Netflix Strategic Analysis

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Netflix | Strategic Analysis (Nov 2007) | | Netflix, the online subscription-based DVD rental service aimed to better satisfy customer in a way competitors didn’t, customized and personalized service with unlimited monthly rentals from a great variety of film offerings. Now they want to leverage their strengths to enter into the Video on Demand market | | | 9/18/2009 | |

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Table of Contents
1. Netflix Strategic Analysis
2. Netflix vs. Blockbuster: Comparative assessment of strategic differences
3. Netflix Competitive Advantage
3.1 Home video industry - Positioning Perspective
3.2 VRIO Perspective
4. Video On Demand (VOD) – Strategic Advantage

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1. Netflix Strategic Analysis
Netflix, an online subscription-based DVD rental service aimed to better satisfy customer in a way competitors didn’t, with unlimited monthly rentals from a great variety of DVD offerings and personalized service.
Netflix created a distinctive value proposition by understanding customer needs and competition offerings; Netflix found the sweet spot to align the firm’s capabilities with the customer needs in a way that competitors could not match them, creating unique activities to deliver to that gap(1).
To take the movie rental to the next level, Netflix used the internet instead of rental stores and offered service only to DVD users while rental stores were still renting VHS. The combination of internet and DVD technology made competition irrelevant, by reaching in an untapped market, Netflix expanded existing industry boundaries and reached for the blue ocean(1).
Netflix started building their offering from customer’s frustration such as narrow diversity of films and stressful return due dates which implied late fees. Netflix was able to hold large amounts of inventory in their warehouses without having the physical space constringency of a rental store, added convenience of delivery and the unlimited monthly rentals of a



References: (1) W. Chan Kim and Renée Mauborgne, “Blue Ocean Strategy: From Theory to Practice” California Review Management, 2005. (2) 8 8 7 7 Willy Shih, Stephen Kaufman and David Spinola, “Netflix”, Harvard Business School, November 19, 2007.

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