A Comparative Analysis of Business Strategies and Models in the US OTT Market

The provided content includes articles and online resources related to business, management, marketing, and strategy. The articles cover various topics such as leadership, innovation, operations strategy, and environmental concern in manufacturing. Additionally, the online resources include tools for competitive analysis, a PESTEL analysis of marketing theories, and information on the mission statement, vision, promise, and values of Netflix. These materials can be used to gain insights into business strategies, management practices, and marketing approaches.

INDIVIDUAL
REPORT

EXECUTIVE SUMMARY
Strategic management can be defined as a process which includes the formulation and
implementation of goals where initiatives are taken by venture's top management. Apart from it,
report also emphasize on considering different resources by analysing the internal and external
environment. This present document has been prepared on Netflix which is a global venture who
provides streaming films and TV series. This present document will emphasize on mission and
vision of cited organization.
This document is evident of different models and matrix's which has been explained
effectively. Further, SWOT analysis of the venture has been done in order to see where firm
stands in the global market. Apart from this, this report is also evident of specifying the role of
different departments within the Netflix and with their efficient operations, firm directed towards
achievement of their goals and objectives.

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
1. MISSION AND VISION OF NETFLIX.....................................................................................1
Mission...................................................................................................................................1
Vision.....................................................................................................................................2
2. ENVIRONMENTAL, INDUSTRY AND COMPETITOR ANALYSIS....................................2
PEST analysis.........................................................................................................................2
Porter’s Five Forces................................................................................................................3
Competitive Profile Matrix.....................................................................................................4
External Factor Evaluation (EFE) Matrix..............................................................................7
3. NETFLIX’S INTERNAL STRENGTHS AND WEAKNESSES...............................................8
4. DIFFERENT STRATEGIES AND THEIR ADVANTAGES AND DISADVANTAGES........9
SWOT matrix.........................................................................................................................9
Grand Strategy Matrix..........................................................................................................11
Quantitative Strategic Planning Matrix................................................................................12
5. RECOMMENDATIONS...........................................................................................................14
6. IMPLEMENTING THIS STRATEGY.....................................................................................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INDEX OF TABLES
Table 1: Competitive Profile Matrix of Netflix...............................................................................4
Table 2: External Factor Evaluation (EFE) Matrix for Netflix.......................................................8
Table 3: Internal Factor Evaluation (EFE) Matrix for Netflix........................................................9
Table 4: SWOT Matrix of Netflix.................................................................................................10
LIST OF FIGURES
Figure 1: Subscribers Ratio.............................................................................................................5
Figure 2: Digital Video Viewers......................................................................................................5
Figure 3: Content Acquisition Spending.........................................................................................6
Figure 4: Share of Pay TV services.................................................................................................7
Figure 5: Grand Strategy Matrix....................................................................................................12
Figure 6: Porter-Generic-Strategy model......................................................................................14

INTRODUCTION
Strategic management can be defined as a process which includes the formulation and
implementation of important goals where initiatives are taken by ventures top management on
behalf of owner, based on the consideration of resources by analysing the internal and external
environment. It plays a crucial role so that organization gets competitive advantage over the rival
firms who are working in the same industry (Teece, 2010).
This present document has been prepared on Netflix which is a global venture who
provides streaming films and TV series. Organization having their operations throughout the
world except in countries like China, North Korea, etc. Further, cited firm have 3,500 employees
who are giving there productive services throughout the globe. This present document will
emphasize on mission and vision of cited organization. It will also showcase environment,
industry and competitor analysis along with identifying a particular strategy which Netflix can
pursue in order to achieve positional advantage.
1. MISSION AND VISION OF NETFLIX
Mission
Netflix mission is to increase the streaming subscription business both domestically and
internationally. Cited firm also focusing on to improve the customer experience by expanding the
streaming content so that they become the loyal customer's for the venture. Apart from it,
organization revenue is increasing year by year and cited firm is focusing on the same and this is
the major reason of their immense goodwill throughout the globe (Montgomery, 2011).
Organization main aim is to increase their goodwill, revenue, productivity and turnover as
compared with their major competitors. Further, venture has concerned on some component for
their mission statements and these are:
 Products and services
 Market
 Technology
 Customers
 Growth and profitability
 Self- respect
 Employees
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Vision
Neflix vision is to become the worldwide leader in on-demand video entertainment
available for the multiple devices (The Mission Statement, Vision, Promise and Values of Netflix.
