Strategy, Enterprise, and Innovation: Netflix Case Study Report

This report provides a strategic analysis of Netflix, examining its internal resources and capabilities through SWOT and Value Chain analyses, highlighting its strengths in brand value and customer experience, while acknowledging weaknesses such as high operating costs and debt. The report evaluates the impact of external environmental factors, using PESTLE analysis to assess political, economic, social, technological, environmental, and legal influences, particularly in the UK market. It also assesses the impact of competitive forces on Netflix's entrepreneurial activities and profitability using Porter's Five Forces model, focusing on bargaining power of suppliers and buyers, threats of substitutes and new entrants, and rivalry among existing competitors, concluding with recommendations for maintaining its competitive edge in the media industry. The report emphasizes the need for Netflix to adapt to changing market dynamics and maintain its position in the global market.

Strategy Enterprise
and Innovation

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Critically analyse the internal resources and capabilities to give organisation competitive
advantages...................................................................................................................................1
2. Evaluate the impact of external environment factors on the entrepreneurial activities
of the firm...................................................................................................................................4
3. Evaluate the impact of the competitive forces on entrepreneurial activities and
profitability within the industry.................................................................................................5
CONCLUSION................................................................................................................................6
REFERENCE ..................................................................................................................................8

INTRODUCTION
The Enterprise Strategy is term as corporate strategy which defines widest form of
strategy within business. Enterprise comprises to deals with having issues that creating overall
impact. This form of practice developed at high level within a firm and having authority of
decision making is enhanced by managers or Board of Director of particular company.
Innovation brings uniqueness, creation along with development and implementation towards niw
ideas or vision that ongoing process (Lainez and et. al., 2018). Through this concept it improves
efficiency and effectiveness to gaining competitive advantages.
For this report, the organisation known as Netflix incorporated, it is American technology
and media service provider and production of media company headquarter is operated from Los
Gatos, Gatos, California. It was founded in 1997 and serving the areas worldwide along with
founder are Reed Hastings and Marc Randolph (Altamony and et. al., 2016). The revenue is
generates as per $20.156 billion with number of employees are 8,600 international served their
contribution. In this report, topci are covers critical analyse of internal environment capabilities,
key driver of change in external environment along with evaluate their impact on organisation
basis. Impact of main competitive forces which is influence in entrepreneurial activities towards
organisation increase profitability.
MAIN BODY.
1. Critically analyse the internal resources and capabilities to give organisation competitive
advantages.
Internal Environment: It defines about the culture, members, events and factor within
organisation having competency to influence decisions of organisation. Some of tools or
techniques helps to individual for identify their internal capabilities (Borshalina, 2019). As for
Netflix internal competency can scrutinize through Swot analysis and Value chain assessment
where it helps to gain more competitive advantages.
Swot analysis: It is strategic planning techniques which is assort to help individual for assessing
particular firm's strength, weakness, opportunities and threats which related towards business
competition or project planning.
Swot analysis of Netflix:
Strength Weakness
1

 Netflix has becomes more influential
brand for online streaming context
which establish in worldwide apart firm
United States.
 It has increase brand value within short
period of time.
 Netflix is one of important is string
with brand equity where it has build
over time. It is most trusted brand in
internet television factor, where they
need to realise customer expectation as
well as their experience to enter high
popularity.
 They have high promotional channels
for advertising content in digital
platform. The main reason for attaining
more popularity for Netflix as they
have customer friendly relationship.
Their technology is easy to use and
technology advanced user interference.
 Netflix started expand their venture
globally where they reach up to more
than 190 countries from 139 million
user as for shows and movies.
 The content is produced by Netflix and
provides a competitive advantages,
where Netflix need to spend more
operating costing for greater extend
where each year it raising.
 Netflix does not having any ownership
for original content where it causes
various source of negative implication
arises towards company productivity
(Chuang and Lin., 2017).
 Increase in debt where Netflix having
many diversified content that enhance
debts factor more interigate. Through
this influence brand value gets weaker.
Opportunities Threats
 For Customer base, Netflix can enter in
many countries along with expanded its
OTT service to their subscriber and
others (Cui and et. al., 2017).
 There many OTT competitors such as
Amazon prime which also provide
digital services and one of top high
influencer against Netflix.
2

