Escolar Documentos
Profissional Documentos
Cultura Documentos
Submitted to
Prof. Amy Vuong
Submitted by
Ramandeep Singh, Harpreet Kaur, Natarajan Sundaresh, Kanwaljit Singh
November 21, 2014
NETFLIX
Contents
EXECUTIVE SUMMARY................................................................................................................................... 2
ISSUE IDENTIFICATION .................................................................................................................................. 3
ENVIORNMENTAL AND ROOT CAUSE ANALYSIS ........................................................................................... 3
SWOT ANALYSIS ............................................................................................................................................ 4
Strengths: ............................................................................................................................................. 4
Weakness: ........................................................................................................................................... 5
Opportunities: ...................................................................................................................................... 5
Threats: ................................................................................................................................................ 5
PEST ANALYSIS ............................................................................................................................................... 6
ALTERNATIVES/OPINIONS ............................................................................................................................. 6
RECOMMENDATIONS .................................................................................................................................... 7
IMPLEMENTATION ........................................................................................................................................ 7
MONITOR & CONTROL: THE BALANCED SCORECARD ................................................................................... 7
REFERENCES .................................................................................................................................................. 9
St Lawrence
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NETFLIX
EXECUTIVE SUMMARY
Netflix, Inc. is the world's largest online movie rental service, with more than 10 million
subscribers (Netflix Media Center, 2009).
Netflix exhibits dominant economic characteristics in the online movie rental business. They
enjoy strong market size and growth rate when compared to rivalry competition. The number
of rivalries are increasing, and the market remains dominated by only a few sizeable
rivalries like Blockbuster Video, Wal-Mart, Walt Disney Movies and Movielinks
Downloadable Movies. Netflix is determined to offer new and innovative technology to
sustain their competitive advantage.
Netflix growth strategy entails making the best product and the best consumer experience
even better. Lead the expansion of internet delivery content by offering subscribers both
mail delivery and a continuously improving internet delivery option (Netflix Overview, 2009).
Netflixs vision is to change the way people access and view the movies they love. To
accomplish that, on a large scale, we have to set a long term goal to acquire 5 million
subscribers in the U.S., or 5 percent of the U.S. TV households over the next four to seven
years (Thompson C-41).
This vision is well devised and crafted setting short term and long term performance targets.
Current analysis shows less than 4 million subscribers in 2004, and in less than six years
their subscriber base has more than doubled to more than 10 million subscribers.
Their intent is to leverage their online DVD rental leadership to grow both subscribers and
net income, thereby using a balanced scorecard approach relating to financial performance
and those related to strategic performance.
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NETFLIX
ISSUE IDENTIFICATION
MARKET RISK - Ever expanding market size and threat to be left out in a market.
They should focus on increasing their focus in different markets like India instead of
only focusing on U.S
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NETFLIX
The proprietary technology and information systems are also based on a certain historic
scale of operations which has increased substantially and this could lead to systemic
disruptions and negatively impact operations.
The DVD format would probably give way to Internet movie and TV content providers and
Netflix would be left stranded with its warehouse and sophisticated mail handling systems.
However the one thing which will continue to survive is CINEMATCH and its database of
billions of movie ratings which will give a competitive edge to Netflix when it decides to
switch over to other formats of movie distribution.
SWOT ANALYSIS
Strengths:
Brand Recognition: The Netflix brand is very well known and has become a verb
among many internet users.
Accessibility: The Netflix App has enabled their subscribers the ability to stream
media on nearly all internet enabled devices.
Original Content: Award winning original content for series House of Cards and
Hemlock Grove and other critically acclaimed titles.
Brand Recognition: The Netflix brand is very well known and has become a verb
among many internet users.
Accessibility: The Netflix App has enabled their subscribers the ability to stream
media on nearly all internet enabled devices.
Original Content: Award winning original content for series House of Cards and
Hemlock Grove and other critically acclaimed titles.
Cost of Content: The cost of mass licensing packages and the in-house original
content production has the company undertaking a large amount of debt.
DVD Subscribers: DVD and Blu-ray subscribers have dramatically declined in 2013.
Raising Subscription Prices: Netflix has a difficult time raising subscription
prices. The last attempt to raise monthly subscription prices left currently subscribers
upset and Netflix stock tumbling.
International Expansion: The ability to create original content will enhance
international growth.
Original In-House Programming: With many house-hold entertainment devices
connected to the internet, there is an opening for internet tv and Netflixs exclusive inhouse content poises the company for that demand.
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NETFLIX
Weakness:
Cost of Content: The cost of mass licensing packages and the in-house original
content production has the company undertaking a large amount of debt.
DVD Subscribers: DVD and Blu-ray subscribers have dramatically declined in 2013.
Raising Subscription Prices: Netflix has a difficult time raising subscription
prices. The last attempt to raise monthly subscription prices left currently subscribers
upset and Netflix stock tumbling.
Opportunities:
Threats:
ISPs: Netflix accounts for about 30% of daily internet traffic. With net neutrality laws
struck down, Netflix may have to assume more debt or cut content.
Competition (Amazon Prime, YouTube): Both, Amazon Prime and YouTube has
announced their own original content productions and aim to be a direct competitor to
Netflix.
Content Price: The price of licensing and renewing those license agreements
remain to be the largest threat to the companys ability to operate at a profit.
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NETFLIX
PEST ANALYSIS
ALTERNATIVES/OPINIONS
Focus on original content publishing like Orange is the new Black increased
revenues and lower costs
Invest in innovation
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NETFLIX
RECOMMENDATIONS
Production of in house serials, movies and content would be a major game changer
for Netflix
Price rises should be done with caution recent hike led to loss of 6 M customers
IMPLEMENTATION
This strategy can be implemented by following many key factors, few of which are listed
below:
1. Strong human resource team
2. Continuous and consistent representation of the company
3. Develop more distribution centres to accommodate the growing economies of scale
4. Focus on Marketing through social media
5. Investing in R&D to improve efficiencies
6. Improve the MIS (Management information system) to achieve supply chain efficiencies.
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NETFLIX
Area of Objectives
Measure or Target
Time
Primary
Expectation
Responsibility
Customers
1. Number of
Increase customer
2018
customers
base to 100 M in 3
Aggressive
years
expansion
Managers/Employees
1. Employee welfare
Employee Turnover
4 years
decreased by 20%
Enhance
communication.
Operations/Processes
1. Lowering the Cost
of software
Marginal Cost
2018
decreased by 4%
Outsource more
types of content.
implementation
Business Ethics/Natural
Environment
1. Eco friendly
company
E waste to reduce by 40
2016
ISO 14001
standard
Financial
1. Financial
sustainability
2019
TQM practice
Optimize global
expansion
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NETFLIX
REFERENCES
www. Netflix.com
http://www.ibtimes.com/hbo-challenges-netflix-streaming-announcement-questionsloom-about-price-quality-cable-tvs-1705777
http://qz.com/299989/netflix-now-accounts-for-35-of-bandwidth-usage-in-the-us-andcanada/
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