Month: September 2013

In 2010, Blockbuster filed for bankruptcy when they nearly had $1 billion in debt with $170 million being in liabilities for customers, suppliers, employees, and movie studios. The article that I read said bankruptcy was due to “mounting losses, rising debt and competitors”, but I believe there were more factors behind the bankruptcy. Perhaps the actual problem wasn’t from competitors and technological advancements, but from the company’s internal and external decisions, and Blockbuster’s inability to adapt.

Since the advancement of Netflix and online movie streaming, peoples’ demand to rent out movies is decreasing. The hassle to go out to the store and pick up the movie was not favorable compared to viewing movies with Netflix that has a better value proposition of either video-on-demand services or delivering the DVD right to your doorstep through mail. So why didn’t Blockbuster follow in the footsteps of Netflix? At the same time, Blockbuster had too much retained earnings, opening 6,500 stores across the world. If the company was $1 billion in debt by 2010, wouldn’t Blockbuster’s managerial and financial accountants have noticed the decrease in revenue, and tried to cut expenses instead of investing money on all the fees to run a store, and all the payment for every employee, manager, and distributor? Blockbuster had the resources; however they refused to change their business model to one that included a multi distribution channel to make it more convenient for the customers.

Image:http://www.bitterwallet.com/wp-content/uploads/2010/03/Blockbuster_Video_eps.png

For more than a decade, sweatshops have been a grim issue. Activists protested against multinational corporations such as Disney and Nike for hiring workers from developing countries, and forcing their workers to work up to sixteen hours every day without being paid overtime. Several enterprises have changed and worked towards improving the working environment, increasing the minimum working age, and raising the salary of the workers. Yet, multinationals continued to hire cheap overseas workers due to consumers having a high demand on their brand name goods.

The only way to end sweatshops is to bring awareness to the consumers and for them to stop purchasing the brand name goods, however, that is a difficult task. In contradiction to R. Edward Freeman’s Stakeholder Theory, he states businesses that have one (financiers mostly in this case) benefiting group out of all the stakeholders is regulated to decline, but that is not the case here. Although unethical, these multinational corporations that use sweatshop workers continue to prosper well through the decades because of factors such as millions of people in developing countries wanting to support their impoverished family, or consumers not wanting to change to sweat-free alternatives because they value trends and brand name goods more. Unless there is an alternative that will equally benefit all the stakeholders, nothing will stop multinationals from ending the use of sweatshop workers.

Source: http://www.economist.com/node/187886
Video:

• http://videos.howstuffworks.com/planet-green/38670-blood-sweat-t-shirts-tracing-clothes-to-the-source-video.htm
• http://videos.howstuffworks.com/planet-green/38671-blood-sweat-t-shirts-60-rupeess-video.htm

Welcome to UBC Blogs. This is your first post. Edit or delete it, then start blogging!