Strategic Management: A Case Study of Netflix Inc.

This report provides an in-depth analysis of the strategic management practices of Netflix Inc., focusing on its market position, competition, innovation, CSR, and governance. The report examines the industry structure, market positioning, and compares Netflix to its competitors. It also discusses the company's efforts in corporate social responsibility and its impact on the community and environment. The case study offers insights into the strategic utilization of business assets to achieve organizational objectives.

Strategic management

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Strategic management is the strategic utilisation of business assets to reach organisation
aims and objectives. It is an action plan to assure execution targets are met and the business
constants to develop. Strategic management offered entire direction by developing plans and
policies framed to attain objectives and the assigning assets to execute the plans (Makadok,
Burton and Barney, 2018). For the completion of this report, the selected company is Netflix Inc.
which is an American Technology and media services provider and production organisation.
This firm operate its business in different nation of the world. The document will consider
information about industry structure, market position, country markets and size. Further, it will
explain about the comparison to the competition in term of innovation and strategic innovation,
CSR, governance and ethics.
MAIN BODY
Netflix Inc. is an American technology and media services provider and manufacturing
establishment. This venture was incorporated in 1997 by Reed Hastings and Marc Randolph in
Scotts Valley, California, UK. The firm operate its business at global level excluding China,
Syria, North Chorea and Crimea. It offer steaming media products and in services film
production, film distribution and television production etc. There are approx 8,600 people are
employed by this firm and these employees make their contribution in running the business of
firm in better manner. This enterprise is one of the largest contributors to the cord cutting trend.
It is when customers for go traditional cable Network TV in favour of an alternative basically
streamlining facilities. This trend is assisting respective venture crush its competition for one
simple reason that the establishment is offering quality innovative content at a reasonable cost.
Netflix is accessible to customers by its app, smart TVs, game consoles, streaming media players
and Amazon’s Fire (Teece, 2019). The organisation has about 183 million paid subscribers
crosswise the world at the end of the first quarter of 2020. The firm is forecasting membership
growth will continue in the second quarter of 2020 with the firm predicting a maximisation of
25.6% for the quarter.
Industry structure is the sum of 4 market structures which is perfect competition,
monopolistic competition, and oligopoly and monopoly rivalry. In context of Netflix, it falls
under oligopoly and the reason for that is as respective firm is a paid online video service and
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there is only a few ventures like Amazon and YouTube in this market. They generally offer
identical service which users could subscribe to their service and they permit them to stream any
movies online. Along with this, the barrier to enter this market is much high as it require more
fund and also need to large amount of IT expects to help determining data base. Netflix analyse
their market positioning with the implementation if STP which is a marketing tool and is detailed
as segmentation, targeting and positioning (Amason and Ward, 2020). Segmentation refers to
activity of segregating the market on the basis of variables like demographic, psychographic,
geographic and behavioural etc. n context of respective firm; they concentrate on perfect
competition market and segment their market on basis of all types of variables which devises
them differ from their rivals. In targeting this, market is targeted on the base of components such
as market where there is less competition and provides range of target audiences, They target
their market of consumers of 18-40 age group of people and upper-middle class of income group
of individual. Positioning indicates to building an effective image in minds of consumers. In
relevance to selected firm, they positioned their brand as digital streamlining which can be
accessed anywhere and anytime.
Main capability of the firm is that it make it presences at international level which makes it
is easier for them to access large number of target audiences. Along with this, they is accessible
in multiple languages. Cause of their global based business, it is complex for them to
administrate and manage effective control. This influences the production level and palace of
work of respective enterprise, there is wider communication gap among each branch which also
slows down working or operation activities at large scale. In addition to it, services like Netflix is
accessible through high speed internet which is not available to each and crosswise all nations. In
reference to opportunities, the relevance organisation can include possibility to tie up with
telecom providers to provide bundled packages to subscribers. Netflix opportunities would
absolutely consider collaboration with local content producers for certain geographies to have
more loyal and diverse audiences (Okumus and et. al., 2019). Apart from this, government
regulations can generate threats for services like Netflix due to occurring and making change
within it. Threats from other streaming rivals like Amazon can also affect the respective venture.
