Strategic Management in Action Case #3: Netflix

Strategic Management in Action Case #3: Netflix

Question 1

Based on the case study, the most effective strategy for Netflix should be a prospector strategy. A prospector strategy is a competitive policy that focuses on spurring the opportunities that currently exist in the market for the company. One of the most prudent strategies that should be adopted by Netflix is innovation. Based on the cut-throat competition that currently exists in the industry orchestrated by companies such as Hulu, Amazon, blockbuster, and HBO, Netflix needs to find innovative ways of delivering content. Netflix requires flexibly organizing its organization and promoting creativity throughout its products and services. Some of the innovating methods that can be used by the company include focusing more on mobile technology conscious of the fact that the majority of the people are mostly on their smartphones and would, therefore, prefer to access the content on the go. Netflix should, therefore, ensure that their content is available in all smartphones. Secondly, Netflix should also lower the rates of their subscriptions as a way of ensuring that they expand their market base. As it is now, the content of Netflix can only be accessed by a limited number of persons who can afford their minimum monthly payments of $9 per month. There is a growing number of people in the developed nations who have access to a smartphone, but the high cost of Netflix subscription is out of their reach. Netflix should, therefore, focus on lowering their monthly subscription as a way of tapping into the emerging markets, while at the same time innovating a lighter version of their application. The move mentioned above will go a long way in ensuring that the company increases its market opportunities. Also, the company should consider innovating new payment options, which will make it easy for those without a Paypal account to pay for their services.  Also, Netflix should consider changing its payment model, for instance, by incorporating a pay-per-usage model, which will be more efficient for the customers as opposed to the current model that charges even when not in use.

Question 2

The success of Netflix has largely been orchestrated by the company’s capabilities and core competencies. The company has changed how people watch movies by bringing movies closer to the people. The company has succeeded by providing a wide range of selected DVDs, which hastened the delivery of DVDs. The competencies of the company were also evidenced through the focus by the CEO of Netflix Reed Hastings, who focused on spurring the number of subscribers as well as the earnings per share. Netflix has, over the years, focused primarily on customers by focusing on quality, which has led to a large market base. In recent years, the company has also focused on increasing its resources as a way of taking up a large share of the market. The company has made concerted efforts to increase their content around the globe through the acquisition of content from countries where competitors are yet to set foot. The objectives mentioned above have made the company rake in close to $22billion in debts, in a bid to maintain a vast market share. By 2019, the debts of the company were close to $ 25 billion, indicating how the company has used resources to spur its success.

Question 3

The company has focused on three critical concerns in the following ways. The company has focused on expanding the range of their DVDs, which has made it easier for a large number of people to access movies at their convenience. Also, it has formulated an easy way of choosing movies and in the process, creating an easy and effective way of choosing movies. The introduction of the movie streaming service has also been one of the most revolutionary services in the company. The company has, in recent years, strived to become the best company in the world, providing internet services. The company has also focused on people by ensuring that services are closer and more available to the people. Also, the company has opened branches in different locations across the globe as a way of fostering a closer bond with their customers. The above is, for instance, evidenced by the fact that the company has locations in 190 countries, something that their competitors have not been able to achieve. The company has also focused on the support processes by ensuring that there has a global payment system, which is accessible to all people across the globe. Also, they have a responsive customer service through a mobile number platform and also through the popular social media sites. The moves mentioned above have improved the production and operation processes and thereby contributing to the expansion of their market base.

Question 4

Netflix has a strong competitive advantage in relation to the value chain. As earlier mentioned, the company has a presence in 190 countries, something that even their customers have not been able to come close. The company has further expanded its content source to all continents across the world. In the process, the company has been able to attract a wider market and thereby increasing their revenues and success.