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World’s Worst Strategic Decision. April 15, 2008

Posted by Who? in Random.
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I really don’t know what Blockbuster hopes to accomplish by purchasing Circuit City.  Full story here.

What does the executive team at Blockbuster sees in this proposal?  At first glance this appears to be a Hail Mary!, but there has to be something there.  I mean these guys are C-level executives for a reason right?  Its like Kmart/Sears the remix.

Blockbuster should be focusing on shutting down B&M sites not acquiring 655 more of them.  I understand that physical stores will provide some of the media stream but a trimmed-down, lean and mean operation seems like a better bet than tripling overhead.  I would not want to compete with Best Buy, Apple Stores/iTunes, Amazon.com, NetFlix and On Demand.  Call me crazy, but that sounds like challenging Tyson to a friendly game of punch for punch.

This raises an interesting question: when a company is at the end of its relevant life span, what is management supposed to do?  The practical answer is bring in a turnaround team, but I’m not talking about that.  Is there a point when a company should board up voluntarily?  Like GM.  “Hey guys, we had a great run for the last 60+ years, but lets face it, we’re obsolete.  Good game.”  High fives all around.

In my opinion, I think the challenger needs to be innovative and ahead of the trend to take on the powerhouse incumbent.  Blockbuster buying Circuit City is like trying to bail the Titanic with a keg cup.  Stupid boardroom bullshit that doesnt do anything more than shuffle the deck.  Amen.

 

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