A business model is the way a supplier transacts business with its customers. Business model innovation focuses on addressing unmet needs on the part of consumers who dislike some aspect of an existing business model for an existing category. So with that said what is Blockbuster’s business model? Blockbuster business model back in the early 2000 was to pay-per-rental. Blockbuster’s customers were frustrated by late fees and not being able to find their movie of choice when they wanted it. Blockbuster’s brick and mortar business model was the only video rental chain that could offer the product that customers wanted. Its biggest strength was their sheer size. However, with customers’ busier lifestyles, demands, and the advancement in technology, Blockbuster was left behind and needed to explore the uncharted waters of the Internet.
Blockbuster focused on market niche when they started decades ago renting VHS tapes. They used information systems to enable a focused strategy on a single market niche (Laudon & Laudon, 2007 p.100). Blockbuster targeted a specialized market which included a specific type of customer and provided a specified product to that customer. They focus primarily on renting out movies and games to people who like both.
Michael Porter’s Competitive Forces Model is probably one of the most often used business strategy tools and has proven its usefulness on numerous occasions. The five forces consist of traditional competitors, new entrants, customers, suppliers, and substitute products and services (Laudon & Laudon, 2007 p. 96-97). When you look at Blockbuster's industry it has many different aspects to it when considering the dimensions of its industry. First of the Five forces is Buyer Power which is high when buyers have many c ...