Strategic Management: Competitive Advantages of Netflix

This report explores the competitive advantages of Netflix based on Porter's Diamond Framework. It discusses the factors that contribute to Netflix's success in the digital content industry and compares it to its rivals. The report also examines the strategies, structure, and rivalry of Netflix, as well as the government and market opportunities it faces.

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STRATEGIC MANAGEMENT
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Executive Summary
The focus on the Netflix competitive advantages based on the Diamond Framework. Netflix as
an industry has produced online rental products that enable them to have a fair share of the world
marketplaces. The market contributes Their success by making the services available and in
many ways possible. As Porter (2011) says, it all along within the marketing price, saturation,
and content, clearly they separate themselves from rivals. It is with their membership of pricing
scheme that seduces the customers, and such an approach has contributed to them, thus
becoming market leaders. However, Netflix has faced many challenges surrounding their recent
decisions online streaming service coupled with an increase in price. This report reviews and
compares the theories referring to Netflix and other rivals of the competitive advantage of a
radical approach by Porter (2011). Although Porter’s Diamond Framework has been extensively
discussed in the management literature. The purpose of this report is to explain why Porter's
Diamond Framework is not a new theory that explains the competitiveness of countries but
rather a framework that enhances our understanding of the international competitiveness of
firms.
Keywords: Porter, Diamond Framework, competitive advantages,

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Netflix Strategic management
Introduction
Numerous competitive advantages are seen to be narrow by the managers in the area of the
rivalry. According to (Porter, and Heppelmann, 2014) some Companies rely on the competition
in the existing sector is what drives the profitability in certainty. There are specific forces such as
Customers and supplier have a bargaining power, whereby it may pose future threats, and such
treats may substitute the sales of the product/services. Netflix Company rivals in the digital
content industry with different types of competitors, where customers would rather pay less
money for the subscription for the services (Carroll, Menenberg, and Kwok, 2009). The industry
would like to be paid more for a lesser amount of work. And the current digital providers are
following the business model to make services to a similar product.
Endowment Factor
Netflix Company has competitive advantages in the trade(David, and David, 2013), where they
have exploited the production for a long time due to entrepreneurship, capital, and labor. Michael
E. Porter a professor in Harvard Business, a developer of ‘Porter Diamond theory framework'
advocates that, "the competition and profitability is driven by the structure of the industry, not
whether the manufacturing produces high tech or low tech, regulated or unregulated, is emerging
or mature" (Porter, 2011). The Netflix employees are paid well than other digital content
developers such as Hulu/Amazon. Porter says they also allow the employees to decide on the
expense without the managerial concern as long as Netflix interest first. Netflix does not rely on
the common sense and judgment instead of the formal policies, which would get better
outcomes, and at a low fee. In the concern of entrepreneurship and capital, 2018 Netflix roughly

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used $8 billion to create new and original 700 television shows to upsurge the global viewers
(Porter, 2011). In the context, Netflix attracts the new subscriber in the different parts of the
world to make it up on the top and stay competitive globally. Netflix uses the price of digital
content to broadcast unlike the Hulu/Amazon how they operate
Demand conditions
The demands on the quality levels rise when the industry and the intrinsic cost goes down.
Therefore, the waste is deducted allowing the general pool of value to be available to the
suppliers, buyers, and competitors to grow. (Porter, 2011) As more digital content in the
manufacture is shaped, a quality demand of the content is also made. There is a high demand for
the firm to produce high superiority pioneering products in the market. Netflix recognized the
situation as an offensive to produce quality “image and sound” game created by streamlining
plans. Their layout for a Non-Hd is $7.99 for a month, for a two- steam Hd tier is $13.99 per
month, and thus for July 2018. Currently, Netflix is analyzing on an Ultra strategy for content of
four-stream with high dynamic range (HDR), which delivers more effervescent color
reproduction with high distinction (Loebbecke, 2012). Netflix beats the competitors through
quality over the cost. Porter later found that Hulu and Amazon do not offer a similar quality
package or numerous streamlining tiers for the family unit, but the pricing is related to that of
Netflix. According to Porter (2011) Amazon only offers a basic HD plan with a limited amount
of $99 yearly with a digital content to select, while the Hulu possess a more significant portion of
digital content, however it lacks the original material, which makes customers wait for television
shows that are aired on a regular cable network (Loebbecke, 2012).

