blockbuster.

Recommendations

The first recommendation is to create a corporate culture based on the values and priorities of the company. Managers should ask themselves questions about the importance of service and customer support. In a company with a well-developed corporate culture, employees who are entirely different in skills, education, and experience are more likely to get a job; this will be a plus for clients. The second recommendation is to have a transparent reporting system, conditions, and services. Transparency is the secret of trusting relationships between market partners, employees, superiors, customers, and the company.

The third recommendation is the constant motivation of employees and a sincere attitude towards them. Blockbuster did not have a motivation system for its employees and management. Therefore, all these people became hostages of a rigid dictate system and strict conditions in a field that seemed to have to look for other ways to approach people. It must always be remembered that in working with mature people, motivation and inspiration are needed, and not army orders. The fourth recommendation is to set realistic goals; management must clearly and realistically formulate plans by the actual demands of the market and the capabilities of the team (McShane et al., 2021). Knowing the purposes of the work, each employee and small manager will direct their efforts in the right direction. If specific goals are unattainable, the manager does not need to rest against them, but it is better to recognize this and move on to other plans immediately.

The fifth recommendation is the selection of the company’s internal processes with the latest technologies. The world is inevitably changing, and one cannot argue with this, getting used to the position of the best among competitors in the market. Blockbuster’s management felt relaxed and confident, as they were the companies that successfully marketed their services in the late 1980s (McKinnon, 2022). But the world was changing, and technology was advancing rapidly, to which Blockbuster did not have time to adapt.

References

Anindita, V. (2021). Disruptive strategy in disruption era: Does Netflix disrupt the existing market? International Journal of Business and Technology Management, 3(1), 30-39.

Blockbuster: Leadership & strategic failures. (2018). Acasestudy.Com. Web.

Burroughs, B. (2018). House of Netflix: Streaming media and digital lore.Popular Communication, 17(1), 1–17. Web.

González-Chans, C., Membiela-Pollán, M., & Cortés-Cuns, M. (2020). Relational marketing and brand community: The case of Netflix.Redmarka. Revista de Marketing Aplicado, 24(2), 251–274. Web.

Lobato, R., & Lotz, A. D. (2020). Imagining global video: The challenge of Netflix.Journal of Cinema and Media Studies, 59(3), 132–136. Web.

McKinnon, T. (2022). 8 reasons why Blockbuster failed & filed for bankruptcy. Indigo9 Digital Inc. Web.

McShane, S., Tasa, K., & Steen, S. (2021). Introduction to the field of organizational behavior. Canadian organizational behaviors (11th Ed). New York: McGraw Hill.

Neira, E., Clares-Gavilán, J., & Sánchez-Navarro, J. (2021). New audience dimensions in streaming platforms: The second life of Money heist on Netflix as a case study.El Profesional de La Información. Web.

Okami, L. E., Yamamoto, K. N., & Lloyd, R. A. (2020). Exploring the return on customer (ROC) model in the video sales and rental industry: An intramodal analysis of Blockbuster, Redbox, and Netflix. Review of Integrative Business and Economics Research, 9, 358-371.

Vučeković, M., & Gavrilović, K. (2021). Digital transformation and evolution of business models. IPSI BGD Trans. Internet Res., 17(1), 29-35.

Wayne, M. L. (2019). Global streaming platforms and national pay-television markets: A case study of Netflix and multi-channel providers in Israel.The Communication Review, 23(1), 29–45. Web.

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