Business Project Management Assessment 2022

Running head: BUSINESS PROJECT MANAGEMENT
Business Project Management
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Table of Contents
Netflix External Analysis:..........................................................................................................2
Dominant Economic Feature Analysis:.....................................................................................2
Buyers need and price sensitivity:..............................................................................................3
Porters five forces analysis:.......................................................................................................3
Driving Force of Change Analysis:............................................................................................4
Key success factors:...................................................................................................................5
Comprehensive positioning Plot:...............................................................................................5
Assessment of Industry:.............................................................................................................5
Company’s Internal Analysis:....................................................................................................6
Current strategy:.........................................................................................................................6
Value Chain Analysis:................................................................................................................7
SWOT Analysis:........................................................................................................................7
Identification of strategic issue:.................................................................................................8
Report to CEO:...........................................................................................................................9
Introduction:...........................................................................................................................9
Data Analysis:............................................................................................................................9
Competitive Advantage (Strength):.......................................................................................9
Weakness:..............................................................................................................................9
Opportunities:.........................................................................................................................9
Threats:.................................................................................................................................10

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Three Strategic Alternatives:....................................................................................................10
Recommendations:...................................................................................................................10
References:...............................................................................................................................11

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Netflix Strategy
Industry: Production Company
Netflix External Analysis:
PESTLE ANALYSIS:
SOCIAL:
a. It is very big brand impression and takes pride in complying with the ethical business
standards and morality.
b. Netflix considers wider look at entire population such as the growth rate, distribution
and age to obtain better idea of consumer spending power (Jenner 2016).
Technological:
a. Making improvement in compression techniques would help in improving the overall
streaming quality.
b. Focuses on not only improving streaming quality but also facilitates easy payment and
delivery procedure.
Legal:
a. Netflix needs to fight against the GEO blocks and copyright infringement rights.
b. Piracy of video is another reason for loss of streaming and cinema industry should
punish the offenders severely (Rothaermel 2017).
Dominant Economic Feature Analysis:
Market Size and Growth Rate:
The Macro environment factors particularly the inflation rate, saving rate, rate of
interest, aggregate demand and aggregate investment are dominant market forces in

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production industry (Matrix 2014). Netflix makes use of country’s economic factor namely
the growth rate and industry’s economic indicators such as CATV system industry growth
rate.
Technology/R&D
Technology has been disrupting numerous industries all through the world. Over the
last five years the industry has witnessed transformation and hardly provides chance to
established players to cope with the changes. Furthermore, the new rule of Thumbs up or
down rating system would help in enhancing the personalization, making the front screen on
the Netflix highly relevant for the users.
Buyers need and price sensitivity:
The subscribers of Netflix have shown increasing sensitivity towards price rise. The
recent reaction of Netflix subscribers to the increase in price varies relative to degree even
though a small variation in price may result in significant implications (Ryan 2013). A price
rise of $1 per month may force the subscribers to either downgrade to lower tier or may
choose to cancel Netflix entirely.
Porters five forces analysis:
Threat of new entrant: Strong
The new entrant in CATV introduces new innovation and places pressure on Netflix
through lower pricing strategy, cost reduction and provides new value proposition. Netflix is
required to manage all these challenges to protect its competitive edge.
Bargaining power of suppliers: Moderate to Strong

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Suppliers operating in dominant position can reduce the margin of Netflix which it
can earn in the market. The overall bargaining power of supplier can reduce the overall
profitability of CATV systems (Wayne 2018).
Bargaining power of buyers: Moderate to Strong
Buyers wants the best by offering the minimum amount of price and this places
pressure on Netflix profitability in long run. The smaller and the powerful is the customer
base of Netflix the greater is their bargaining power.
Threat of substitute products: weak to moderate
When the new product meets the identical needs in the different ways the profitability
of the industry suffers (Allen, Feils and Disbrow 2014). The threats of substitute product is
high given it offers value proposition which is very much uniquely different from the
offerings in the industry.
Rivalry among existing competitors: Weak
Netflix presently operates in a CATV system industry which is very competitive. The
competition however does not create any impact on the long-term profitability of the
business.
Driving Force of Change Analysis:
Globalization: Netflix selected market is simply based on the perceived differences, it first
selects those that are less differentiated through its process and later learned to adequately
expand its market and improve its capabilities beyond US (Kovacs and Jansen 2015).
Globalization allowed Netflix to increase its subscription increasingly to households were
consumers are interested in watching movies on their big screens.

