Netflix: Competitive Analysis and Strategic Recommendations

This report provides a comprehensive analysis of Netflix, the leading online streaming service. It begins with a study background, highlighting Netflix's position in the global market and its establishment in 1997. The report delves into Netflix's external environment using a PESTLE analysis, examining social, economic, political, technological, legal, and environmental factors influencing its operations. It then applies Porter's Five Forces framework to assess the competitive dynamics within the industry, evaluating supplier power, buyer power, product substitution, rivalry among competitors, and the threat of new entrants. The report further explores Netflix's business-level strategies, including cost leadership, and its strategic intent, focusing on internationalization and localization. The analysis concludes with a summary of key findings, emphasizing Netflix's potential for continued expansion and success in the competitive market. The report references several academic sources to support its analysis.

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Table of Contents
Study background............................................................................................................................1
Netflix’s External Environment.......................................................................................................1
Netflix – A Five Forces Analysis....................................................................................................3
Netflix – Business Level Analysis...................................................................................................3
Strategic Intent.................................................................................................................................4
Conclusion.......................................................................................................................................4
References........................................................................................................................................5
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Study background
In terms of online streaming, Netflix is the largest company on the global platform. Headquarter
of the company is in Los Gatos and it was established in 1997 (Netflix, 2018). The main aim of
the paper is to emphasize on the different environmental factors that impact the overall activities
of the company. It is important for the company to focus on the overall environmental factor so
that it could be easy to consider the strategies that will help in competing with the other
competitors present in market. The report will highlight, the different concepts such as external
environment will be done through pestle analysis and in the next part business level strategy and
strategic intent will be considered that will help in maintaining the brand image in the
competitive market area.
Source: (Samson, 2018).
Netflix’s External Environment
a) Social factor
In relation to the social factor, it is examined that in the market of UK, there are majority of the
younger viewers who are emphasizing on the online streaming services. The online streaming
service has been enhanced in the market and it has positively influence the routine activities of
the company. In the present era, there is more demand of the online streaming services as
compared to traditional medium. The eco consumerism culture has helped in influencing the
mindset of the youngsters towards the services offered by the company (DeLong, 2016).
b) Economic factor
In the market, the recession is increased and this has affected the overall spending of the
customers and also the services of the company are affected. The fees related to subscription
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have also impacted the customers with the low income bracket but Netflix has resolved the issue
of the customers by offering the online streaming services (Jenner, 2018).
c) Political factor
In the market, it has been observed that majority of the audience has been moved from the
traditional method towards the services offered by the company. There are political involvement
due to which the company does not emphasize on considering the implementing the different
strategies that are beneficial for the company. In the EU, the rule has been set in which it has
been stated that 30% of the content should relate to European. So, it can be stated that political
framework has affected the growth in the competitive market (Jenner, 2016).
d) Technological factor
The activities of the company are related to research and development and it is important to use
the updated technology as it helps in attracting customers. Netflix focused towards 4K streaming
which has helped in gaining popularity among the customers and also the new software has been
created named as “Hermes” that helps in translation of the series that are introduced on the sites
(McDonald and Smith-Rowsey, 2016).
e) Legal factor
The legal factor of the company emphasizes on the privacy statement in which it is important for
company to maintain privacy. According to the legal framework, the company focuses towards
providing the information to the partners so that relations can be maintained and also activities
can be conducted on the global platform (Lobato, 2019). So, it can be said that policies are
considered by the company to maintain the functioning on the global platform.
f) Environmental factor
The company has focused towards putting the serious efforts to push the third vendors such as
Amazon web services towards the services of the company. But the company also declined to
give comment on the Greenpeace findings (Rich, 2017). So, it is stated that the main emphasis of
the company is to use the renewable resources as it can help in attaining the set goals.
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Netflix – A Five Forces Analysis
1. Power of suppliers
The supplier power is low as it is analyzed that they have their own content that assist them in
controlling the functional operations. Standardized services are provided and also the switching
low is cost in comparison to the competitors. The customers of the company have the chance to
switch to the next suppliers if the services are not effective (Voigt, Buliga and Michl, 2017).
