BUS547-CE Netflix Critical Assignment PDF

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Netflix critical assignment with fully detailed analysis to the questions provided....

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Critical Assignment: Netflix, Inc. Case Study

Ebony Chew BUS547-CE Strategic Management Professor Bell October 5, 2021

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Describe Netflix's strategy process over time. What approach to the strategy process does Netflix follow? What works well with this approach? What are some challenges with this process, especially as Netflix continues to grow fast? Netflix’s strategy aligns with having competitive advantage as its one of the leading competitors in the on-demand streaming service. The streaming service used a business model mirroring brick-and-mortar video store. Netflix customers could browse through DVDs on Netflix’s website and have them mailed directly to their homes. DVDs rented for $4 each, plus an additional $2 shipping fee (Rothaermel, & Guenther, 2017, p. 4). If the renter wanted to keep the DVD, they could purchase it at a discount.23 Initially, Netflix was also one of the few places where customers could buy DVDs, making sales a primary source of revenue. However, this income stream was under threat as retailers like Amazon and Walmart began stocking DVDs (Rothaermel, & Guenther, 2017, p. 4). Netflix would direct DVD buyers to Amazon in exchange for ad placement on Amazon’s website (Rothaermel, & Guenther, 2017, p. 4). However, the challenges with the strategy process are the lack of differentiation that Netflix had issues on. For example, the company spend money to acquire global licensing aiming for its content to be original and although they can acquire global originals as competitors like Amazon and Hulu invest more in content, Sarandos will be competing not only for viewers, but also for talent (Rothaermel, & Guenther, 2017, p. 12). Also it was a challenge for them to continue their relationships with internet service providers as customers who use certain internet services complained on the low-quality video streaming and that is when they decided in the fourth quarter in 2016 to launch offline viewing as a new feature that allows users to watch downloaded content on iOS and Android devices where broadband access is limited such as subways, airplanes, and emerging market countries (Rothaermel, & Guenther, 2017, p. 9).

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How was Netflix able to disrupt the U.S. home entertainment industry? Describe Netflix's innovation strategy over time. Also, how did Netflix's business change over time? How did its business model innovation support its technology strategy? Netflix was able to disrupt the U.S. home entertainment industry by starting up as a DVD rental company where families had to order the movies or tv shows by ordering the disks online and then after watching them, returning them back by mail (Leslie, 2020, p.93). It became successful due to the fact it was one of the ways that Blockbuster went out of business and decades after Netflix has started, they continue to create both online movies and the company’s business changed over time by adding auto playing that is programmed to automatically continuing playing the next episodes. Unlike network TV or social media apps, Netflix does not make its money from advertising. But the more that consumers watch, the more Netflix learns about how they watch: not just which shows they like but how and when they like to watch them; what keeps them hooked and what turns them off (Leslie, 2020, p. 93). As technology has advanced Netflix was moved towards digital streaming which enabled consumers to watch anything they wanted from its library of shows and films, even anytime they chose, on whichever device was near them all for the price of paying less than $10 a month (Leslie, 2020, p. 91). The company’s valuation sharply increased this year as investors bet that consumers will never fully resume their former habit of leaving the house now and again and will instead spend even more hours (Leslie, 2020, p. 91). The business model innovation supports their strategy in a positive way and because it’s always coming out with new content and always updates their versions, they become one of the leading well-known streaming services that provides consumers ways to watch tv (Leslie, 2020, p. 91).

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What are Netflix's core competencies? How can they help Netflix to sustain its competitive advantage? How must its core competencies be honed and modified? Innovation technology and brand equity. Netflix offers excellent customer experience through the recommendation systems it uses making it easier for users to select titles to watch from. Likewise, the innovation affects the user engagement and continuous innovation is essential, so users do not grow detached (Pratap, 2020, p. 1). While the quality content is at the core of the Netflix experience, the design of the platform and its other features that distinguish the experience from others (Pratap, 2020, p. 1). Netflix is known industry wide as an innovative brand that has established an organizational culture fostering innovation and creativity. However, it spends a heavy sum of money each year on research and development in which the focus on innovation has helped the firm build a source of sustainable competitive advantage (Pratap, 2020, p. 1). The brand equity drives growth through the brand recognition and user loyalty as Netflix has proved itself more dynamic and customer-oriented in terms of understanding their expectations. Through a higher focus on user experience, the company achieved higher credibility and reliability, resulting in strengthening brand equity over time. It gained a significant lead over its competitors, and this will have a stronger impact in the longer term. The result is a strong and lasting source of competitive advantage for the online streaming platform (Pratap, 2020, p. 1). The level of resonance that Netflix gained among its users will be difficult for its rivals to imitate. Overall, in the longer term, Netflix will be less vulnerable to competitive pressure and to pricing changes or competitive marketing by its rivals (Pratap, 2020, p. 1). To continue honoring and modifying the core competencies Netflix must continue creating new