When learning about competitors of Netflix is Amazon which stands to be one of the top
competitors of respective venture. Amazon prime video has about 150 million subscribers- a
number that’s been developing at a fast pace over the past two years as the firm has maximised
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production of its original content. The annual revenue of Amazon Prime in 2019 is $19.21 billion
whereas $20.2 billion. Apart from this Disney+ and HBO Max are other rivals of Netflix.
Reed Hastings and Marc Randolph have effectively set up organisation to be on high level
and is one of the main assets for enterprise. The leadership and business form of them have
leaded the firm to new heights. Also the manpower of enterprise is trained in such a manner that
they are offering progress and development to firm. The brand images which formed for Netflix
is offering it with rivalry benefits and the rivals identify in complex to copy the business format
in this manner (Sullivan, Thomas and Rosano, 2018). The recruitment in firm is paid concentrate
to support on critical competitive nature and team work skills. When considering the external
atmosphere of establishment, there are a number of components influencing organisation. The
respective firm operate its business in diverse nation so cause of which it is crucial for enterprise
to follow the rules and regulations of each nation in which it operate business. There can be
political interference which continues to develop in relevance for tech organisations globally.
Whereas this firm is mainly a streaming service venture, it is also a tech firm and thus also
subject to government scrutiny like the other tech firms. The economical factor like global
recession is also influencing establishment highly. The demographic composition of the global
population has modified a lot during recent years which affect the business of firm in term of
changing the taste and needs of the modern generation. Netflix competes with diverse businesses
including gaming, social media and other online streaming facilities. Due to the high competition
in these areas, the management of respective firm make development in its technology and
technical services to get over the competitive pressure.
When looking at competitive rivalry of enterprise in marketplace, the entity have number of
rivals but the high fixed cost and the rate of market development is effectively assisting the firm
to deal with it. When considering the threat of new entrants then it is low because to set up a
business in respective sector huge capital and resources are required. Bargaining power of buyers
for Netflix is always high as firm is effectively performing in diverse areas in order to generate
revenue to consumer and satisfy all their needs (Ruggiero, Martiskainen and Onkila, 2018).
Apart from this, the purchasing power of suppliers is low because there is range of providers in
market. Along with this, Amazon prime and other firms are also offer substitute services as
compare to Netflix so the threat of competition and substitute product is high.
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In order to provide back to community and society, there are several efforts put in by
Netflix. They offer jobs to local people and organise educational activities to children. At
Netflix, they are constantly tuning the execution of their servers, both to minimise energy utilise
and maximised speed and other performance metrics. Now they are focusing on saving
electricity with the support of their 200 percent of the bandwidth per watt (Ansoff and et. al.,
2018). The firm also appropriately fulfilling four pillars of social accountability under this they
are efficiently satisfying their economic, legal, ethical and philanthropic accountabilities
regarding the community. In order to fulfil legal form they are paying taxes and consider rules
and responsibilities that are framed by national authority. They also make fairness at workplace
by offering equal growth options and paying them fairly.
Netflix also make concentration on developing a company where ethical norms are provided
importance. In reference to maintain and manage risks, the enterprise are taking range of
approaches and these considers long term planning for development, independent operations in
firm, looking for product growth and innovation, analysing risk company wise, financing in to
new area of development etc. All these phases have appropriately assisted Netflix to administrate
risks occurring within the venture. However, even after such tools and tactics to administrate
threats organisation has to suffer some issues like Netflix have always been brand based on Reed
Hastings and Marc Randolph. The sustainability of firm is highly based on them. Apart from
this, establishment have also faced cash crisis that have brought attention regarding financial
department of firm. It is therefore crucial for organisation to now concentrate upon its reserves
that can be utilised at times of complexities.
