Netflix Case

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  • Topic: Gross profit margin, Profit margin, Strategic management
  • Pages : 6 (1938 words )
  • Download(s) : 481
  • Published : November 27, 2011
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Netflix, Inc. is the world’s largest online subscription service for distributing the rental of movies and TV episodes by streaming the content through the Internet, and which customers also have the availability of receiving their rentals directly via mail. Subscribers given the option of eight different subscription plans, each pertaining unlimited streaming per month with a varying amount of titles allowed out at a time. Each subscriber has the ability to choose to stream the content over a high-speed internet connection, receive a physical disc copy of the rented content through postal delivery, or both. As of July 2010, Netflix had provided its services to approximately 15 million subscribers, operating effectively from their 50 regional distribution centers, alongside their additional 50 shipping points, evenly dispersed across the United States. With their numerous facilities located throughout the nation, Netflix succeeded in their pursuit of creating a convenient and responsive network that enables for 98 percent of their subscribers to receive one-business-day delivery.

Strategic Management Process
Netflix has based its operations and services upon the same unique business model it began with, since the start of the company in 1999. Created by founder and CEO, Reed Hastings, Netflix’s strategy has been driven by their aspirations in becoming the world’s best Internet movie service provider, by means of offering an array of different DVD titles in the quickest and easiest way. Netflix intends to become above all through continuously expanding their subscription base, producing an annual growth in earnings per share and, among all, increasing their probability of out-competing their rivals. Netflix has pursued their underlying strategic goals with the determination of improving the overall efficiency of the delivery/distribution process and by also striving to not only satisfy their current customers, but to entice prospective customers as well, with effective improvements in customization, product variety, convenience, and other various advancements. Netflix, understanding that they are still relatively new to the market, geared their financial objectives to be of less competitive and of narrow focus deciding to acquire increasing values on their earnings per share each year and investing in the expansion of their library. Netflix has been primarily focused on the generic business level strategy of the rental market for DVDs, supporting the transition to online streaming of movies and TV episodes. To further develop the strategic approach, Netflix’s complementary strategy in introducing new opportunities, is to expand globally, as to where they are currently exclusive to the United States. If acted upon, this strategy will lower the overall cost in maintaining the operations since there will be few capital investments and an enlarged degree of online streaming. Netflix has already implemented several aspects of their strategic model, and has succeeded in such endeavors. Further implementations correspond to the areas associated with subscriptions in general. Netflix chooses to increase subscription level through methods of soliciting their “first one month free” promotional deal to attract interested parties, offering a variety of different plans to meet the needs of as many different segments of consumers, and productively working to maintain and gain a stronger brand reputation. In addition, implementation is currently undergo with the amount of titles in Netflix’s library. They infer their continued interest in establishing additional alliances to obtain access to further titles, in efforts to surpass their rival’s capacity. These strategies and their implementation is suggested to be analyzed by Netflix annually through quantitative and qualitative measurements to decide whether to continue, abandon, or adjust such strategies.

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