Category: Management Styles

Introduction

This research paper gives a detailed coverage of Blockbuster Company, a renowned player in the entertainment industry. Of special interest during the survey will be an analysis of the company’s management style and its impact on the performance of the organization. The synthesis will therefore explore management pitfalls that led to the collapse of the company plus some of recovery strategies, which have been adopted to regain the company’s status in the entertainment market.

Company overview

Blockbuster is an American company, specializing in the entertainment industry by providing rental services for video games and home videos. Initially, these services were offered through rental shops, which were principally franchised and under ownership.

Due to the changing demand and technology, Blockbuster has continuously improved its service delivery and introduced new products like delivery of DVDs through customer emails, streaming of videos that are highly demanded in the market and use of kiosks (Blockbuster Corporate, 2011).

Based on its performance and trends, the company attained its peak in 2009, when it had a total of one thousand seven hundred stores in the United States with branches in seventeen countries around the world. The company’s head office is in McKinney, Texas. Due to stiff competition in the market, Blockbuster has been hit by countless financial crises that have led to severe revenue losses.

This led to the company’s decision to declare the firm bankrupt in September 2010, resulting into an auction that saw Dish Network, win the acquisition at a cost of $233 (Blockbuster Corporate, 2011). Following the auction, the company operates as a subsidiary under Dish Network ownership.

Blockbuster management

There is no doubt that management is a key factor that determines the success of any business organization. Good management allows a firm to align its strategies with goals and objectives for better performance (Rue & Byars, 2008). This segment discusses some of the management styles and principles, which have shaped the performance of Blockbuster Company throughout its history. It is therefore important to mention that the section will highlight negative and positive management styles that have impacted the organization.

With its headquarters in Texas, the company has a stable customer base in the United States of almost forty eight million. In 2002, Blockbuster realized annual revenue of $5.5 billion, with more than 80% of it being generated from America. Importantly, the company was acquired by Viacom in 1994, controlling its voting rights and equity.

Like many other companies in the business world, Blockbusters has witnessed disappointments and failures throughout its business timeline. For instance, Cox enterprise sold more than eighty stores, which belonged to Blockbuster in 1991.

This had direct impact on the performance of the company as it struggled with low prices of its shares, which was 14% below the initial value. The defection of the company’s biggest franchise partner was a source of alarm within Blockbuster’s management. While reacting to the defection, Cox’s chief executive officer expressed his disappointment, noting that the company had made a serious mistake by considering joint ventures with Blockbuster.

As mentioned above, the departure by Cox had detrimental effects on the progress of the organization even though it rose to become a leading provider of DVDs, video games and videos. It can therefore be deduced that the failure was as a result of mistakes, which had been made by the company’s management before recovery strategies were put in place.

To achieve its desired strength, the company implemented a series of overhauls. Additionally, Blockbuster was concerned with establishing and nurturing strong relationships with its customers through sourcing of specialized customer care services from other companies like Acxiom, which played a crucial role in 2003.

Through Acxiom’s input, Blockbuster was able to develop a stable customer relationship management system that would augment the company’s interaction with its customers by proper utilization of available information.

This approach further gave Blockbusters an upper hand in analyzing, mining relevant data and for the marketing department to improve its services through a redefined communication procedure (Rue & Byars, 2008). It was considered as one of the best management decision made, which led to the exponential growth of the company in the United States and in other parts of the world.

Another positive management practice witnessed at Blockbuster was its ability to focus on neutralizing competition threats within the market environment. This was based on the fact that the company realized appealing results despite the fact that video rental business is highly prone to constant changes due to technological advancements being made in the world (Pantes, 2010).

The management’s idea to open over two hundred stores annually was a remarkable strategy and a sales driver for the company in its late 90s. In fact, some observers had projected a saturation state in the American market if the expansion strategy was to be maintained.

As mentioned above, opening of more business stores highly favored the success of Blockbuster. Additionally, this approach aimed at protecting existing units from being cannibalized. Through this expansion of customer base, the company was able to utilize demand for DVDs, which was growing in the market.

