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Renting and Netflix

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Renting and Netflix
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1. How strong are the competitive forces in the movie rental marketplace? Do a five-force analysis to support your answer.

At the moment a lot of people are downloading and watching movies online. Some of them it’s free no monthly payments required. There are also pirating movies online for free and other free sources are available. It is available through online piracy to get the same movies which are offering Netflix.
Five -force analysis:
Threat of substitutes:
Probably other websites which offer to watch movies online for free and satellite companies. Walmart, Blockbuster, Sky store online. Also pirating movies on the Internet which is for free and illegal. Substitutes price availability.

Suppliers Bargaining Power:
It is very High. There are not a very big choice of suppliers. It is important to chose the right supplier fo your demand. Suppliers has the power on the movies. It is important to maintain good relationship with movie providers.

Barriers to entry: Netflix has the leadership position in the market at the moment. The other competitors are not so strong as people not renting DVD’s as much, as few years ago. Netflix outcompeted his competitors because provide high quality, high definition and wider product selection, advanced technology. Actually entry into movie market and attract the customers it’s not so easy.

Buyer Bargaining Power:
Buyers is the most important and powerful in this type of business. If the buyers has no money movie rental business will go down. Or if the buyers has alternative options to rent DVD’s in store or stream. Also piracy affecting Netflix. If the price is not suitable for the subscriber he/she will switch to competing company. Furthermore rights of the buyers for e.g. Netflix allows to cancel subscription any time, so you don’t have to sign any contracts. It is necessary to avoid delays in orders, because can increase customer dissatisfaction and affect the company.

Competitors:


References: Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland, (2013). Crafting and Executing Strategy: Concepts and Cases. McGraw-Hill Irwin www.netflix.ie [online]
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