Redbox Corp Essay

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Research Paper-Redbox Corporation Unit 8 Procurement & Contracting BBA- July 17, 2012 The Redbox Corporation, kiosks and DVD rentals, was the brainchild of The McDonald’s Corporation. It began in 2001 as a concept of McDonald’s new business development department. Redbox’s success is a result of partnerships, a successful business model, and careful Electronic Contract Management policies. In 1984, Redbox CEO Mitch Lowe started a company called Video Droid. Lowe had been a partner with a video rental company as was weary of the high over-head costs associated with the business. One of his first attempts at self-service vending machines (old soda machines fitted to dispense VHS and beta tapes) was met with failure. However, nearly twenty years later, Lowe, while working as a consultant to McDonald’s, teamed up with Redbox and its project management team to develop Coinstar. Coinstar, already popular for its change machines located in local grocery stores, teamed up with Redbox to provide kiosks for the video rental market. McDonald’s contribution to Redbox’s success is being an effective partner by way of investments and location. McDonald’s had long been known for its efficiency in choosing high-traffic, easily attainable locations. Their precept was that take-out burgers were a perfect match for take-out movies. The McDonald’s locations typically have ample parking, are located in busy areas, and the customers are drawn by the promise of good food. Redbox and McDonald’s parted ways in 2006 after McDonald’s board of directors decided that the DVD-rental industry would be bigger than what McDonald’s restaurants wanted to handle and that it might be a distraction to its core business. However, McDonald’s Ventures L.L.C. “a wholly owned subsidiary of McDonald’s Corporation still owns about 47 percent of Redbox Automated Rental L.L.C.”

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