 Netflix having more advantages on
spread out from its content licensing by
increasing with various other
distributors.
 By government regulation of rules for
Netflix service. There are many
challenges and threats to restricted
towards Netflix digital service as in
many countries.
 Digital Piracy threats for brand, and
through this people utilise free
television shows or web series from
piracy service and not engage with
subscription (Ezzi and Jarboui., 2016).
Value Chain Analysis: In this process, a set of activities which firms operating from a
specific industry that enables to perform in order to deliver a valuable product for market. It also
helps to identifies its primary to support the activities that added to value its final product with
detailed analyse to reducing cost and enhance more differentiation or comparison with others. Inbound logistics: This factor determines about goods which is obtained from the
organisation supplier and assort till end of production (Febrianda and Tokuda., 2017). For
Netflix, they are OTT digital service provider where they provide digital base content
which increase marketing bond relations. Operations: It comprises about raw material and other type of goods which manufacture
into finished product. By adding value to the product at the stages where it moves
through alignment of production. Product of Netflix as their subscription channels
towards customer and involvement for maintaining websites and portals to effectively
streaming by digital platform. Marketing and Sales: Both concept work differently but having common target to
provide product and services as more customer where marketing helps to measure that
product is targeting right customer and sales is to support for increasing revenue.
Marketing team of Netflix provides one month free trails to customer. Outbound Logistics: It refers that if product gets manufactured and prepared for
distributing in competitive market and distribution centres such as whole seller, retailer
3

and customer (Garud, Gehman and Tharchen, 2018). As per perspective of Netflix, their
content team assures that service should optimise in proper and effective manner.
 Services: The type of service which operates through sales training, guarantee and
warranties related with product and services. It involves to maintain better customer
relationship with providing title and websites functionally.
2. Evaluate the impact of external environment factors on the entrepreneurial activities
of the firm.
External environment: It is designed to reflects about overall outside factor which
influence which having impact on business related operation. Many factor and method are
include in external environment such as Pestle Analysis.
Pestle Analysis: According to this external tools helps to scanning the macro environment of
components of strategic management which create an impact on organisation's performance
(Verbano and Crema., 2016). As for Netflix, their external environment is assess for mapping
more opportunities and challenges in United kingdom. Political: This factor determines about overall norms and regulation which is implement
by corporate governance. As the political situation of United Kingdom is stable as per
factors which consider corporate taxation, foreign trade policy and others. For Netflix
they streams digital services where they have some low opportunities from United
Kingdom as foreign trade policy (Wahab and Jabar., 2017). But there is negative
implication from Brexit market where it not allows to trade in European Union that can
reduces growth. Economical: In this external aspect, it provides information and data relates with
particular country economic performance in terms of GDP growth rate, employment rate,
inflation, recessions which create influence for organisation. In perspective of Netflix,
they belong from United States where dollar value is weak than pounds, but UK people
are follows the trends which it can increase subscription rate for Netflix. Social: According to this factor, it comprises about population related information of
specific region. As in United Kingdom having wide scale of population size. Even
companies can approach people through demographic factor such as age, gender, caste
and colour (Wonglimpiyarat., 2016). In Netflix many people are connected as employees
4

and subscribers where they are satisfied and they can selected their customer on the basis
of preferences. Technology: Through this factor United kingdom is having world's leading research and
development of institutes. There is huge scope of artificial technology as resources in
United kingdom where companies utilise this advantages for better scope and
opportunities. Similarly, as Netflix is having digital base OTT service platform where
they can implies for different trait of technology advancement that generates more
benefits. Environment: From every industrial or business organisation having serious
environmental where economy can not able to move forward with absence of
industrialisation (Zhuravel and et. al., 2017). Issues which create more barrier like
pollution related with environment where Netflix can use the wind power to offset energy
for online cloud storage is comprising of new initiative which reduces carbon footprints.
 Legal: Many companies are operates from their business from UK where they have to
follow the employment act in different situation based such as Minimum wages act,
maternity act and paternity leave. For Netflix, they need to face challenge from copyright
segments. Streaming on multiple devices can mapped as user from sharing their
credentials by reducing cable bills.
Evaluation:
From above Pestle analysation for UK in context of Netflix, where the more positive
factor of external environment can implies from social, technological and economical. As Netflix
is United States based company where prices of dollar is less than pounds and different
advancement of resources can helps to company for promotions and increase infrastructure. High
population can be advantage factor which it increase the scope of subscribers. The negative
implication from political where Brexit market reduces the growth by not trading in European
countries.
3. Evaluate the impact of the competitive forces on entrepreneurial activities and
profitability within the industry.
Porter's five forces model- It is a framework used to analyse and identify the
competitive rivals, potential new market entrants, bargaining power of suppliers, buyers and
substitute products. These factors directly affect its ability to serve its customers and make a
5