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Related and Supporting industry
Above and beyond the Hulu, HBO, and Amazon who are top competitors within the market
industry, other companies such as YouTube have begun to overflow in the industry, which is
creating the head-to-head gratified competition (Small, 2012.). YouTube is the largest platform
used by the users; a generated content was presented "YouTube Red" a platform which is based
on the subscription on YouTube. Customers subscribe on the content of their interest while the
YouTube operators who develop their content to be seen this platform they get salaried by the
YouTube-based viewers model. The iQiyi is considered as the next china’s Netflix where China's
government generates digital content. Netflix is not allowed to operate in China freely thus
making China the unexploited market du the restriction from the control agency of the republic.
(Porter, 2011) Netflix at one point it has supported industry, and traditional filming industry
where it’s has streamlined for many years. Netflix is now a multi-billion company with making
its content of the filming industry; however, it has seen its largest customers of independent film
civil rights. It's no longer needs these films protruding commemoration such as Sundance.
Netflix topped in 2017 by selling out over $36.5 million in obtaining the right of videoing
however in decided not to use any money of the films that debuted. Netflix Company has
decided to use the money and devote to generating its contents believing it will be more
profitable (Aagaard, 2013).
Netflix strategy, structure and rivalry
Porter categorizes rivalry as the most dangerous carter of competitive advantage of companies.
Netflix company has created a structure that has been used to capitalize on how it operates as the
unit and rivals to its competitors (Murschetz, 2016). Day to day companies directors have a
mean complete understand on the executives of the company because they have limited exposure

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to the activities. The Netflix board members attend the periodical and monthly senior conference
and work in perceiving dimensions only. Another strategy that company's uses are that it
communicates with the boards works through a channel of the short online memo, whereby the
management can ask a query and remark a document (Nagle, and Müller, 2017). This allows the
executives to generate text and feedback to create an existing material between the two units.
Porter says, "Company opens the lines for communication, which ensures smooth flow of
innovative plans and ideas within the corporation.” The members of the board, spend twice as
long to prepare the panel conference than their challengers, Netflix Company keeps their
employee well and pays the well, and also they don’t limit their expenses (Porter, 2011). Netflix
expects a high return on the farm duties and schemes that are essential to archive their goal; that's
why they require a very most elegant work frame from the employee. This motivates and allows
the workers to focus on the work and not think of something that is outside the organizational
culture. Netflix has had a rough time with its competitors since they didn’t have the funds to
maneuver within the own given employees (Murschetz, 2016). Companies like Hulu, HBO, and
Amazon, are learning and trying to contend with the principles of Netflix Company since it's
only the largest and integer one in the business. The best thing with Netflix is not to worry of
rival but make themselves a better company
Government and chances
The CEO of Netflix company, Reed Hasting in 2017, hired Monique Meche as the new head of
global public policy. Once serving she will oversee the comprehensive strategy on the Netflix
government operation affairs over the 190 countries. Being the president, she will be dealing
with more significant supervisory analysis as well as the United States. The European Union
lawmakers are devoted to pressurize the streaming of Netflix giants for the upwards of 20/30

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%of their convenient directory to European content made, and Netflix contrasted such quotes.
The region regulator is another group, which is also exploiting lacy taxes on the technology
giants like Netflix. These regulators are the part of the crackdown EU broader in the US for
business live out (Havu, 2014). The Netflix Company has struggled in the Asian countries
making it harder to obtain the right for programming, while in China specifically, Netflix
operation was blocked until they were brokered to make a deal with the subsidiary of Badu.
HBO, Hulu, and Amazon are also experiencing the same problem with Netflix Company thus
leading to a competitive advantage (Murschetz, 2016). Hiring Meche was enough power to move
and create a distance between the top competitors. Monique Meche rivals with her former
employer to develop policies that would navigate the future strategies with the knowledge of
Amazon Company but also understand the Netflix plans (Porter, 2011). As a deal with
international and domestic policies amazon struggles to come up with an answer to the problem,
down uprooted executive by the top competitor in the market

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