Name: Nugra Irianta & Suleyman Annamammedov
BUSI 4317 – Business Policy and Strategy
Case Study #: 3
I. Introduction: Strategic Profile and Case Analysis Purpose
Netflix, Inc. is an American provider of on-demand Internet streaming founded by Reed hasting and Marc Randolph in 1997. Behind this multi billions dollar company, there is unique story of how, Hasting, one of Netflix founder came up with the Idea of Netflix. The idea for a rent-by mail video business came up because he was forced to pay a late fee for an overdue copy of Apollo 13. After he realized no one has ever come up with this business model yet, he then sells his company, Pure Ateria software and invested 2.5 million to a new company called Netflix. In September 1999 Netflix introduce the new concept which allow them to provide flat-fee, unlimited rentals, and late fee free, called monthly subscription concept (O'Brien). The problem Netflix is experiencing now is that a hypercompetitive market with really high threat of new entry. By analyzing their strategic management and strategic competitiveness, we are going to formulate and implement the best strategic action for Netflix to earn Above-average return.
a. Netflix business strategy is a cost leadership with variety product and service which allow them to gain revenue up to US$4.37 billion in 2013 (Hastings and Wells). What make Netflix different is preferable is because its subscriber are able to select, receive, and watch/stream content in an unlimited time with 8.99 per month. The fact that, this market is not yet heavily regulated and not much capital needed to enter the market, make anyone in internet based service company could be Netflix new competitor.
b. The market where Netflix is currently competing is indeed a fast-cycle market. Competing in this kind of market means, Netflix has to keep being innovated otherwise they will left behind and lose a significant percentage of the market. Not only that, also, there are plenty of new market that Netflix could explore before Netflix loses the change of being the first mover.
c. Even though Netflix only operated in two continents, As of September 2013, Netflix reported their global subscriber is around 40.4 million (Stelter). There are three more continents that Netflix didn’t explore yet. This fact is interesting because there is no any other company with similar concept as Netflix has explored this new big market yet.
II. Analysis: Situation Analysis and SWOT Analysis
a. General environmental analysis
i. The six segments of the general environment
1. Political/Legal – There are a lot of website that provide free movie streaming illegally. If Netflix can push the government to regulate and be more restricted to prevent this violation, its subscriber will increase significantly.
2. Demographics – Netflix already has a really good service which they provide movie according to demographic and customer taste. Netflix also doesn’t have to worry about...