Blockbuster - the fall of a giant

Abstract

The dynamic capabilities view, one important theoretical perspective developed in the strategic management literature, was advanced to explain why firms succeed in dynamic environments (i.e. environments in which companies are exposed to various types of exogenous shocks). This view states that the answer lies with firm’s ability to respond efficiently and effectively to major changes in their competitive landscape. This thesis aims to make a connection between the dynamic capabilities literature and a real life business situation, by presenting a teaching case and using the theory to analyze the events described. The Blockbuster Inc. case provides further evidence that the top management team’s perception of opportunities and threats is essential in shaping the response that a firm gives them. The case also suggests that the timing of a firm’s decisions is very important to succeed in dynamic environments and that a firm’s market-orientation level also helps to determine its success in the marketplace. Furthermore, the case provides evidence that resource base changes occur frequently and in many forms in fast changing environments, and also stresses the importance of correctly performing these changes. Finally, the case demonstrates the importance of dynamic capabilities in fast changing environments and the dangers that companies may be exposed to by not having these capabilities.