It’s Impact on the Rise and Downfall Of
MBA 517 Fall 2012
(Strategic Planning and Policy Analysis)
14th Dec, 2012
TABLE OF CONTENTS
• Executive Summary
• Strategic Vision
• Business Objectives
• Environmental Analysis
• Industry & Competitive Analysis
• SWOT Analysis
• Business Strategy
• Implementation Plan
• Monitoring Adjustment- A Dynamic Process
Netflix, Inc., the world’s largest and leading online DVD rental company; was founded by Reed Hastings and Marc Randolph in the year 1999 and operated from Los Gatos, California. In the very initial days Netflix started its business through online DVD rental using web media which is called as www.netflix.com through internet. The business was operated by delivering DVDs through postal mail and then charged the customers and this was called as Pay per DVD rental services. Gradually with this the company revenues increased and in a span of two years Netflix gone for an expansion and the Pay per DVD revenue model was replaced with a “fixed monthly fee system”, the monthly fee was about $ 15.95 per month. This was a major breakthrough for Netflix which has allowed all its customers wherein they can rent up to 4 DVDs per month without any due dates or late fees. After initializing the fixed monthly fee system, later in the year 2000, Netflix has launched one more strategy which was like customers can have up to four DVDs with in their possession one time for a fee of $19.95 per month. Netflix's decided to split the business into two separate companies, one for the streaming and one for the "legacy" DVD business which is called as Qwikster. And then Netflix started charging the subscribers two separate bills every month which made Netflix to face the unexpected downfall. Netflix’s website for the subscribers www.netflix.com , which helped in prioritizing the category and the choice of movies based on the customer’s preferences. By doing so, Netflix tracks the wish lists or queues of movies listed so that subscribers can browse movies of similar category and choose to watch. Then Netflix used to ship movies which are on the top of the wish list or queues of subscribers through mail. Netflix has designed their website as per the requirements in which way it has all the ability and the facility of tracking the subscribers with individualized ratings based on all movies that customers had previously rated after viewing them.
Netflix as a company enjoyed tremendous success with all these success formulae, so it has decided to submit for an initial public offering. And later there was a huge drop in the stock market prices which dropped and due to the downfall in the stock the company position became little difficult for a company’s IPO to succeed with uncertainty in the financial markets. In July 2000, Reed Hastings, CEO of Netflix, needed to decide whether the company should proceed with the IPO or withdraw. During the current scenarios, Investment banks predicted that the IPO of Netflix would succeed only if it’s showing positive cash flows within a twelve-month horizon.
In 2005, Netflix has grown to a position where the company has 35,000 different film titles available and also shipped one million DVDs out on daily basis. Netflix developed and maintained an extensive personalized video-recommendation system based on ratings and reviews by its customers. In 2006, Netflix offered a $ 100,000 to the first developer of a video-recommendation program that could beat its existing algorithm. And later in the year 2007, the company delivered its billionth DVD. In 2007, the company began to move away from its original core business model of mailing DVDs and introduced video-on-demand via the Internet. Netflix business has grown but while DVD sales fell from 2006 to 2011....