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Technological change: With the change in technologies Netflix provides wide range of
comprehensive selection of movie DVDs. The company has spent $120.3 million on
acquiring new movie DVDs and TV content streaming (Park 2017). It has also developed
software to give one-day business delivery to 95% subscribers.
New Market Entries: Netflix has expanded in a rapid manner by using the expertise of
different generation to help in ascertaining the content preferences, marketing tactics and
company-wide organization. It has added more languages and has also expanded its support
for devices and operations.
Key success factors:
The key Success factors of Netflix are as follows;
a. Provides customers with unlimited options
b. Investing in the original content
c. Netflix pioneered binge watching
Comprehensive positioning Plot:
Netflix has been successful in clearly demonstrating that it has the ability of changing
the industry and becoming a leader. Netflix has went into partnership with SKY and BBC in
Europe and simultaneously produces content in nations like India and Denmark. Developing
distinctive brand name is one its competitive positioning strategy that are consistent with
needs of clients. This strategy has been helpful in keeping its competitors and new market
entrant at bay.
Assessment of Industry:
The industry of video streaming is growing and it is anticipated to grow around USD
82 billion by the year 2023 based on the compounded annual growth rate of 17% between

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2017 and 2023. As the prospect of growth is very high, Netflix is yet exploring some market
as the industry of video streaming is becoming very competitive (Tryon 2015). Companies
such as amazon, HBO have also entered into the market.
Company’s Internal Analysis:
Key Ratios 2015 2014 2013 2012 2011 Trend
Profitability
Return on Assets
(EBITDA/Total Assets) 0.013906 0.049609 0.031607 0.007682 0.117139 -93%
Return on Equity
(EBITDA/ Shareholder’s Equity and
Retained Earnings) 0.044824 0.130508 0.249362 0.025727 0.337345 -92%
Efficiency
Asset Turnover
(Revenues/Total Assets) 0.664471 0.781634 0.808224 0.909622 1.04411 -13%
Return on Capital Employed
(EBITDA/Shareholder's Equity) 0.063814 0.188065 1.280868 0.040931 0.559297 -93%
Leverage
Debt to Equity 1.066535 0.484468 3.743608 0.268574 0.311134 -14%
Liquidity
Current Ratio
(Current assets/Current liabilities) 1.538926 1.479625 1.419905 1.337047 1.49451 -11%
Other Financial Ratios
Inventory as a % of Current Assets
Gross Margins as a % of Revenue 32% 32% 29% 27% 36% -25%
Net Margins as a % of Revenue 2% 5% 3% 0.48% 7% -93%
The profitability ratios show that the Return on Asset has been on the declining trend
while the return on equity has represented a strong trend with the ratio growing as high as
0.24 in 2013. This represents that Netflix is making an effective use of the available
shareholder’s fund. The debt position has however remained high in the last five years
(Saravanakumar and SuganthaLakshmi 2012). The debt of Netflix is not covered by
operating cash flow and there is a high amount of non-cash earnings. The earning is however
forecasted to grow by 32.16% each year.

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Current strategy:
Financial objective: Netflix aims to be a cost leadership by minimizing its cost and
frequently reducing its selling price.
Strategic objective: The product development is one of the intensive growth strategy which
supports the Netflix expansion and development. The strategic objective of Netflix is to
develop and sell new products in the online market.
Business strategy: The business strategy of Netflix is market penetration in order to expand
its operations in the multinational market (Park 2017). The objective is to grow revenues and
market share is very much dependent on how it maintains is competitive advantage.
Value Chain Analysis:
Competitive disadvantage: High reliance on the third-party entertainment content makers.
Competitive parity or Equality: Innovativeness and information technology assets.
Temporary competitive advantage: Support the licensing from content creators and holders
of copyright.
VRIN Core Competencies: Higher equity of Netflix brand. Larger platform of content
producers and higher capacity of actual content creation.
SWOT Analysis:
Strength
a. It has more than 130 million users
on more than 190 nations.
b. No commercials
Weakness
a. Cost involve in adding up the
content is high and not sustainable
for long period.
b. No Unique technology
Opportunities Threats