This strategy was initiated by John Antioco, while serving as the company’s chief executive officer. During the company’s management crisis time in 1997, John Antioco served as the company’s chairman, CEO and president simultaneously (Pantes, 2010). Nevertheless, it was observed that Blockbuster was extremely concerned with business expansion without considering its corresponding cash flow and the need to improve the efficiency in service delivery.

The acquisition of the company’s 80% equity by Viacom also jeopardized the ability of Blockbuster to make independent decisions since the management was accountable to the buyer. In understanding the management trend and performance of Blockbuster, it is essential to note that the company has experienced inconsistent results, attributed to the management’s ability to establish business plans, strategies and diversification techniques.

From the above analysis, it is evident that something was wrong with the management of Blockbuster. For instance, the company’s leadership failed to notice the presence of a superior technology that would guarantee the organization’s success (Jonas, 2010). On the contrary, the management was overwhelmed by the internal growth of the company at the expense of appreciating opportunities, which presented themselves.

A good example is John Antioco who rejected the idea of partnering with Netflix after he was approached by the company. Instead, John Antioco failed to embrace the idea, arguing that it was aimed at killing the future of Blockbuster. As a result, John Antioco and his management were unable to incorporate new ideas, which were to address the needs of customers and grasp a wide range of opportunities that were present in the market at the moment (Jonas, 2010).

According to some analysts, Blockbuster’s bankruptcy was as a result of poor management strategies. For instance, the company’s leadership defined its activities in a narrow manner that exposed the firm to a financial crisis (Bodey, 2009). By defining its products with simple words and statements, Blockbusters could not convince consumers exhaustively. Consequently, customers had to find satisfaction from other competitors within the industry.

By being insensitive to several innovative ways of connecting with its customers, the company created a loophole for Netflix and other players to exploit direct consumer linkage through the internet and emails (Bodey, 2009). This is mainly because new players in any market always explore areas, which may have been ignored by existing companies. It follows that Blockbuster’s narrow definition limited its ability to gain a competitive advantage that was necessary in stabilizing its revenue.

Furthermore, the company did not invest in communication tactics, which was necessary in denoting the expected value of a given brand for customers. Communication acts as a determinant for customers’ selection over business competitors in a given market.

To make matters worse, the management ignored to include a value promise on the company’s website, creating a gap between the expectations of customers and what they perceived as the company’s capability (Make it a Blockbuster night, 2007). All these shortcomings within the management contributed towards the company’s dwindling performance and the inability to keep pace in a competitive business world.

Following the poor performance of Blockbuster, which led to its bankruptcy, the company has been seen in a recovery mode, with the new management remaining determined to revive the organization’s lost reputation. The firm was acquired in 2010 by Dish Network, a TV operator in the United States (Bodey, 2009).

Since then, the leadership of Dish Network has adopted new strategies, aimed at re-establishing the brand of Blockbuster in the entertainment industry. Among these strategies and new management models was the launch of free in-store memberships, which was to be applicable for ninety days from the time the idea was initiated. Additionally, Dish Network introduced satellite-membership, efforts that were aimed at reassuring customers and winning their confidence (Gruenwedel, 2011).

Blockbuster has adopted workforce and execution management strategy. In a 2011 interview, Blockbuster’s new president admitted that there was still demand for physical media, despite the advancement in technology and the gradual shift to digital media.

This was also based on a wide range of advantages attached to physical media like the quality of Blue-ray discs and the use of DVDs in cars, which made the technology more acceptable (Make it a Blockbuster night, 2007). Additionally, Dish Network believed that kiosks were more user-friendly and offered unique terms of allowing customers to gather with families and friends.

In order to win the confidence of Blockbuster customers, Dish Network has embarked on reminding the public on their commitment towards nurturing the iconic legacy of Blockbuster. To achieve this target, the management focused on establishing new and strong relationships with its customers, giving free emails to new customers and rolling back prices for most of its products in stores distributed around the world.

Moreover, the new management has invested in advertisements to inform its customers about the products available at their nearest video stores. In other words, Blockbuster management is determined to eliminate loopholes, which exposed the company to the wrath of its opponents (Gruenwedel, 2011). Of importance is its focus of customer relationships and exploitation of business opportunities.

