Gregory Allan Noah
MBA 575: Contemporary Management
January 22, 2009
To revolutionize how people rent movies, Reed Hastings founded Netflix. He also is trying to revolutionize how managers work. There are five principles that guide the human resources at Netflix: pay higher-than-average salaries, provide compensation choices, foster talent hunters, let subpar employees go with their dignity intact, and limit rules to improve innovation. It has had its ups and downs, but now they are in a competitive struggle. It is a competitive struggle that includes household names such as Blockbuster, Amazon, and Apple. Netflix has been able to maintain a competitive advantage due to their method of getting the product to the end user, their method of hiring, and their expert knowledge. As competition starts to increase due to new entrants, Netflix's business model has to be evaluated to determine if there must be some changes. Currently, the culture that surrounds Netflix has established a cost leadership strategy.
In this case, there should be an assumption that cost leadership is a key to Netflix. There is no specific numbers, but there should be an assumption that Netflix is losing some market share to the new entrants in the industry. Netflix only serves members in America and the United Kingdom. Also, there will be a future increase in demand for VOD (Video on Demand). This creates new entries to the industry for online DVD rentals and poses a problem to Netflix as they currently do not have much invested in VOD rentals. With the advancement of technology, many companies will take advantage and enter into industries such as the DVD rental industry.
The main concern for Netflix is that they are losing market share in a competitive landscape. The questions exist as to whether or not change the business model that has worked so well in the past and how can...