2016). Moreover, their vision for future has been discussed down under:
 Become the best global entertainment distribution service
 Developing market which will be approachable to film makers
 Licensing the entertainment content whole around the globe
 Increasing the customer base through their effective services worldwide
2. ENVIRONMENTAL, INDUSTRY AND COMPETITOR ANALYSIS
PEST analysis
PEST analysis for cited organization plays a crucial role as they have their effective
operations throughout the globe and venture has to consider each and every element of external
environment analysis before starting their operations in new place (Verbeke, 2013).
Political:
These factors can influence the organization performance upto great extent. It involves
government regulations who can control organization operations and impact their activities
(Welford, 2013). Some political aspects are discussed down under:
 Political stability
 Government policy
 Taxation level
 Trade barrier
 Market regulations Bureaucracy
Economic:
Economic factors have contributed a lot in the growth of cited firm. There are things
which include customer income, spending rates, inflation rates, interest rates, etc. Moreover,
consumer income is also one of the major factor in which organization operates as revenue is
sensitive for economic conditions and people may feel that online streaming is a luxury product
(MARKETING THEORIES – PESTEL ANALYSIS, 2015).
Social:
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From social point of view, demographic changes and lifestyle are the major element
which is influencing organization growth. Further, people compares the traditional media with
the digital media and this comparison is one of the challenging factor for the cited venture
(Hollensen, 2015). Apart from it, increasing access of electronic devices is impacting Netflix
access to each market as privacy of data is major concern However, it gives lot of benefit to
customers as they can watch any films anywhere.
Technological:
Technology is changing at a rapid pace and cited firm need to update their technology
constantly in order to give their competitors stiff competition who are dealing in the same
industry. Further, organization have to stay bold in the online streaming market as it is majorly
impacted with new development in the technology (Salem Khalifa, 2012).
Porter’s Five Forces
Competition rivalry
This threat is relatively high as there are many ventures who provide streaming and cited
firm need to adopt certain practices which will improve their revenue and productivity (Dong-
Hun, 2010). Moreover, Netflix has loosed 4% of the market share since the year 2012 as they are
getting stiff competition from Hulu and Amazon.
Threat of new entrance
This threat is high as there are numerous websites who offers the online streaming.
Further, there also not exist any legal barrier which stops competition from setting up the website
Threat of substitute
Threat of substitute for Netflix is low as they only have some minor threats. Further, any
venture who do not provide streaming and only provide films can be treated as substitute.
Bargaining power of buyers
Bargaining power of buyers is high as buyers having different alternatives and options
available with them. With this, they can easily switch the services and it will be major drawback
for the business venture (Winroth and Johansson, 2010). Customers used to be loyal for the
services what they are getting and are not loyal for the service provider.
Bargaining power of suppliers
3

Although cited firm has few suppliers but then also the supplier power is high. The main
reason is the content which they are offering to customers. Supplier content plays a crucial role
and firm has to ensure that they provide quality of content to their customers. Those
organizations provide content to Netflix becomes their suppliers.
Competitive Profile Matrix
Competitive Profile Matrix (CPM) is a tool which compares organization with the
competitors and reveals strengths and weaknesses of business enterprise. This matrix helps
venture to understand the external environment and also the competition which persist within the
industry (Competitive Profile Matrix (CPM), 2016). It identifies Netflix key competitors and
compares them with industry's critical success factor. Further, by identifying the strength and
weakness, firm will try to overcome them.
Netflix Amazon Prime Hulu
Critical Success Factors Weight Rating Score Rating Score Rating Score
Advertisement 0.15 4 0.60 3 0.45 2 0.30
Goodwill 0.20 4 0.80 2 0.40 2 0.40
Customer's Retention 0.10 3 0.30 3 0.30 3 0.30
Global expansion 0.30 3 0.90 4 1.20 2 0.60
Market share 0.15 4 0.60 3 0.45 2 0.30
Management 0.10 4 0.40 2 0.20 3 0.30
TOTAL 1.00 3.6 3 2.2
Table 1: Competitive Profile Matrix of Netflix
The above explained table shows strengths and weakness of Netflix when compared with
its two major competitors and they are Amazon Video and Hulu. Netflix has got the score of 3.6
as compared to Amazon Video and Hulu 3 and 2.2 respectively. This shows that cited
organization remains competitive force in the industry.