2. Power of buyers
In case of Netflix Company, the power of the buyers is low as the company focuses on
innovation and differentiation to boost the demand of services. The quality videos are provided
to the customers, so it creates difficulty for them to select the other medium and by this it can be
stated that the bargaining power is low.
3. Product substitution
The substitution rate is high as there are many companies who are also offering the similar
services. If the customers do not prefer the quality or the service of the company then they have a
wide choice to prefer the other substitutes available in the market.
4. Rivalry competitors
There are many competitors in the market such as Amazon Prime and also Hulu. These are the
competitors of the company and it can affect the overall sales and also the demand in relation to
the services offered in the market (Walker and Reeves, 2019).
5. Threat of new entrants
It is low as the huge is required to enter into the online streaming market. It would not be
possible for the companies to enter into the highly competitive market. Netflix has maintained a
large market share and due to this the other competitors has a major threat in context to the sales
and demand of the services in the market.
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Netflix – Business Level Analysis
There are various business level strategies considered by the company such as focus is given on
cost leadership. It is one of the best business strategy in which the services are offered at less
price as compared to competitors and also the quality provided is best. Low subscription is also
the service that is provided to the customers in which the customers have the wide choice of the
movies they prefer to watch. In last is focused low cost in which the main of the company in to
satisfy the customers with the low prices that also boost the demand of the services in relation to
the other competitors present in the market (Walker et al., 2017). So, it can be stated that these
are the strategies that are considered to maintain brand image.
Strategic Intent
The company has been dominating in the market and it has been done by maintaining the
strategic intent in the competitive market. The first strategic intent relates to internationalization
and localization strategy in which the services of the company are provided in more than 190
countries and also the company uses the cloud computing platform in relation to the Amazon
web services which is one of the cost effective medium. Operating in the large platform has
helped the company in boosting the preferences of the customers and also it has focused towards
targeting the audience on the global platform (Samson, 2018).
Conclusion
It can be concluded that Netflix is the online streaming company and by analyzing the marketing
environment it is observed that there is still a scope of expansion. The rules and regulations are
followed by the company which has boosted the positive image of the company in the mind of
the consumers. It is noticed that internationalization and localization strategy is considered that
assist in maintaining the large customer base in the market. So, the company has the wide scope
to boost the functional operations in the competitive market area.
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References
DeLong, C.A., 2016. Mollett v. Netflix, Inc. Information & Communications Technology
Law, 25(2), pp.190-200.
Jenner, M., 2016. Is this TVIV? On Netflix, TVIII and binge-watching. New media &
society, 18(2), pp.257-273.
Jenner, M., 2018. Netflix and the Re-invention of Television. Springer.
Lobato, R., 2019. Netflix Nations: The Geography of Digital Distribution. NYU Press.
McDonald, K. and Smith-Rowsey, D. eds., 2016. The Netflix effect: Technology and
entertainment in the 21st century. Bloomsbury Publishing USA. McDonald, K. and Smith-
Rowsey, D. eds., 2016. The Netflix effect: Technology and entertainment in the 21st century.
Bloomsbury Publishing USA.
Netflix., 2018. Netflix.[Online]. Available at: https://www.netflix.com/in/ [Accessed on 24 May,
2019].
Rich, B.R., 2017. When History Makes the Cut. FILM QUART, 70(3), pp.5-9.
Samson, R., 2018. The business strategy of Netflix.[Online]. Available at:
https://www.profolus.com/topics/the-business-strategy-of-netflix/ [Accessed on 24 May, 2019].
Sim, G., 2016. Individual Disruptors and Economic Gamechangers: Netflix, New Media, and
Neoliberalism. The Netflix Effect. Technology and Entertainment in the 21st Century, pp.185-
202.
Voigt, K.I., Buliga, O. and Michl, K., 2017. Entertainment on Demand: The Case of Netflix.
In Business Model Pioneers(pp. 127-141). Springer, Cham.
Walker, K. and Reeves, S., 2019. Netflix warning. British dental journal, 226(5), p.307.
Walker, R., Jeffery, M., So, L., Sriram, S., Nathanson, J., Ferreira, J., Feldmeier, J. and Merkley,
G., 2017. Netflix leading with data: The emergence of data-driven video. Kellogg School of
Management Cases, pp.1-19.
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