At Netflix the technology is the operations. But in an operation that relies on constant product turnover, can the IT keep up the speed up while supporting rapid growth in a business in which margins are shrinking?
As we all know, technology is the primary driving force for just about everything Netflix does. Netflix became the worlds largest subscription service for sending DVD's by mail and streaming movies and TV episodes over the internet which attracted over 15 million subscribers by July of 2010. On the other hand, blockbuster and movie galleries were facing financial disasters and even bankruptcy. Netflix didn't have much competition and was able to increment profit through their online renting store. For instance, consumers were able to, purchase movies, DVD's and TV episodes from any retailer such as Walmart or amazon. Also, they were able to watch movies on assorted cable channels included in the TV and entertainment packages provided by traditional cable providers. In my opinion, Netflix forced the industry to move from the traditional way of watching a movie into digital technology, meaning all consumers were able to rent or buy movies and TV episodes from the comfort of their home.
Strategic Group Mapping
Strategic Analysis (Nov 2007) |
Netflix, the online subscription-based DVD rental service aimed to better satisfy customer in a way competitors didn’t, customized and personalized service with unlimited monthly rentals from a great variety of film offerings. Now they want to leverage their strengths to enter into the Video on Demand market |
Table of Contents
1. Netflix Strategic Analysis
2. Netflix vs. Blockbuster: Comparative assessment of strategic differences 3. Netflix Competitive Advantage
3.1 Home video industry - Positioning Perspective
3.2 VRIO Perspective
4. Video On Demand (VOD) – Strategic Advantage
1. Netflix Strategic Analysis
Netflix, an online subscription-based DVD rental service aimed to better satisfy customer in a way competitors didn’t, with unlimited monthly rentals from a great variety of DVD offerings and personalized service. Netflix created a distinctive value proposition by understanding customer needs and competition offerings; Netflix found the sweet spot to align the firm’s capabilities with the customer needs in a way that competitors could not match them, creating unique activities to deliver to that gap(1). To take the movie rental to the next level, Netflix used the internet instead of rental stores and offered service only to DVD users while rental stores were still renting VHS. The combination of internet and DVD technology made competition irrelevant, by reaching in an untapped market, Netflix expanded existing industry boundaries and reached for the blue ocean(1). Netflix started building their offering from customer’s frustration such as narrow diversity of films and stressful return due dates which implied late fees. Netflix was able to hold large amounts of inventory in their warehouses without having the physical space constringency of a rental store, added convenience of delivery and the unlimited monthly rentals of a.
Netflix didn't have much competition in their industry and was able to outperform their competitors technology is the main driving force for Netflix main driving force would be technology. Netflix outperform their competition by renting and video streaming movies online compare to the rest of regular...