Netflix Internal Analysis

Netflix was founded in 1997 with the intent to revolutionize the way in which consumers watch movies and television shows. Their accomplishments both in innovation and in customer base for their service indicate that the firm has been, and continues to be, successful in doing so. Currently, the

Porter’s model aims to enable managers not only to understand their industry environment but also to shape their firm’s strategy. The five competitive forces are threat of entry, power of suppliers, power of buyers, threat of substitutes, and rivalry among existing competitors. “As a rule of thumb, the stronger the five forces, the lower the industry’s profit potential- making the industry less attractive to competitors. The weaker the five forces, the greater the industry’s profit potential – making the industry more attractive” (Rothaermel, 2013, p. 65). It is recommended that managers position their company in an industry in such a way that relaxes the constraints of strong forces and

Netflix has quickly become a household name by saturating the market with a new age way to rent movies. Established in 1998, Netflix geared its business to provide consumers with quick and easy access to their favorite movies without the need to leave their homes. As the business developed and other popular sites, such as YouTube, began to gain popularity Netflix entered the market of streaming online content. During the infancy of their instant service Netflix still relied heavily on mailing DVDs to offer their customers a wider range of movies and TV shows. However, as their steaming library grew the mindset of the company began to shift. As they transitioned away from their mailing movies, key

Entering and transforming the video rental industry was a large undertaking for the start-up company. The first marketing objective the company undertook was the process of building a brand. Netflix’s identity was crucial to future growth and success. Without a strong brand, competitors with deep pockets could have easily duplicated the company’s business model. Secondly, leveraging technology was critical to establishing the business and infrastructure growth. The consumer base was the final objective Netflix sought to achieve. Retaining and growing subscribers were fundamental to revenue and marketing goals.

Growing competition as a challenge represents the various companies that are now entering the market of online media-streaming. Companies such as HBO, Amazon, Google, and Hulu Plus have all began to offer media-streaming on the same electronic devices as Netflix, Inc. Currently Netflix, Inc. remains in the lead amongst its competitors; however, there is no guarantee that this advancement is a permanent one. It is inevitable that emerging companies will come up with creative ideas to gain the competitive edge and receive more consumers. For example, Amazon.com has “amplified

Netflix began in 1997 as a revolutionary idea by CEO Reed Hastings and software executive March Randolph. Before long, in 1999 Netflix launched its major line of business, the online subscription service, which radically changed the way consumers viewed movies and television. For a young company in an innovative and growing industry, Netflix has set itself up for a tremendous journey. The company has had much success due to its adaption of a modern business model and strength in operations management. Its continued reliance on and improvements of operation management principles is necessary to continue growing and bringing in profits.

Netflix has some interesting growth strategies over the next few years. Their plan is to continue to innovate and enhance the consumer experience, as evidenced by their new streaming video program. They also intend to focus on subscriber growth, in order to maintain market leadership, and realize economies of scale. They believe they will continue to grow by leading the expansion of online video rental. The company plans on doing this by offering subscribers both mail delivery and a continuously improving online video option. Netflix believes that their appeal and success are built on providing

Netflix has an established business model in a rapidly-growing industry that brands it a market leader in online media content distribution. By being the first considerably competitive company to offer streaming movie services, they have significantly leveraged their first mover advantage in this market segment. Netflix’s strong financial health gives it the flexibility to follow opportunities in nearly any aspect of the entertainment provider industry. Its latest project, original television programming, were all paid easily with the $1.2 billion in cash reserves. Its strong cash flow also confirms that the company is in no danger financially, and as long as its strategy remains competitive, the company has the cash to experiment and innovate.

Netflix. Inc was founded in 1997 as a DVD mail delivering Service Company that has grown to become a renowned movie and Television series streaming provider. After launching its streaming services in 2007 Netflix diversified and expanded its streaming services to Canada as of 2010 and is now a household name in more than 190 countries. The business model that the firm has implemented since its inception has proved superior to its competitors. Before venturing in the Canadian market the firms’ management had reiterated its strategic plan as one that seeks to grow revenue, increase its market share and earnings as it expands the content of its streaming services. To be leaders in an industry that is volatile with ever changing business environment is not easy. Thus the purpose of this strategic plan will be to evaluate the firm and develop strategies and further recommendations that will not only maintain Netflix’s position as the top movies streaming service provider globally but will also assist management to implement strategies that will help the firm to adapt to a digital media landscape that is ever changing.

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 Movielink’s Downloadable Movies. Netflix is determined to offer new and innovative technology to sustain their competitive advantage.

“Most ideas will sound crazy, stupid and uneconomic, and then they will turn to be right.” Hastings (2005). He is a man whom believed in himself and his idea. He decided to build up a pure original system that will help millions, fulfill their desires and needs. Netflix, as an entertaining company, had their ups and downs, but they succeeded. No one can succeed without their ups, downs, struggles, challenges, competitors and so on. They helped us and as an exchange we helped them to make history and reach the top. Our society today is in need of more and more of everything and they have offered it. Netflix has changed our TV industry by offering us more variety and options, which is caused by increasing in technology, demand, quality of the

Video-on-demand or VOD, a service that allows users to select and watch videos over the internet, will be one of the greatest innovation as stated in the Netflix case study. It will be a great opportunity for Netflix, but it will also be a challenge to integrate or do away with its current business model. Its current business model is one that relies on the internet and the post service to deliver DVDs to its subscribers. Netflix should carefully enter the VOD market without doing away with its current model. This will allow it to maintain its growing position as a giant in this media industry. In order to better understand Netflix and the problems it faces, we must first identify its strengths. What does Netflix offer its customers that its competitors do not? What differentiates it from its competitors?

Successful use of the Porter Model Analysis includes identifying the sources of competition, the strength and likelihood of that competition existing, and strategic recommendations for the action a company should take to develop barriers to the various forms of competition (Prahalad and Gary, 1990). With the realization about intensity and power of competitive forces, organizations can develop options to influence them in a way that improves their own competitive position. The result could be a new strategic option, e.g. a new positioning; differentiation for competitive products of strategic partnerships.

This essay will provide insights and sufficient background to understand Netflix’s success and difficulties the company is facing.

Over the past 18 years, Netflix has greatly evolved, changing the way movies and television shows are watched. It was founded in 1998 by Marc Randolph and Reed Hastings as a DVD mail-order service. Netflix knew that it had to grow and innovate in order to compete with other big-name movie rental services such as Blockbuster and Redbox. Because of this, both Randolph and Hastings decided to integrate streaming in 2007. Although one could only stream on a desktop or a laptop,