This is just too good. I just read on Business 2.0 blog that Blockbuster is trying to buy Hollywood Video, a rival chain of video rental stores. OK, this is CLASSIC Defend & Extend Management. They must be thinking that if they can just get big enough, they will be able to get those elusive scale savings and be able to have more control over their pricing. It won’t happen. They have to understand that storefront video rentals will never get any better as a business, no matter how big they get. (See my previous blogs on this.)
It’s amazing to see companies with broken Success Formulas buy other companies with the SAME Success Formula and expect that to improve the business. Didn’t anybody at Blockbuster ask WHY it would improve the business? Why it would make someone suddenly decide not to order that video on demand and charge down to the video store instead? Sadly, there are many other examples. Here’s one: Tupperware, who thinks its home party concept is still a viable concept in the 21st century, bought Beauty Control a few years ago because the company also sold through home parties. They expected to benefit from the synergies. Want to guess how that turned out?
