Redbox

1. What are the chief elements of Redbox’s strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fit the competitive approach that Redbox is taking? What type of competitive advantage is Redbox trying to achieve?

A: The chief elements of Redbox’s strategy are the low cost provider strategy and strategic partnerships. Redbox offers convenience as well as many locations. The company has established numerous brick and mortar type kiosks without having to invest into the actual retail type stores.

The rental price is for a dollar a day unless you have offer code is much cheaper than spending $4.50 rental fee in many movie rental outlets. If the video is kept after 25 days, there will be a charge of $25 applied to your account and you’re free to keep the video.

Some of the competitive advantages for Redbox is the partnership established with Coinstar. This partnership has allowed Redbox to expand the locations kiosks have been deployed to. They kiosks are also located in high traffic areas such as grocery stores, McDonald’s, Walgreens, 7-11 and others, which increase the convenience. Not only has Redbox established partnerships with Coinstar but has recently negotiated license agreements with Sony, Lionsgate, Paramount, Warner Bros, Universal Studios and 20th Century Fox.

2. What does a SWOT analysis of Redbox reveal about the overall attractiveness of its situation and future prospects?

A: Strengths:

• Low cost

• No monthly fee or contract

• User friendly Kiosk, Online reservations

• Numerous locations

• Ability to return videos at any Redbox kiosk

Weakness:

• Limited video selection

• Limited machine capacity

• Expensive contracts and partnership with studios

Opportunities:

• Could expand to video game industry

• Video streaming or online downloads

Threats:

• DVD duration

• Netflix has a large share of the streaming industry

3. What strategic issues or problems does Redbox management need to...