Video Concepts is a video rental business which also provides popcorn and sodas as well as home delivery of its videos. It competes with Blockbuster Video, which recently opened a nearby store, but has effectively dominated its market and won the majority market share. At this point, the company faces a cash flow problem which may seriously hamper its ability to compete long-term in a mature market.
The company's strengths are its commitment to the community, a strong internal structure that enables it to operate efficiently even with prices well below those of Blockbuster, and a reputation for providing a high level of customer service.
On the other hand, the company is weak in its financial position, with loans that are due and payable within a few years. Also, since the company is a small organization, it does not have the buying power that its major competitor has.
The company's primary weakness is its inability to advertise as effectively as the competition and a relatively small market in a mature industry. Technological innovations are threatening the video rental business, and Video Concepts is likely to be one of the first casualties if steps are not taken to improve its situation.
The management acumen of the owner of Video Concepts makes it possible that the company might be able to survive if it recognizes that it is not merely in the video rental business, but rather in the home entertainment services business. Another opportunity that the owner could take advantage of is selling the business outright and using the capital from the proceeds to begin a new venture.
The biggest problem that Video Concepts faces at the moment is the competition posed by Blockbuster. Although Video Concepts has added some innovative marketing concepts, it is faced with the possibility of raising its prices, a strategy not typically associated with a company in a mature industry. Presumably, Video Concepts could increase i...