Analysis of Netflix's Business Strategy and Strategic Alliances Report

This report provides a comprehensive analysis of Netflix's business strategy and strategic position. It examines Netflix's focus on economic and shareholder perspectives, supported by stock price data and pricing strategies. The report offers suggestions for improving Netflix's strategic position, including expanding DVD selections, enhancing technology for ease of use, and optimizing marketing strategies. It discusses Netflix's vertical integration strategy, owning its content and distribution system, and its value chain, highlighting infrastructure and technological advantages. The report also analyzes Netflix's strategic alliances with Disney, Pixar, Epix, and Amazon, exploring their impact on cost savings, market development, and resource fit, ultimately contributing to subscriber growth and profit margins. The report references various academic sources to support its findings.

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9. Does the firm seem most focused on the economic, accounting, or shareholder
perspective of its competitive advantage? Give quotes or information from these sources to
support your view.
Yes, the company seems more focused as the stock remained consistent since 2010 as the stock
prices rose from $55.19 to $304.79.This growth will be seen in terms of attractive pricing model.
In 2011 Netflix declared a new pricing strategy, that will effectively increase the price of the
service by 60% for the customers. This increase in price will lead to the discontinuation of
services by many customers. (Netflix: the outsiders, 2017) Again in 2012 the company
experience a rise and fall in the price of a stock, because of management decisions and the
concerns of the investors. The figures of 2013 show the profitability growth, as the share price
has been increased by 28.72% from the previous year, which will show the rising cost in the
context of suppliers and investors of the foreign market, that will leads to high cost of revenues.
The year 2013 shows the positive profitability growth, which shows that the market segment is
taking the steady growth till 2020.

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10. What suggestions do you have to improve the firm’s business strategy and strategic
position?
The suggestions that are followed by the company for improving the strategic position of the
company are they have to provide customers with the wide selection of DVD, so to compete with
the existing competitors. (West,2015) The company also has to focus on the easy to use
technology , so that the customers who want the DVD’s will purchase it and the customers who
are friendly with net surfing can use the streaming services, according to the ease.this step will
reduce the cost of posting as well , which leads to cost-effectiveness. The strategy part also
includes the marketing and the advertising strategy in which the new customers are provided
with free trials and also made an expansion in the new countries,like Latin America in terms of
providing services by post.The company has to make an alliance with the Redbox as the
company is involved in the streaming of videos and Redbox is taking a competitive advantage in
this segment.
11. Is your firm highly vertically integrated?
The next strategy that is to be adopted by Netflix is vertical integration, which means that the
company is owning its content and using its own distribution system, for delivering the content
to the subscribers. (Johnston, 2014) Owning the rights and the distribution allows the Netflix to
keep all the revenues with the company , rather than sharing it with distributors,which will make
Netflix , the revolutionary in terms of watching television for US audiences.

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12. Use the preceding vertical value chain to identify the corporate strategy of the firm. In
other words, where within the industry has the firm chosen to compete?
The firm’s value chain is surrounded by resources and activities. The support activities that are
proved as an advantage for the Netflix are the Infrastructure of the firm and the technological
development. The resources of the company are available electronically , by which the company
is able to minimize the overheads cost. The company is posing a threat to bandwidth as its
inventory for products purchase is unlimited. (Dyer ,2015)The reason for increasing the
bandwidth of the company is that the company is able to offer more shows and movies to the
customers. From the perspective of primary activities , the company has to reduce the cost of
logistics, which will make the company more viable . the company is able to forecast the demand
as the revenues are based on subscriptions.
In future, the company has to target on service, for increasing its competitive advantage by
taking the suggestions that how the products will be improved,which will add value in the
customer ratio of the company in terms of future profitability.
13. Has your firm participated in any mergers or acquisitions in the past three years? What was
the nature of these actions? Did they result in a consolidation of competitors?
14.Research what strategic alliances your firm has entered in the past three years. Based
on company press releases and business journal reports for each alliance, what do you find
to be the main reason the firm entered these alliances?
The strategic alliances in which the company has entered in the past three years are with Disney,
Pixar , Epix and Amazon for the TV content and with relativity media like and others for
movies. Ths move allowed the company Netflix to keep the lower overhead on content, by

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providing more financial stability and flexibility. (Koza,2013) The advantage that will be seen in
terms of these alliances is the advantage of cost savings and the new opportunities in terms of
market development.
15. Do you think each of the three alliances achieves the original intent and therefore is
successful? Why or why not?
Netflix is considered as the best example of the company that is built on alliances. Netflix
alliances with the companies or partners like Disney, Pixar and Epix, and Lucas will provide a
resource fit to the company. The partnership with these companies is seen as the motivating
factor, for taking the access of resources, that are provided by these companies. One of the
biggest alliances that the company has made with Disney exclusively provides all the US rights
to all Disney's films, including the subsidiaries like Marvel, Lucasfilm, and Pixar. The Disney
umbrella under the movies like Captain America, Star wars, etc. , are only available on Netflix ,
which help Netflix in increasing the subscriber base and ultimately leads to higher profit
margin.Another important alliance with Amazon, helps Netflix to migrate its entire streaming
infrastructure to Amazon cloud services, at the cost of creating its own. It helps the company to
make the global expansion, in order to attract the US subscriber base.
References:
Koza, M. P., & Lewin, A. Y. (2013). The co-evolution of strategic alliances. Organization
Science, 9(3), 255-264.
Johnston, R., & Lawrence, P. R. (2014). Beyond vertical integration–the rise of the value-adding
partnership. Thompson, G.(et al.)(Eds.), Markets, hierarchies and networks, The Coordination of
Social Life, Sage, London, 193-202.

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Dyer, J. H., & Singh, H. (2015). The relational view: Cooperative strategy and sources of
interorganizational competitive advantage. Academy of management review, 23(4), 660-679.
West, D. C., Ford, J., & Ibrahim, E. (2015). Strategic marketing: creating competitive
advantage. Oxford University Press, USA.
Netflix: the outsiders. (2017).