The Case Study Of 'Netflix'
The Case Study of ‘Netflix’
Overview of the case-“Netflix”
This case attempts to highlight the strategic challenges and opportunities faced by Netflix. Neflix, founded in 1997 by Reed Hasting & Marc Randolph in California, USA, grew rapidly along with more than 24.4 million subscribers and they have 100,000 movies titles to choose from (Coulter, 2013). However, the company started to face troubles when it announced to charge different prices for its DVDs by mail and streaming video plans. In addition to this, as competition intensified, achieving a competitive advantage by offering the service the customers want, by when and how become more challenge and tough in the marketplace. In order to compete with such challenges, company focuses on its competitive strengths-streaming and other initiatives such as developing profitable partnerships with content providers for cost cutting strategy.
The major strategic issues found for Netflix are growing number of competitors, increasing content costs, lack of proper pricing for its services, and increasing concerns for its piracy and losing market share etc.
Analysis & Evaluation
As a part of analysis and evaluation, Netflix’s strategic direction, resources, capabilities and core competencies are discussed here as follows:
1. Strategy that should be used by Netflix
It can be noticed that Netflix first started with a prospector strategy as it came up with new innovation. It was prospector in a sense that it changed the way customers wanted to watch movies. As a prospector, it developed a new process so that customers are delivered movies directly without going into a movie rental business like Blockbuster. However, it seems that now Netflix has changed from a prospector to the defender strategy as more competitors emerged in different areas. For instance, streaming area includes companies such as Hulu, Amazon, and Apple, and Video on Demands includes RedBox, HBO and so forth (Coulter, 2013). Having considered all, hence, I think that Netflix should use both Prospector and defender strategies so that there will be high chance of being market leader by developing new innovations and protecting other competitors to win the company’s market share.
2. Netflix’s resources, capabilities, competencies and core competencies contributing to its success
The success of Netflix is mainly relied on its strategic resources, capabilities and competencies. It is true that when these organizational strengths are well-combined with its external market opportunities then success can be accomplished. The major resources of the company are its people, service and capital and infrastructure that are properly used to build core competencies to gain a competitive advantage. Netflix’s core competencies and strengths are smooth delivery of the services, seamless and valuable customer experience. In addition, the company has developed the model and software which are making its features unique and difficult for its competitors to replicate.
3. Netflix’s focus on the three functional concerns (Product, People and Support processes)
It’s clear that Netflix’s three functional concerns include the product, people and support processes. First, it is related to product category. It includes online designing of services-movies which can be bought by subscribing and choosing the appropriate options after paying off certain charges. The product is made by connecting various movies partners by which customers choose the movies to watch what they want, when they want and where they want. Second, talent people are recruited, trained, developed and retained in the company with rewards and incentives to even motivate for improving their performance. Last but not the least, support processes- as information technology advances, it would be more easy for Netflix to sale even more and expand its services deploying various systems such as information systems, financial/accounting systems.
4. Netflix’s competitive advantage relative to its value chain
It can be pointed out that Netflix’s competitive advantage is more concerned with its value chain activities that are created for smooth operation and services. Its value chain operation is quite fast and more efficient along with innovative logistics systems that are likely to lower the costs and improve the efficiency so that a competitive advantage can be achieved. For instance, it has improved a streamline distribution process and making outstanding headway in its content purchasing and licensing (Coulter, 2013). It is true that value chain would provide a competitive advantage through low cost competitive strategy for Netflix.
Summary, conclusions & Recommendations
In short, it can be known that Netflix is the company with high value as it has a larger number of subscribers and provides the quick services to its valuable customers. The company provides DVDs by using the latest technologies that helps it to become a leader in online video streaming. Some of the major recommendations for Netflix are as follows:
- It would be better for the company to improve its technologies by investing its R&D and Innovation so that it can become what it really aspires for.
- It is also necessary that it should improve its online services by investing its funds in boosting its services and mail-order speed. In addition, it should offer its streaming video services globally and quickly so that the costs of licensing content globally will be diminished as potential subscribers increase.
- Netflix should focus on customer satisfaction by offering what they want, customer service and device ubiquity so that more and more customers will be in the favor of Netflix.
- It is true that as online streaming matures, the company has to find the ways to reach mass audience with improved and more content to be an innovative than its rivals.
- Coulter, M. (2013). Strategic Management in Action (6 ed.). New Jersey, USA: Pearson Education, Inc.
- David, F. R. (2011 (13th ed.). Strategic Management: CONCEPTS AND CASES. New Jersey: Pearson Education,Inc.
- Pearce II, J.A.,& Robinson, R.B. (2014(14th Edition)). Strategic Management: Competing for Domestic and International planning. New York: McGraw-Hill Irwin.
- (n.d.) Retrieved from https://www.netflix.com/