4

Figure 1: Subscribers Ratio
(Source: Loesche, 2016)
Further, above figure signifies that Netflix enjoys a significant position in SVOD market. It has
around 43% subscribers which is far ahead from Amazon Prime i.e. 22% and Hulu merely 9%.
Figure 2: Digital Video Viewers
(Source: Sutcliffe, 2016)
Additionally, there is significant growth in the subscribers of Netflix from past 3 years as
compared to Amazon Prime and Hulu Plus. Above figure signifies the same.
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Figure 3: Content Acquisition Spending
(Source: Hagey and Ramachandran, 2015)
Additionally, above infographics signifies the spending of each company in content acquisition.
It has found from this that Hulu has adopted aggressive approach in this context in order to
enhance the number of subscribers.
Figure 4: Share of Pay TV services
(Source: Statista. 2016)
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However, fact cannot be denied that concept of SVOD is on growing phase but it is still far
behind from cable TV concept. Above figure signifies the same.
External Factor Evaluation (EFE) Matrix
External Factor Evaluation (EFE) matrix is a strategic-management tool which is used for
assessing current business status. Further, it is considered as an important tool in order to
visualize and prioritize opportunities and threats which business must be facing (Elbanna, 2010).
Moreover, external factors evaluated in EFE matrix consist of social, economic, political, legal,
and other external forces which can impact the organization performance. EFE matrix for Netflix
has been discussed down under:
Key External Factors Weight Rating Score
Opportunities
1. Streaming devices 0.16 3 0.48
2. Video games rental 0.08 3 0.24
3. Low cost of HD TV's 0.11 4 0.44
4. Declining cable TV's subscription 0.06 4 0.24
5. 3D TV's 0.09 2 0.18
Threats
6. New firm entering industry 0.13 2 0.26
7. ISP bandwidth caps 0.08 3 0.24
8. Declining DVD rentals 0.07 2 0.14
9. Barriers to market expansion 0.12 4 0.48
10. Growth of online commerce 0.10 4 0.40
TOTAL 1.00 3.1
Table 2: External Factor Evaluation (EFE) Matrix for Netflix
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From the above table it is evident that EFE matrix for Netflix comprises five external
opportunities and threats. Netflix having the total score of 3.1 which is more than the average
score of 2.5. Further, this shows that mentioned venture focusing on grasping the external
opportunities and dealing with the threats accordingly.
3. NETFLIX’S INTERNAL STRENGTHS AND WEAKNESSES
Internal Factor Evaluation (IFE) Matrix
Internal Factor Evaluation (IFE) matrix is considered as a strategic management tool
which is generally used for evaluating major strengths and weaknesses in functional areas of
business enterprise. Furthermore, IFE matrix is very similar to EFE matrix (Galpin, T. and
Whittington, 2012). The major difference between the IFE matrix and the EFE matrix is the
different factors which include in the model.
Moreover, IFE Matrix together with EFE matrix is strategy-formulation tool which can
be used to evaluate how mentioned organization is performing and what all there internal
strengths and weaknesses is. This model has been discussed down under for better
understanding:
Key Internal Factors Weight Rating Score
Strengths
1. Satisfaction of employees 0.17 4 0.68
2. Multi skilled employees 0.18 3 0.54
3. Strategic partnership 0.16 4 0.64
4. Strong team 0.15 3 0.45
5. Better customer service 0.14 4 0.56
Weaknesses
6. Tapping foreign markets 0.06 2 0.12
7. Problem in tracking cost 0.04 1 0.04
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8. Lack in getting original content 0.03 1 0.03
9. Problem in getting new release 0.03 2 0.06
10. Consumers more time in marketing 0.04 2 0.08
TOTAL 1.00 3.2
Table 3: Internal Factor Evaluation (EFE) Matrix for Netflix
IFE matrix assess the current strength and weakness for business venture and the score
which organization got is 3.1 which is better than the par average score (2.5). This shows that
mentioned business organization has maximized their strengths and used them for effective
results. Further, they will try to overcome the weakness in order to make the same as strength.
4. DIFFERENT STRATEGIES AND THEIR ADVANTAGES AND
DISADVANTAGES
SWOT matrix
SWOT matrix also knows as an internal analysis which helps business venture to
evaluate their internal position so that they can get a competitive advantage over the rival firms
who are working within the industry (Zott, Amit and Massa, 2011).
