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Topics: Renting, Strategic management, Rental shop Pages: 29 (1109 words) Published: October 28, 2014
INTRODUCTION
Netflix:• video rental store.
• Founded by Reed Hasting and Marc
Randolph in 1997 in Scotts Valley, California.
• Business model centers on mailing DVDs to
customers using 35 warehouses spread
around country.
• Rapid growing DVD rental service where
they gained 3 million subscribers in early
2005.

EXTERNAL ENVIRONMENT ANALYSIS





Situational Analysis
Industry Analysis
Competitive Environment Analysis
Environment Trends

SITUATIONAL ANALYSIS
• Politics/Legal
– Governmental regulation – little regulation
– Supplier agreement – start rent DVD after 28 day
DVD in market.

• Socio-cultural
– Changing in customers’ buying behavior
– Changing in customers’ watching method
– Customers’ perspective about price, time and
quality of services.

SITUATIONAL ANALYSIS cont..
• Technological
– VHS to DVD - become one of the companies
adapt this technology
– Changing to stream online – digital age
– Wide-spread in gadgets market – PSP, Blue Rays
Player and others

• Demographic
– Increase world population – 6.1 billion in 2000 to
7.2 billion in 2015

SITUATIONAL ANALYSIS cont..
• Economic
– Customers can watch a movies without paying
more.

• Socio-cultural
– Most of the people like to watching movies
– Changing customers buying behavior

INDUSTRY ANALYSIS
• Threat of new entrants/ barriers to entry
– low entry barriers
– Industry leader
– Customer loyalty is weak

• Power of suppliers
– Suppliers own content that company needs.
– Licensing deals
– Legal issues

INDUSTRY ANALYSIS cont..
• Power of Buyer
– Customer loyalty is weak (price changes)
– Majority of revenue is from customers

• Product Substitutes
– Alternative methods of receiving content
– On demand, purchasing

INDUSTRY ANALYSIS cont..
• Intensity of rivalry among competitors
– Many competitor
– Few emerging market leaders
– Trying to maintain dominance

COMPETITIVE ENVIRONMENT
ANALYSIS
• Competitors
– Divided to direct and indirect competitors.
• Direct –Redbox, Vudu,Hulu Blockbuster and Voddler
• Indirect – Youtube, Bittorrent and DailyMotion

• Competitors’ Objective
– Blockbuster objective is to remain the world
largest video rental chain.

COMPETITIVE ENVIRONMENT
ANALYSIS
• Competitors’ Strategies
– Using franchise strategy. For example,
Blockbusters has open stores in 17 countries.
– Some of competitors like Blockbuster become
partnership with Samsung Electronic America .
This strategy allow owners of Samsung to rent
Blockbuster DVDs online.
– Competitor also compete to provide low rental
cost. For example, Redbox allow its customer to
rent movies $1 per day at strategic kiosk.

COMPETITIVE ENVIRONMENT
ANALYSIS
• Competitors’ Capability
– Deal with cheap wholesale disc supplier.
– Provide large volume of product
– Multichannel of distribution
– Kiosks in strategic location – supermarket ,Mc D
– Lower cost
– Provide convenient method of purchaising
– Provide VOD servis

ENVIRONMENTAL TRENDS
• Quite related to:– Technology environment
– Global environment

SUMMARY : ATTRACTIVENESS OF
EXTERNAL ENVIRONMENT
• From the study, DVD’s rental industry is not so
attractive because of;
– Low barrier to enter into this industry. Potential
entrants to market range from the actual studio
that create and own the right of content to illegal
digital distributors.
– Intensive rivalry of competitors too high. There
are many competitors that offer same products in
the market. Eg: Blockbuster, Redbox

SUMMARY : ATTRACTIVENESS OF
EXTERNAL ENVIRONMENT
– Suppliers have more power to control the market.
Suppliers have a power to control over the timing
of the physical and digital distribution of their
content to maximize their profit.

• However, Netflix is seen in this industry
because it;
– Create economy of scale. Netflix’s founder secured
$30 million which allow it to build and market the
Netflix brand. As a result, it...
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