Assignment on Strategic Fit of Netflix
Added on 2022-08-15
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Running head: MANAGEMENT
Strategic Fit of Netflix
Name of the student
Name of the university
Author Note:
Strategic Fit of Netflix
Name of the student
Name of the university
Author Note:
MANAGEMENT1
Abstract:
The global video streaming market is one of the most competitive segments in the entertainment
industry. The competition has become so intense that it has necessitated even the leader in the
market namely, Netflix restructure its market strategies. The analysis clearly points out several
aspects of Netflix which contribute to its strong market position. First of all, the company is
listed on NASDAQ which enables it raise capital from the American stock market. Secondly, the
company markets immense varieties of shows like films, documentaries and TV shows which
enables it to generate immense revenue. However, the report has also brought into the light
several weaknesses in terms of marketing of products in case of Netflix. First, its operations are
still very much centred on the US, its home country whereas its competitors like Hulu and
Amazon, also based in the US enjoy strong international presence. Secondly, Netflix charges far
higher rates compared to its competitors like Hulu. Thirdly, Amazon provides a more vast range
of products. These two factors limits the product differentiation of Netflix, thus rendering its
competitively weak. The company should form a business plan to strengthen its market position.
The emergent business plan would consist of two strategies namely, marketing more purposeful
shows to spread consumer education and obtaining secondary listing in emerging markets. These
emergent strategies would be supported by an approval of an amount of $5 billion
Abstract:
The global video streaming market is one of the most competitive segments in the entertainment
industry. The competition has become so intense that it has necessitated even the leader in the
market namely, Netflix restructure its market strategies. The analysis clearly points out several
aspects of Netflix which contribute to its strong market position. First of all, the company is
listed on NASDAQ which enables it raise capital from the American stock market. Secondly, the
company markets immense varieties of shows like films, documentaries and TV shows which
enables it to generate immense revenue. However, the report has also brought into the light
several weaknesses in terms of marketing of products in case of Netflix. First, its operations are
still very much centred on the US, its home country whereas its competitors like Hulu and
Amazon, also based in the US enjoy strong international presence. Secondly, Netflix charges far
higher rates compared to its competitors like Hulu. Thirdly, Amazon provides a more vast range
of products. These two factors limits the product differentiation of Netflix, thus rendering its
competitively weak. The company should form a business plan to strengthen its market position.
The emergent business plan would consist of two strategies namely, marketing more purposeful
shows to spread consumer education and obtaining secondary listing in emerging markets. These
emergent strategies would be supported by an approval of an amount of $5 billion
MANAGEMENT2
Table of Contents
Abstract:...........................................................................................................................................1
SECTION 1 – Analysis and Discussion..........................................................................................9
Part 1. Introduction..........................................................................................................................9
Part 2. Internal Analysis:...............................................................................................................10
Part 2.1. Historical Analysis:.....................................................................................................10
Timeline:................................................................................................................................10
Strategic choices:...................................................................................................................12
VMOST.........................................................................................................................................15
Vision and Mission....................................................................................................................15
Strategy......................................................................................................................................16
Tactics........................................................................................................................................16
Product Portfolio:...........................................................................................................................17
Show Product Portfolio:............................................................................................................18
BCG Matrix...............................................................................................................................19
(Cash Cow, Star, Problem Child, Dog).....................................................................................19
Star:............................................................................................................................................19
Cash cows:.................................................................................................................................20
Question mark:...........................................................................................................................21
Dog:...........................................................................................................................................21
Table of Contents
Abstract:...........................................................................................................................................1
SECTION 1 – Analysis and Discussion..........................................................................................9
Part 1. Introduction..........................................................................................................................9
Part 2. Internal Analysis:...............................................................................................................10
Part 2.1. Historical Analysis:.....................................................................................................10
Timeline:................................................................................................................................10
Strategic choices:...................................................................................................................12
VMOST.........................................................................................................................................15
Vision and Mission....................................................................................................................15
Strategy......................................................................................................................................16
Tactics........................................................................................................................................16
Product Portfolio:...........................................................................................................................17
Show Product Portfolio:............................................................................................................18
BCG Matrix...............................................................................................................................19
(Cash Cow, Star, Problem Child, Dog).....................................................................................19
Star:............................................................................................................................................19
Cash cows:.................................................................................................................................20
Question mark:...........................................................................................................................21
Dog:...........................................................................................................................................21
MANAGEMENT3
Product Position:........................................................................................................................22
Introduce new products:........................................................................................................22
Education:..............................................................................................................................22
Market Definition and Location....................................................................................................23
Competitors (Rank)...................................................................................................................23
Current Competitive Position........................................................................................................24
Product Positioning....................................................................................................................24
Company's Aggressiveness Strategy.............................................................................................24
Current Competitive Strategy........................................................................................................25
Ansoff Matrix for Company [New Product Development; New Market Development;
Prescriptive Strategy etc.]..............................................................................................................26
Green Strategy [Ask yourself, is my company eco-friendly?]:.....................................................27
Summary of Historical Analysis:...................................................................................................27
FINANCIAL ANALYSIS.............................................................................................................28
Extract of Financial Data...............................................................................................................28
Accounting Ratios.........................................................................................................................28
Summary of Ratio Analysis:......................................................................................................30
Evaluation of COMPANY Financial Position using the CAMELS Framework......................30
Summary of Financial Analysis:...................................................................................................32
