Netflix Case Study

Topics: Renting, Rental shop, Blockbuster Inc. Pages: 24 (8860 words) Published: July 27, 2005
Table of Contents
Company Overview4
External Analysis
Dominant Economic Feature 8
Competitive Forces – Five Forces Model10
Driving Forces12
Key Success Factors14
Competitor Analysis15
Industry Attractiveness21
Internal (Company) Analysis
Company Strategies21
SWOT Analysis23
Value Chain Analysis29
Competitive Strength Assessment 30
Strategic Issues and Obstacles31
Alternative Courses of Action for Success 31
Implementation 32
Works Cited 36
Corporate OfficersA
Online Movie Industry Market ShareB
Renting Process Flow ChartC
Growth Rate ChartD
Rental Price Comparison E
Ratio ComparisonsF
S.W.O.T. AnalysisG
Weighted Competitive Strength AssessmentH
Unweighted Competitive Strength AssessmentI
Financial AnalysisJ
Return on Assets / Return on EquityK

Reed Hastings founded Netflix in 1997. He noticed that there was a demand for the ability to rent movies. With a large customer base he figured there was no question that his company could fail. This began the online movie rental industry to a large scale. With one company becoming successful, it wouldn't be but a matter of time before others began to catch on and begin to reap the benefits of someone else's idea. Reed Hastings has already been a success for beginning new companies. He first made a name for himself by going public with Pure Software in 1995 ( After the development of this company he began to acquire several other companies and made Pure Software one of the 50 largest public software companies in the world by 1997; this until they sold to Rational Software in 1997. From there Hastings moved on to other projects. The other project in mind was Netflix. Hastings and a few colleagues formed Netflix in 1997, as formerly stated. Which by 1999, they had over one million subscribers in only three and a half years. Since the beginning of Netflix in 1997, they have battled many different forms of DVD entertainment competition. The competition ranges from simply going to the local video store, or actually going out to purchase a movie. It ranges too many other levels as well as many other mediums. Through the beginning and even until today Netflix has been able to stay ahead of their competition; this mainly due to the seemingly flawless method of getting the product to the end user, and back. "No one is going to out-hare Netflix," Hasting said. (Netflix-Maddox) With this bold statement, Hastings has been able to keep his word on it. He is able to keep his word mainly because of the intricate rental system involved, also because they have until recently been what seemed to be the best deal for renting movies. Netflix seems to have a simple statement. "Our vision is to change the way people access and view the movies they love. To accomplish that, on a large scale, we have to set a long-term goal to acquire 5 millions subscribers in the U.S., or 5 percent of the U.S. TV households over the next four to seven years." (Maddox, c-14) This statement appears to be plausible as long as they figure a way to keep the Blockbusters and the Wal-Marts of the world at bay. "Netflix launched its movie rental service in 1999 with the goal of using the DVD format and the Internet to make it easier for people to find and get movies they will enjoy. As a result, our members can reliably discover and enjoy lesser-known titles. As we succeed, more people are watching more films, and filmmakers are reaching a larger audience. In turn, we believe they will produce more new films. Netflix strives to be the world's largest and most influential movie supplier. (" ISSUES

·The first strategic issue that Netflix will need to cover is how...
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