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contents for customers and maintain attracting clients that way they can continue being one of the leading on demand streaming services (Porter, 2011, p. 56). Netflix growth in the United States seems to be maturing. How could Netflix increase demand for its services in the United States? What other services could Netflix offer to drive future growth? Netflix can continue to increase demand for its services in the United States by offering more services to its customers such as streaming the service on smart speakers or even virtual reality headsets. By investing in smart devices Netflix will not only triple their profit but it would be an even more in demand to watch their content continue the growth even further soon. The other services could Netflix offer to drive the future growth are original content, downloadable content, partnerships, and licensing. Netflix needs to continue to produce more original content as with its hit shows "House of Cards" and "Orange is the New Black," Netflix has taken on some aspects of a traditional TV network, producing original shows for distribution over the internet. The company produced 600 hours of original content last year and plans to increase to 1,000 hours in 2017 (Reilly, 2017, p. 1). Netflix raised subscription fees to $8.99 per month, slowing down subscription growth. Last April, the Monitor reported that subscriber growth was falling short of Wall Street's expectation, and this fall some shareholders wanted Disney to purchase the struggling firm and use it to distribute its content (Reilly, 2017, p. 1). Customers would be heavily engaged in Netflix if it starts to put out more downloaded content allowing to watch both movies and television shows offline (Rothaermel, & Guenther, 2017, p. 8). Netflix should also inquire about more partnerships and licensing. They have a variety of customers watching the streaming device on

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other service providers and the best way would be to take consideration of partnering up with very well-known brands as it is an opportunity to benefit them in the future (Porter, 2011, p. 56). International expansion appears to be a major growth opportunity for Netflix. What challenges does Netflix face by going beyond the U.S. market? What can Netflix do to address some of the challenges encountered when going internationally? And which international markets should Netflix focus on, and why? By Netflix going beyond the U.S. market, they face challenges such as the limitations to other media services in different countries throughout the world as well as not accommodating the legislations locally. The price strategies will be difficult to incorporate in both local and accepted competitors. The need to improve on infrastructure to distribute the quality of contents to new subscribers in the latest locations. Also creating additional programs that will benefit local subscribers. What Netflix can do to address some of the challenges is by expanding more content and allocate within local markets while partnering with well-known regional media streaming service providers. As well as incorporate the content to producers whose works are recognized to Netflix as a result in generate a fan base. Netflix will need to work on their subscription prices since they are trying to expand to different countries. Netflix needs to focus on international markets from Asia. They are not as popular in China a thriving and well-known country and has a market where co-founder Hastings explained how Netflix is still in the relationship building phase (Rothaermel, & Guenther, 2017, p. 12). Netflix’s expansion has drawn the attention of several government authorities. The European Commission is considering a European content quota (trade restriction) and subsidy pots (money granted by the government) for national production (Rothaermel, & Guenther, 2017, p. 12). Another good opportunity for Netflix is inquiring the international market in Israel.

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Netflix has avoided the cost of developing and maintaining an independent marketing campaign in the Israeli market (Wayne, 2020, p. 153). The local providers market their association to Netflix by featuring the original and exclusive series distributed by the portal. As a result, Netflix appears as a significant source of international television content rather than as a global internetbased service offering customizable television-viewing experiences (Wayne, 2020, p. 153). In the Israel market Netflix has not attempted to replace traditional television but rather formed relationships with existing providers that have resulted in the emergence of a new portal branding practice and that is something they must continue to work on (Wayne, 2020, p. 153). Citing Scripture, which biblical principles can Netflix apply to address its challenges? How will these biblical principles affect the ethics standards of Netflix? Matthew 5:36-37, “And do not swear by one’s head, for they cannot make even one hair white or black, all they need to say is simply yes or no anything beyond this comes from the evil one.” Part of being business owners is making decisions based on values and knowing when to say yes and know to things that will potentially make both the owner and organization better as well as living up to one’s word (New International Version, 2021). Many people do not stick to their word creating distrust and dishonesty. One of the reasons behind creating businesses is to make their mark mean something and fulfill their commitments. Saying yes or no is powerful to one because they know what they are trying to accomplish in their business and by developing and building trusting relationships with others shows not only they can count on them but as well as their commitments. Romans 8:28, “And they know that in all things God works for the good of those who love him, who have been called according to his purpose.” When business companies understand and know there is a purpose for their work and are certain they are on the right track they will always remember in all good and bad things are working for their good

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(New International Version, 2021). The biblical principles affect the ethics standards of Netflix as the company’s unethical behaviors can potentially span to increasing the price and limiting services on payments. As a result, the behaviors will heavily affect Netflix as they risk losing customers and creating an unhealthy environment for both the company and employees.

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Leslie, I. (2020). How Netflix changed the channel. New Statesman, 149(5550), 90–93. Bible Gateway passage: Matthew 5:36-37 - New International Version. (2021). Retrieved from https://www.biblegateway.com/passage/?search=Matthew 5:36-37&version=NIV Porter, M. E. (2011). HBRs 10 must reads on strategy. Boston, MA: Harvard Business Review Press. Pratap, A. (2020, October 22). VRIO Analysis of Netflix. Retrieved August 16, 2021, from https://abhijeetpratap.medium.com/vrio-analysis-of-netflix-2a67751f9408 Reilly, P. (2017, January 19). Netflix powers past growth expectations. What’s next for the streaming service and TV? The Christian Science Monitor. Rothaermel, F., & Guenther, A. (2017). Netflix, Inc. McGraw-Hill. Wayne, M. L. (2020). Global Portals in National Markets: Branding Netflix in Israel. JCMS: Journal of Cinema & Media Studies, 59(3), 149–153....