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a. Can expand new markets such as
China.
b. Netflix can leverage user base to
obtain partnership with local content
provider.
a. High amount of debt piling
b. High cost of content.
Identification of strategic issue:
The SWOT analysis conducted above shows where Netflix presently stands and the
threats faced by the company in the present era. One strategic issue has been identified for
Netflix which is given below;
a. Netflix must enter into a new geographical location by simply partnering with the
local cable providers and streaming their content along with the international content
in numerous languages. In this manner, the company will be able to produce more
profits and subscribers.

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Report to CEO:
Introduction:
The growth and success of the Netflix is attributable to the strength of business and
competitive advantages which allows international expansion and market dominance. Netflix
continues to grow and exploit the available opportunities even though it faces adverse effects
from its weakness and threats in the market.
Data Analysis:
Competitive Advantage (Strength):
Netflix presently has very easy time for bargain its content from several other
countries. Netflix has huge exposure from promising companies and regularly picks up
television series that are cancelled. Netflix is converging more foreign shows and has went on
to renew series numerous times.
Weakness:
Despite Netflix is branching out several new original content the cost involved in
these shows is very high. Furthermore, Netflix does not owns right of their shows, as a results
when rights expire the shows disappear. Netflix is also increasing its price and consumer may
switch or cancel their subscription.
Opportunities:
Despite the availability of Netflix in numerous countries, it has not yet entered in to
china. The company is facing difficulties with its licensing. It is partnering with different
nations across the globe and are also working with BBC to obtain knowledge regarding
customer base.

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Threats:
Netflix faces competition from Amazon, Hulu, HBO and YouTube. These platforms
provides their own program and the price is not as expensive as Netflix.
Three Strategic Alternatives:
a. Netflix must connect with IMBD and Rotten Tomatoes to provide wide variety of
ratings and information to users.
b. Netflix should improve its application and website for more customer friendly
interface.
c. Netflix must strengthen its security and should provide generous subscription
packages.
Recommendations:
On a conclusive note, it is recommended that more new geographical boundaries
should be explored by Netflix as this is helpful in partnering with the local cable providers
and streaming their local contain together with international content in numerous languages.
This will allow Netflix to increase its share of profit and subscribers.

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References:
Allen, G., Feils, D. and Disbrow, H., 2014. The rise and fall of Netflix: what happened and
where will it go from here?. Journal of the International Academy for Case Studies, 20(1),
pp.135-143.
Jenner, M., 2016. Is this TVIV? On Netflix, TVIII and binge-watching. New media &
society, 18(2), pp.257-273.
Kovacs, G. and Jansen, J., 2015. An Analysis of Strategies by Netflix in the Television
Market (Doctoral dissertation, Tesis doctoral. Aarhus University).
Matrix, S., 2014. The Netflix effect: Teens, binge watching, and on-demand digital media
trends. Jeunesse: Young People, Texts, Cultures, 6(1), pp.119-138.
Park, E.A., 2017. Why the networks can’t beat Netflix: Speculations on the US OTT services
market. Digital Policy, Regulation and Governance, 19(1), pp.21-39.
Rothaermel, F.T., 2017. Strategic management. New York, NY: McGraw-Hill Education.
Ryan, L., 2013. Leading change through creative destruction: how Netflix’s self-destruction
strategy created its own market. International Journal of Business Innovation and
Research, 7(4), pp.429-445.
Saravanakumar, M. and SuganthaLakshmi, T., 2012. Social media marketing. Life Science
Journal, 9(4), pp.4444-4451.
Tryon, C., 2015. TV got better: Netflix’s original programming strategies and the on-demand
television transition. Media Industries Journal, 2(2).
Wayne, M.L., 2018. Netflix, Amazon, and branded television content in subscription video
on-demand portals. Media, Culture & Society, 40(5), pp.725-741.

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