Conclusion

From the above analysis, it is evident that management plays a pivotal role in determining the performance of a company. It is therefore important for the leadership to have workable strategies, which augment the realization of set goals of objectives.

References

Blockbuster Corporate. (2011). Web.

Bodey, R. (2009). Blockbuster Analysis. Web.

Gruenwedel, E. (2011). Six Questions: Blockbuster LLC President Michael Kelly. Web.

Jonas, I. (2010). Analysis: Blockbuster bankruptcy no surprise to landlords. Web.

Make it a Blockbuster night. (2007). Web.

Pantes, K. (2010). Why Blockbuster failed and World Class will win. Web.

Rue, L. W., & Byars, L. (2008). Management skills and application. New York, NY: McGraw-Hill Irwin.

Sunderland’s Management and work style

Sunderland’s management style is a combination of autocratic. From the case study, it is evident that coworkers consider Sunderland’s management style to be formal but effective. A formal management style is autocratic and employees are required to completely follow instructions issued by the top management to the letter.

Sunderland is described in the case study as “always setting expectations at the outset of a project” which have to be achieved. Sunderland uses the autocratic approach to ensure organizational project goals and objectives are achieved. According to the case study, Sunderland is highly valued because she ensures that project goals are achieved as required.

Sunderland is described as having a “great strategic mindset”, which implies that she is highly focused and inflexible. Sunderland’s autocratic management style provides her with a competitive edge in pushing for the development of the best ideas and products for the client. Her focus is on the best product that best suits the needs of the customer. She strives to be efficient in planning, organizing, and directing employees to provide the best solutions to the client.

Sunderland is described as a “doer” in her working style. The case study describes Sunderland as a focused, inflexible, demanding, and a single minded person. Doers execute tasks with a lot of attention to detail, a description that Sunderland fits well into.

Sunderland has a legitimate source of power because of the position she holds in the company. Her position is based on experience and professional qualifications which fit into the job description she holds. In addition, she holds expert power because of her skills, knowledge, and experience from previous positions held in other companies. She also holds coercive power which enables her to influence the people to perform according to the expectations of the customer.

An assessment of Sunderland’s emotional intelligence shows her to be able to control her emotions. That is because she was able make decisions while keeping her emotions under control.

Morgan’s Management and work style

The case study shows Morgan’s management style to be informal and some aspects of the leisure’s faire approach. It is an informal approach that is evident from the relaxed atmosphere Morgan enjoys working in. In addition, Morgan endeavors to strike a balance between “competing interests and priorities”. Morgan provides support and gets involved in executing tasks, by working hand in hand with the employees.

Morgan’s sources of power are legitimate, expert, and referent because of the position he holds in the company. Morgan was recruited to the position because of prior experience, knowledge, and academic qualifications.

The source of Morgan’s expert power is the experience and knowledge he gained as a project manager in different companies before getting the current position. Evidence shows Morgan to be supportive, and partners with the employees, which shows that he has developed person connections with the people he works with, which qualifies him to have referent sources of power.

Morgan’s work style is reflected in his ability to develop close working relationship with other employees and his dislike of Sunderland’s management style. Morgan is emphatic and ensures that he makes employees feel great.

That is evident in from case study where Morgan says that he cannot “imagine working in the bureaucratic labyrinth of a large company” and continues to assert that he values an environment where “where everyone had a seat at the table”. Morgan likes a relaxed working environment, where he creates vision for the people, thinks outside the box, and deliberately tries new ideas to provide the best solution for the customer.

Morgan’s emotional intelligence is based on a cognitive approach where he endeavors to reason with emotions. That is best illustrated in the stamen on how Sunderland understood Mike on the way he can “defend his ideas to the extreme and can get excessively argumentative when things don’t go his way”.

That is in addition to the response Mike make to things that he is interested in, in this case, the interest Mike has in client details, and in understanding the strategic background of any training program to achieve the client’s training needs and organizational goals.

