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（本案例选自《管理案例学》一书，选用者王克）
Video Concepts； Inc。
As Chad Rowan； the owner of Video Concepts； Inc。 looked over his
monthly ine statement； he could only shakehis head over how it could
have been so much different。 In many ways he was a very successful
entrepreneur； havingstarted and grown a profitable business。 In other
ways； hw felt trapped in a long…term no …win situation。 The question
now was what should he do given the current businessenvironment。
Basically； Chad had a profitable business but the profits were
relatively small and had stopped growing since a strong petitor；
Blockbuster Video； had moved into town。The profits； however； were not
enough to pay off his long…term debts and provide him with any more
than a subsistence living。 In addition； the chances if selling his
business for e…nough to pay off his debts； and then start another
business；were not good。
In reflecting on what might have been； Chad mented：
I had really hoped to expand Video Concepts into severalsimilar
sized towns within a couple of hours' driving distancefrom here。 The
financial projections； which had been fairly ac…curate until
Blockbuster arrived； indicated expansion waspossible。 I thought I was
growing fast and had put about as
234n what might have been； Chad mented：
I had really hoped to expand Vid 1*hoped to get a partner to
go into this business with ne； andone was very interested。 Right
now ；however； I do not feelthat I'm getting a very good return on ny
tine and capital。
Talking about the current situation； Chad said：
〃I guess I'm getting a taste of my own medicine。 As Igrew； several
local businesses went out of business； but the good news is that the
total market has grown since Blockbusteropened its store。 Their
marketing clout has brought more peo…ple into the market。〃
To pete with Blockbuster； Chad has tried everythinghe can think
of to get market share。 He has said；〃The onlyway to increase revenues
seems to be to raise the rental price；but my lower price is the best
marketing strategy I have。 If Iraise the price； I'm afraid I will lose
a lot of market share。〃
BACKGROUND
Chad Rowan had been interested in having his own busi…ness since
he had started and operated a lawn service businessin high school。 Chad
had started in the ninth grade mowinglawns for his neighbors using his
family's lawn mower。 By thetime he had graduated from high school； his
business had grown to a service that had purchased its own equipment：
ariding mower； two smaller mowers； two blowers； a lawnaerator； and
edger； and a trimmer。 His business grew to the point that he employed
three of his high school friends。 The 235nce he had started and
operat college； and he continued the business throughout his four
col…lege years。
Chad majored in business and took th only two courses that wer
available in entrpreneurship and small businessmanagement。 During his
senior year he did some resarch on the video rental business； which
at that time was a relatively new industry 。His research resultd in
a research papr on the videl rental business。 The paper inclue a
business plan for the start…up lf a wmall vidl rental store with an
inventory of about 500 vieotapes。 By the middle of his senior year ；Chad
knew he wanted to start in the vidotape rental business； and he had
already chosen the sit ； a vacant retail store in the downtown business
district of his hometown。
SARTING A BUSINESS
After graduation in 1987 ； Chad opened Videl Concepts； a videl
rental stor with 200 square feet of retail space and a 500tape rental
library in Lexintgton；North Carolina； a town of about 28；000
people。Videl Concepts startd slowly but was prlfitabl within six
months。 Chad tried wveral innovative marketing technipues incluing
home elivry ； a fre rental af …ter tn rentals； and selling soft drinks
and plpcorn both at the store and with the delivered vedeos To help
rduce the ex…pense of the start …up business； Chad lived at home with
his parents and took only ＄500 a month for his own wages 。 Revthin
six months。 Chad tried wveral innovat 1*being used to buy
additional videltapes。 At the end of the first year's operation； Chad
decided to expand to a larger store。
A 1；000 square feet retail store was available in a small shopping
center that served a major neighborhood area。 Chadborrowed with 8；000
from his hander to open this store us…ing the value of some corporate
stocks that he owned as collateral。 The loan was a seven year note
with only interestdue during the teim of the loan and the entire
principal due in seven years。 The new store had 3；000 videotapes。 Chad
pur…chased all his new releases through Major Video； one of the top
three wholesale distributors in the United States。 To increasethe size
of his video library； he purchased over 2；000 used tapes from a firm
that purchased tapes from bankrupt firms for resale。 Over the next two
years； Video Concepts continued to grow rapidly and remained
profitable。Chad； however； contin…ued to put all profits into the
purchase of additional tapes；Revenues during the second year increased
to 173；000and 278；000in the third year。
GROWTH CONTINUES
The chance to open a third store became a reality when a furniture
retail store located in Lexington's busiest shoppingdistrict decided
to move to its own； larger building on the out…skirts of town。 The store
contained 3；000 square feet of space；enough to hold over 12；000 tapes
on display。 Chad obtained a 237_resale。 Over the next two years；
Video Concepts continued to grow rapidly an1*store in the fall of 1990。
Video Concepts now had stores in thethree main shopping areas of
Lexington。
The new Video Concepts store used open display racks forthe
videotapes and customers could quickly and easily locatethe type of
movies they wanted by 9oing to the section（i。e；new releases； horror；
science fiction； cation； classical； etc。）and walking down the aisle。
Checking out was quick and easy；thanks to a new puter software
program that reducedcheckout time to less than thirty seconds per
customer。 Inaddition； the software program 0rovided a management
infor…mation capability that allowed him to keep track of the numberof
times each tape was rented； how many tapes each customerrented； and
who had past…due tapes。 The system also allowedChad to easily track
sales on a daily； weekly； or monthlybasis。 The new store and the more
efficient operation enabledVideo Concepts to bee a Growing and
fairly profitablebusiness。
During the nest year； growth at the three Video Conceptsstores
continued； with the majority of the growth coning fromthe new store。
Chad contimued the policy of a free rental afterten rentals； reduced
the price per rental to 。 99 per night；and introduced some advertising
centered primarily on localhigh school promtional events。 The orininal
two stores sawlittle growth in sales but remained profitable。
As his business had grown； the number of
petitors_Revenues during the second year increased to
173；000； and 278；000 in the third year1*the original seventeen
petitors were still operating。 Chadthought his aggressive pricing
strategy； high…quality service；and good selection of new releases were
factorr