Netflix created value in an innovative manner that at the time of launch, tackled an
underserved customer group that was isolated from the core business of the industry incumbent,
Blockbuster, not posing a threat. From the starting time of its business, Netflix make several
innovations like Subscriber model, Netflix queue, video recommendation algorithm, video
streaming, 1st Netflix original, Binge watching and Netflix & chill etc. These innovations make
an effective improvement in the growth and success of respective venture (Schilling and
Shankar, 2019). With the implementation of machine learning, artificial intelligence and heaps of
creativity, Netflix innovation with algorithm has personalised every viewing experience. As
Amazon prime is one of the closest competitor of Netflix which make innovation in its
membership advanced features and a Twitch streaming video game etc.
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Along with Netflix also make an effective contribution in society and environment
development though its CSR activities. In some nations they are working to be as sustainable as
they can in their operations by making their renewable energy commitments. They are learning
into industry wide practices in productions as members of the Producers Guild of American
Green Production and Albert in the UK. When their workers, production teams and the artists
they work travel on behalf of Netflix that has an impact on the atmosphere (Zollo, Minoja and
Coda, 2018). For 2019, they offset the green house gas emissions related by financing in
emission reduction projects. In Netflix, the management of firm consider equality and fairness
related policies as like as it competitors like Amazon prime so that they can make fairness and
treated employees equally. In Amazon prime, the company is heavily investing in wind and solar
to reach 80% renewable energy across all business operations by 2024.
CONCLUSION
This has been summarised form the mentioned information that strategic management is an
effective process of managing business and its operation and activities. By considering effective
tools and strategies of management like STP and Porter five force analyses, the firm can
determine about its market position and competition in respective marketplace. PEST and SWOT
analysis is crucial to determine the impact of external and internal factors over the business
activities of enterprise. CSR activities demonstrate the accountability of company regarding
community and environment as each firm establish in a social atmosphere.
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REFERENCES
Books and Journals
Makadok, R., Burton, R. and Barney, J., 2018. A practical guide for making theory contributions
in strategic management. Strategic Management Journal, 39(6), pp.1530-1545.
Teece, D.J., 2019. A capability theory of the firm: an economics and (strategic) management
perspective. New Zealand Economic Papers, 53(1), pp.1-43.
Amason, A.C. and Ward, A., 2020. Strategic management: From theory to practice. Routledge.
Okumus, F. and et. al., 2019. Strategic management for hospitality and tourism. Routledge.
Sullivan, K., Thomas, S. and Rosano, M., 2018. Using industrial ecology and strategic
management concepts to pursue the Sustainable Development Goals. Journal of
Cleaner Production, 174, pp.237-246.
Ruggiero, S., Martiskainen, M. and Onkila, T., 2018. Understanding the scaling-up of
community energy niches through strategic niche management theory: Insights from
Finland. Journal of cleaner production, 170, pp.581-590.
Ansoff, H.I. and et. al., 2018. Implanting strategic management. Springer.
Schilling, M.A. and Shankar, R., 2019. Strategic management of technological innovation.
McGraw-Hill Education.
Zollo, M., Minoja, M. and Coda, V., 2018. Toward an integrated theory of strategy. Strategic
Management Journal, 39(6), pp.1753-1778.
Teece, D.J., 2018. Dynamic capabilities as (workable) management systems theory. Journal of
Management & Organization, 24(3), pp.359-368.
Heath, R.L., 2018. Issues management. The International Encyclopedia of Strategic
Communication, pp.1-15.
Online
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<https://money.cnn.com/quote/profile/profile.html?symb=NFLX#:~:text=Netflix%2C%20Inc.
%20is%20a%20streaming,and%20sending%20DVDs%20by%20mail.&text=The%20company
%20was%20founded%20by,headquartered%20in%20Los%20Gatos%2C%20CA.>.
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https://www.investopedia.com/articles/markets/051215/who-are-netflixs-main-competitors-
nflx.asp>.
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