Value Chain Analysis....................................................................................................................32
Product Position:........................................................................................................................22
Introduce new products:........................................................................................................22
Education:..............................................................................................................................22
Market Definition and Location....................................................................................................23
Competitors (Rank)...................................................................................................................23
Current Competitive Position........................................................................................................24
Product Positioning....................................................................................................................24
Company's Aggressiveness Strategy.............................................................................................24
Current Competitive Strategy........................................................................................................25
Ansoff Matrix for Company [New Product Development; New Market Development;
Prescriptive Strategy etc.]..............................................................................................................26
Green Strategy [Ask yourself, is my company eco-friendly?]:.....................................................27
Summary of Historical Analysis:...................................................................................................27
FINANCIAL ANALYSIS.............................................................................................................28
Extract of Financial Data...............................................................................................................28
Accounting Ratios.........................................................................................................................28
Summary of Ratio Analysis:......................................................................................................30
Evaluation of COMPANY Financial Position using the CAMELS Framework......................30
Summary of Financial Analysis:...................................................................................................32
Value Chain Analysis....................................................................................................................32
MANAGEMENT4
Porter’s Value Chain..................................................................................................................32
Summary of the value chain:.....................................................................................................33
Core Competencies........................................................................................................................34
McKinsey’s 7-S Framework:.........................................................................................................35
Customer Analysis and Market Segmentation –...........................................................................35
Distinguishable:.........................................................................................................................35
Relevant to purchasing:.............................................................................................................37
Sufficiently large:......................................................................................................................37
Reachable...................................................................................................................................37
Competitor Analysis:.................................................................................................................37
Cooperative Environment..............................................................................................................38
Competitive Industry Environment...........................................................................................38
Key Factors for Success – Lynch (2015, p83- 84)....................................................................39
Industry Life Cycle:.......................................................................................................................39
PESTEL Analysis:.........................................................................................................................39
Degree of Turbulence in the Environment:...................................................................................41
Summary of Opportunities and Threats:........................................................................................41
Strategic Fit Analysis.....................................................................................................................41
SWOT Analysis of Netflix:...........................................................................................................42
EVR Congruence [See table below. Goggle Model for further details]........................................43
Porter’s Value Chain..................................................................................................................32
Summary of the value chain:.....................................................................................................33
Core Competencies........................................................................................................................34
McKinsey’s 7-S Framework:.........................................................................................................35
Customer Analysis and Market Segmentation –...........................................................................35
Distinguishable:.........................................................................................................................35
Relevant to purchasing:.............................................................................................................37
Sufficiently large:......................................................................................................................37
Reachable...................................................................................................................................37
Competitor Analysis:.................................................................................................................37
Cooperative Environment..............................................................................................................38
Competitive Industry Environment...........................................................................................38
Key Factors for Success – Lynch (2015, p83- 84)....................................................................39
Industry Life Cycle:.......................................................................................................................39
PESTEL Analysis:.........................................................................................................................39
Degree of Turbulence in the Environment:...................................................................................41
Summary of Opportunities and Threats:........................................................................................41
Strategic Fit Analysis.....................................................................................................................41
SWOT Analysis of Netflix:...........................................................................................................42
EVR Congruence [See table below. Goggle Model for further details]........................................43
MANAGEMENT5
ESP:...............................................................................................................................................44
Balanced Scorecard:......................................................................................................................44
Summary of Strategic Fit:..........................................................................................................44
SECTION 2 – Strategic Direction.................................................................................................46
Trend and Sensitivity Analysis:.....................................................................................................46
Risk Management..........................................................................................................................48
Growth Strategic Options..............................................................................................................53
Strategic Direction:........................................................................................................................53
Incorporating more educational shows:.....................................................................................53
Obtain secondary listing in emerging markets:.........................................................................54
Suitability – Suitable to whom and what.......................................................................................57
Suitability to Resource Base (Lynch 2015, p132) Fig 4.8 – 7 elements.......................................57
Suitability to Culture......................................................................................................................57
Suitability to Purpose of the Company......................................................................................58
Suitability to Stakeholders.........................................................................................................58
Summary of Suitability..............................................................................................................59
Acceptability..................................................................................................................................59
Acceptability of Business Model...................................................................................................59
Acceptability to Ethics and Social Responsibility.........................................................................59
Acceptability to Knowledge Management....................................................................................59
ESP:...............................................................................................................................................44
Balanced Scorecard:......................................................................................................................44
Summary of Strategic Fit:..........................................................................................................44
SECTION 2 – Strategic Direction.................................................................................................46