What is going on

Mike Morgan called Nunez who refused to take his phone calls because Atain’s account director was the only authorized person and only point of contact with Gramen. By giving a call to Nunez, mike was in direct breach of protocol or Attain’s communication policy, an act that could generate negative relationships with the client. Mike is rebellious because of “trying to challenge the client’s ideas and develop content that is outside the box”. Morgan wants to think outside the box by contacting the client directly.

Morgan seems to work outside the formal organizational structure of doing things and attempts to test new ideas without due consideration of the formal process of evaluating case studies.

Morgan knew very well that his approach of solving client problems could not be in tandem with Sunderland’s strict formal management style. Morgan tried to contact Nunez to test and influence her to accept his unproven ideas which were based on an unproven and single case study, which Nunez had advised him to conduct further research on, to be able to make reliable conclusions.

Morgan also likes challenging the ideas of Attain’s ideas and in this case, had gone further to contact Nunez directly to influence decision making. Morgan knew that Sunderland was not knowledgeable on the “impact sales and financial strategies had on working capital, day’s sales outstanding, and bad debt expenses”.

Nunez called Sunderland because she was the only direct point of contact with the Gramen Equipment Company to inform her of the persistent calls from Morgan. She was professional and did not want to indulge in a breach of the formal organization of running the business.

Sunderland vs Morgan

The relationship between Morgan and Sunderland is not cordial. Sunderland has a strong inclination to authority and regard for the formal organizational structures. On the other hand, Morgan does not have a strong regard for the formal structure of organizations.

Morgan does not value the formal reporting relationship existing in the organization and regards Sunderland to be harsh on him. She seems not to be flexible, but dictates terms in accordance with the client’s needs, a fact Morgan opposes. The strained relationship is further illustrated in the decision Sunderland makes to have a face-to-face meeting with Morgan instead of giving him a call and the contemplation of reporting the incident to Chama.

Initiating positive change

There is need for Sunderland to identify the need for change, the areas of conflict such as Morgan’s insubordination and the conflict between her and Morgan. Employees’ poor comprehension of Attain’s communication policy, employee roles and responsibilities, respect for authority, better working relationships between employees, and the need for all employees to work as a team toward achieving organizational goals and objectives.

To initiate positive change, it is important for Sunderland to define a clear change management strategy. The strategy should encompass the scope which includes the people who are affected. In this case, the people in the management hierarchy seem to be the source of conflicts, with the typical example being the conflict between Morgan and Sunderland. In addition, the conflict between the two parties seems to have created a group of employees loyal and positively regarding Morgan, while other employees regard Sunderland as being too hard and cruel on them.

The tools and techniques used in bringing about change should include a definition of the scope, which in this case should cover the entire organization. Sunderland should clearly understand the size of change required the number of people to be affected, and decide if the change should be gradual or radical.

According to the case study, the change should be gradual to ensure each member is prepared for change and understands the need for change not to make employees discontented with Sunderland’s management approach which could destroy their morale. It is also because different management styles are practiced by different leaders, which needs a participatory approach to change employee perceptions.

Sunderland should identify areas that may lead to resistance to change, evaluate the value system that could be brought about because of initiating change, and understand the background of each employee.

In particular Morgan’s background is critical in initiating a positive change in him regarding subordination to authority and compliance to organizational communication policies and other policies that might be created regarding employee interactions with clients. It is important for Sunderland to create a qualified change management team who understand the need for change.

A communication plan is critical to create employee awareness on the need for change and in being part of the change process. Each employee should be sufficiently made aware of the risks involved if change is not initiated and the reason for being part of the change process. To be effective, Sunderland should formulate a change management plan that factors different audiences, stakeholders, and the employees in general.

Sunderland should start the positive change process by educating to level management team, then middle level managers and supervisors who could be at a better position of educating employees for the need for change.

A training requirements document should be developed which provides precise and detailed management requirements, skills and knowledge requirements, and the need for each supervisor to develop specific training programs for change.

It is important for the change to be effective in maximizing a return on investment, by identifying the impact that the change will bring to the organization in terms of its performance of the core business pursuits. At the end of the change process, Sunderland and the change management team should measure the impact caused by introducing new changes to the organization. The area of focus should be change in employee behavior which is the basis of making positive and effective changes.