Strengths Weaknesses
1. Increased market
share
2. Good profitability
3. Fast delivery
4. Well prepared
website
5. Skilled employees
6. User friendly
7. Strong team
8. Effective culture
1) Pricing
2) No live content
3) Pricing
4) No original data
Opportunities Strength Opportunities (SO) Weakness Opportunities (WO)
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1. Rental video games
2. Tapping international
markets
3. Declining in cable
subscription
4. 3D content
5. Exclusive distribution
6. Attracting audience
 Expanding business
to new area (S2, O2)
 Recruiting
employees for better
performance (S5,
O6)
 Working with the
content producer for
exclusive distribution
(W1, O5)
Threats Strength Threats (ST) Weakness Threats (WT)
1) Different ventures
entering the market
2) Different distribution
model
3) Competitors content
4) Barrier entering into new
market
 Diversify the
services which are
so offered to
audience (S7, T1)
 Explore different
distribution method
(W2, T2)
Table 4: SWOT Matrix of Netflix
SWOT matrix shows the strengths, weakness, opportunities and threats for cited
organization. This matrix is a bit different from analysis as in this the potential strengths and
weakness is matched with the opportunities and also with the threats (Winroth and Johansson,
2010).
Grand Strategy Matrix
This matrix is considered as a useful instrument as it help venture in creating different
alternative strategies for organization. Further, this matrix consists of four quadrants and each
quadrant has different strategies. Moreover, this strategy implies that whole enterprise along with
their division should fall in one quadrant. Further, this matrix has two dimensions and these are
competitive position and market growth (Garriga and Melé, 2013).
Quadrant I
 Product development
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 Market development
 Forward integration
 Concentric diversification
Quadrant II
 Market penetration
 Horizontal integration
 Liquidation
 Product and market development
Quadrant III
 Retrenchment
 Related and unrelated diversification
 Liquidation
Quadrant IV
 Related and unrelated diversification
 Horizontal/ Vertical diversification
 Joint Ventures
Figure 5: Grand Strategy Matrix
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Cited firm falls in first quadrant as Netflix have effective operations throughout the glove
and they have strong strategic position as well. Their advantage goes on for long time period and
they focus on existing market to increase their sale, revenue and productivity.
Quantitative Strategic Planning Matrix
Quantitative Strategic Planning Matrix (QSPM) is considered as a high-level strategic
management approach which evaluates possible strategies for business venture (Slack, 2015).
QSPM also provide analytical method to compare the actions which organization have taken.
Alternative 1
Acquire
Competitors
Alternative 2
Expand internally
Key Factors Weight Rating Score Weight Rating Score
Strengths
1. Satisfaction of employees 0.17 4 0.68 0.16 2 0.32
2. Multi skilled employees 0.18 3 0.54 0.13 3 0.39
3. Strategic partnership 0.16 4 0.64 0.11 2 0.22
4. Strong team 0.15 3 0.45 0.15 2 0.30
5. Better customer service 0.14 4 0.56 0.17 3 0.51
Weaknesses
6. Tapping foreign markets 0.06 2 0.12 0.04 1 0.08
7. Problem in tracking cost 0.04 1 0.04 0.06 1 0.06
8. Lack in getting original content 0.03 1 0.03 0.05 2 0.10
9. Problem in getting new release 0.03 2 0.06 0.08 2 0.16
10. Consumers more time in
marketing
0.04 2 0.08 0.05 1 0.05
TOTAL 1.00 3.2 2.19
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Opportunities
1. Streaming devices 0.16 3 0.48 0.12 3 0.36
2. Video games rental 0.08 3 0.24 0.09 2 0.18
3. Low cost of HD TV's 0.11 4 0.44 0.11 2 0.22
4. Declining cable TV's
subscription
0.06 4 0.24 0.13 3 0.39
5. 3D TV's 0.09 2 0.18 0.08 2 0.16
Threats
6. New firm entering industry 0.13 2 0.26 0.12 2 0.24
7. ISP bandwidth caps 0.08 3 0.24 0.09 2 0.18
8. Declining DVD rentals 0.07 2 0.14 0.05 3 0.15
9. Barriers to market expansion 0.12 4 0.48 0.12 3 0.36
10. Growth of online commerce 0.10 4 0.40 0.09 2 0.18
TOTAL 1.00 3.1 2.42
Sum total attractive score 6.3 4.61
From the above table, it is evaluated that cited firm will focus on alternative 1 i.e.
acquiring of competitors as this will not let firm to invest more and by acquiring existing
business will give firm a dominance.