Trend and Sensitivity Analysis:.....................................................................................................46
Risk Management..........................................................................................................................48
Growth Strategic Options..............................................................................................................53
Strategic Direction:........................................................................................................................53
Incorporating more educational shows:.....................................................................................53
Obtain secondary listing in emerging markets:.........................................................................54
Suitability – Suitable to whom and what.......................................................................................57
Suitability to Resource Base (Lynch 2015, p132) Fig 4.8 – 7 elements.......................................57
Suitability to Culture......................................................................................................................57
Suitability to Purpose of the Company......................................................................................58
Suitability to Stakeholders.........................................................................................................58
Summary of Suitability..............................................................................................................59
Acceptability..................................................................................................................................59
Acceptability of Business Model...................................................................................................59
Acceptability to Ethics and Social Responsibility.........................................................................59
Acceptability to Knowledge Management....................................................................................59
MANAGEMENT6
Acceptability to Technology..........................................................................................................59
Acceptability using Blue Ocean Strategy......................................................................................59
Summary of Acceptability Analysis..............................................................................................60
Feasibility......................................................................................................................................60
Internal Feasibility Checklist.....................................................................................................61
1. Capital Investment Required.....................................................................................................61
2. Projection of cumulative profits (based on strategic choices)...................................................61
3. Working Capital Requirements.................................................................................................61
4. Tax Liabilities and Dividend Payments.....................................................................................62
5. Number of current employees? Redundancy? Is the company over-staffed? –........................62
6. New technical skills; new plants, etc.........................................................................................63
7. New products and how they are to be developed......................................................................63
8. Amount and timing of market investment.................................................................................63
9. Possibility of acquisition, merger, joint venture, etc.................................................................63
10. Communication of ideas to all those involved........................................................................64
External Feasibility Checklist........................................................................................................64
Financial Feasibility Checklist:.....................................................................................................64
Financial Evaluation..................................................................................................................64
Summary of Feasibility:............................................................................................................66
Summary of Suitability, Acceptability and Feasibility:............................................................66
Acceptability to Technology..........................................................................................................59
Acceptability using Blue Ocean Strategy......................................................................................59
Summary of Acceptability Analysis..............................................................................................60
Feasibility......................................................................................................................................60
Internal Feasibility Checklist.....................................................................................................61
1. Capital Investment Required.....................................................................................................61
2. Projection of cumulative profits (based on strategic choices)...................................................61
3. Working Capital Requirements.................................................................................................61
4. Tax Liabilities and Dividend Payments.....................................................................................62
5. Number of current employees? Redundancy? Is the company over-staffed? –........................62
6. New technical skills; new plants, etc.........................................................................................63
7. New products and how they are to be developed......................................................................63
8. Amount and timing of market investment.................................................................................63
9. Possibility of acquisition, merger, joint venture, etc.................................................................63
10. Communication of ideas to all those involved........................................................................64
External Feasibility Checklist........................................................................................................64
Financial Feasibility Checklist:.....................................................................................................64
Financial Evaluation..................................................................................................................64
Summary of Feasibility:............................................................................................................66
Summary of Suitability, Acceptability and Feasibility:............................................................66
MANAGEMENT7
Internal Development....................................................................................................................66
E-Commerce:.................................................................................................................................66
Implementation and Control..........................................................................................................66
Alignment of Company Structure..................................................................................................67
Elements of the Implementation Process.......................................................................................67
Project Management Approach.....................................................................................................67
Project Monitoring and Control.....................................................................................................67
Green Strategy...............................................................................................................................67
Managing Change..........................................................................................................................67
Managing Strategic Leadership.....................................................................................................68
Business Plan.................................................................................................................................68
Execution Plan for Chosen Strategic Option.................................................................................68
Conclusion:....................................................................................................................................68
References:....................................................................................................................................70
Internal Development....................................................................................................................66
E-Commerce:.................................................................................................................................66
Implementation and Control..........................................................................................................66
Alignment of Company Structure..................................................................................................67
Elements of the Implementation Process.......................................................................................67
Project Management Approach.....................................................................................................67
Project Monitoring and Control.....................................................................................................67
Green Strategy...............................................................................................................................67
Managing Change..........................................................................................................................67
Managing Strategic Leadership.....................................................................................................68
Business Plan.................................................................................................................................68
Execution Plan for Chosen Strategic Option.................................................................................68
Conclusion:....................................................................................................................................68
References:....................................................................................................................................70
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