BSBINN601 – Manage Organisational Change 20

Cost Benefit Analysis

Blockbuster derived value by having physical copies of movies that could be leased enough
times to cover the cost of purchase. Renting a movie usually costs between $2 and $5, with
new releases fetching higher pricing than older films. When a client rented a movie, they
agreed on a return date and time. If a client did not make the return on promised date, late
penalties were applied to their account, accounting for an estimated 70% of earnings.

Total Access is Blockbuster's mail rental service, and it allows consumers to swap DVDs
through mail or in-store for a fixed monthly fee. Blockbuster Express kiosks may now be
found in over 2,000 places around the country. Today, the business has just 6,000 shops
worldwide, with additional closures anticipated for this year. Blockbuster began this year
with $984 million in debt, which investors and experts fear it will not be able to repay
(Associated Press, 2010). As a result, Blockbuster's stock is presently trading on the NYSE for
about $0.40 (Yahoo! Finance, 2010). Despite declining performance as a result of rising
competition, Blockbuster remains the market leader. Blockbuster will not sell advertisements
or rely on subscription fees to generate income. The firm expects to earn $830 million from its
domestic streaming service in the second quarter of the year, accounting for up to 25% of
overall earnings.

Risk Analysis (using Risk Matrix)

 Risk analysis and risk mitigation strategies
S/N Risk Risk Level Risk Mitigation
Risk 1 Software failure 8 Troubleshoot plan and technicial
always on standby
Risk 2 Availability of old and classic 5 Good inventory decision
movies
Risk 3 Unwillingness of customers to 7 Promotions and marketing
rent movies with
48-hour expiry
BSBINN601 – Manage Organisational Change 21

Risk 4 Competitors taking over loyal 10 More offer and provide upto date
customers movies for customers
Risk 5 Customer complains during 8 Opened afterhours service to
afterhours resolve any issues after business
hours
Risk 6 Lack of adaptability and keep 8 Continuous Market scan and
up to date with customer analysis to be performed
requirement
Risk 7 Technological advancement 8 Try to keep up to the advancement
and use state of the art technology

Risk 8 Change in video streaming and 11 Keep uptodate with the current law
rental regulation and law and government policy
Risk 9 No customers to stream (no 6
new videos)

Risk Level are based on below risk Matrix