Apart from it, there are different types of strategies available for Netflix and these have
been discussed down under:
 Substantive growth strategy- Cited organization can increase their market base by using
this strategy. In this, cited firm can do merger and joint venture in order to increase their
operations
 Limited growth strategy- In this, company can design new products, export their products
and get relevant profit for the same (Lee, Kim and Park, 2012).
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 Retrenchment strategy: With the implementation of this strategy, cited firm can reduce its
weaknesses and able to see the overcoming of them with revenue and increasing
customer base.
5. RECOMMENDATIONS
In order to achieve goals and objectives, cited firm can implement competitive strategy as
it will help organization to know their position as where they stand in the industry. For this, cited
firm can implement Porter's generic strategy as it will pursue Netflix to get a competitive
advantage over their rivals. Further, there exist three major strategies in it. Organization can
choose either cost, differentiated or focus.
Figure 6: Porter-Generic-Strategy model
Cost leadership marketing strategies are those which used to penetrate the industry by
using organization product or service. This could be possible when cited venture increases their
profitability, efficiency and lower down is cost of production (Gillam and Siriwardena, 2013).
This strategy is suitable for those organizations who want to penetrate the market and which is
dominated by few high cost ventures. There exist some ways through which organization can get
cost advantage and these are:
 Improving efficiency
 Making optimum utilization of resources
 Vertical integration decisions
 Avoiding cost
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Differentiation strategy on the other side needs to tackle market as well as competitors
who exist there in. Differentiation marketing strategies mean development of products and
services which have unique traits and these characteristics are appraised by the customers
efficiently (Aleprete Jr and Hoffman, 2012). If organization want to implement this step then it
should have such strengths:
 Well developed R&D department
 Access to scientific research
 Strong marketing and selling department]
 Excellent goodwill
Focus strategy centralizes on dividing the target market into different section. In order to
meet this, then ventures have to specify marketing strategic for each section (Zhu and et.al.,
2012).
From the above description, Netflix can focus on differentiation strategy as organization
having unique services and their different services should be unique as it gets more of the
customer's response and they can achieve their goals and objectives.
6. IMPLEMENTING THIS STRATEGY
Cited organization can focus on implementing the above explained strategy to different
departments so that the efficiency in working will be maintained and cited venture will be able to
achieve their goals and objectives on desired time period. With immense goodwill throughout the
globe, cited organization has different departments where skilled workforce is working in order
to achieve stated mission and vision.
 Human Resource: HR department plays a crucial role as HR manager look over each and
every department and see the requirement in particular area.
 Marketing: Marketing department of Netlfix is also important as their duty is to promote
the organization services effectively so that more of the customers get attached to it.
 Finance: This department looks overall finance transaction of the venture and emphasizes
on spending less so that they get more of the profits.
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CONCLUSION
From the above report it is clearly evident that Netflix is global firm who has effective
operations throughout the globe. This document is evident of different models and matrix's
which has been explained effectively. Further, SWOT analysis of the venture has been done in
order to see where firm stands in the global market. This report also showcases recommendation
that cited organization can implement Porter Generic Strategy in order to give their competitors a
stiff competition who are working within the same industry. Apart from this, this report is also
evident of specifying the role of different departments within the Netflix and with their efficient
operations, firm directed towards achievement of their goals and objectives.
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REFERENCES
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Gillam, S. and Siriwardena, A. N., 2013. Leadership and management for quality. Quality in
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Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
Lee, H., Kim, M. S. and Park, Y., 2012. An analytic network process approach to
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Montgomery, C.A., 2011. Resource-based and evolutionary theories of the firm: towards a
synthesis. Springer Science & Business Media.
Salem Khalifa, A., 2012. Mission, purpose, and ambition: redefining the mission statement.
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Teece, D.J., 2010. Business models, business strategy and innovation. Long range planning.
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Verbeke, A., 2013. International business strategy. Cambridge University Press.
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Welford, R., 2013. Hijacking environmentalism: Corporate responses to sustainable
development. Routledge.
Winroth, M. and Johansson, G., 2010. Introducing environmental concern in manufacturing
strategies: Implications for the decision criteria. Management Research Review. 33(9).
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