profit. Netflix is an American technology which provides media services and it is headquartered
in Los Gatos, California.
This model defines impact of competitive forces on company. It is used to understand
whether new products or services are potentially profitable. Netflix can applies this model when
it is entering into a new market or starting a new business. Each force will be further elaborated
on below : Bargaining power of suppliers: It defines the bargaining power of suppliers in an
industry how it affects external environment by increase in prices. Thus it will make an
direct impact on profitability of firm. In television industry the suppliers bargaining
power is moderate as there are numerous suppliers in the market. Henceforth, Netflix can
build supply chain from suppliers to avoid the fall in the profitability. Bargaining power of Buyers : It refers to the pressure consumer can put on business for
better customer services or lower prices. Netflix can build a large customer base which
will decrease bargaining power of buyers. It can introduce innovative products in the
market as customers are always seeking innovation to limit their powers. Threat of substitutes :It means when competitor offers attractive and innovate products
at a lower cost to customers the threat of substitute is high in the digital industry if the
rivalry organization provides services at lower prices. Netflix should understand the core
needs of customers regarding with services and products. They must provide better
services to the consumers for long term sustain. Rivalry among the existing competitors: It examines number of competitors exist in the
marketplace. Thus, it defines intensity of rivalry will increase as there are numerous
competitors. The existing competitors is high in television industry where Netflix can
avoid the rivalry by collaborating with the competitors which will help to grow their
customer base to compete in effective way.
 Threats of new entrants : It defines threat new competitors will face by existing
challengers in the market. Netflix should build effective barriers to survive into digital
market. It can bring innovation in the product line to attract new customers.
CONCLUSION
As per above report of Strategy enterprise and innovation come as summarisation about
describes considering Swot and value chain analysis to measure internal strength and weakness
6

as well as internal capabilities and differentiate within product and service from others that helps
to gain competitive advantages. The external environment by using Pestle analysis to measure
United kingdom digital market where political and legal factor can create implication for
organisation performance in terms of growth. Economic, Technological and Social can be
positive factor such as wide of resources, people and trending of digital product and services
counted for more benefits. Porter Five forces helps to scrutinize and evaluate information from
particular industry to measuring competitors, number of buyers and supplier are presented in
current market. This overall practises helps to gain profit and competitive advantages.
7

REFERENCE
Books and Journals
Lainez and et. al., 2018. Spanish strategy on bioeconomy: Towards a knowledge based
sustainable innovation. New biotechnology. 40. pp.87-95.
Altamony and et. al., 2016. The relationship between change management strategy and
successful enterprise resource planning (ERP) implementations: A theoretical
perspective. International Journal of Business Management and Economic Research.
7(4). pp.690-703.
Borshalina, T., 2019. Innovation Strategy for Creative Industry of Indonesian Batik Trusmi
Micro, Small & Medium Enterprise (MSME). Global Business & Management Research.
11(1).
Chuang, S.H. and Lin, H.N., 2017. Performance implications of information-value offering in e-
service systems: Examining the resource-based perspective and innovation strategy. The
Journal of Strategic Information Systems. 26(1). pp.22-38.
Cui and et. al., 2017. Strategy, resource orchestration and e-commerce enabled social innovation
in Rural China. The Journal of Strategic Information Systems. 26(1). pp.3-21.
Ezzi, F. and Jarboui, A., 2016. Does innovation strategy affect financial, social and
environmental performance?. Journal of Economics, Finance and Administrative
Science. 21(40). pp.14-24.
Febrianda, R. and Tokuda, H., 2017. Strategy and innovation of mushroom business in rural area
Indonesia: case study of a developed mushroom enterprise from Cianjur district, West
Java, Indonesia. Int'l J. Soc. Sci. Stud.. 5. p.21.
Garud, R., Gehman, J. and Tharchen, T., 2018. Performativity as ongoing journeys: Implications
for strategy, entrepreneurship, and innovation. Long Range Planning. 51(3). pp.500-509.
Hnatenko and et. al., 2020. An approach to innovation potential evaluation as a means of
enterprise management improving. International Journal of Supply and Operations
Management. 7(1). pp.112-118.
Miles, S.J. and Van Clieaf, M., 2017. Strategic fit: Key to growing enterprise value through
organizational capital. Business Horizons. 60(1). pp.55-65.
8

Prokhorova and et. al., 2016. Innovation performance and its influence on enterprise economic
efficiency in the market. International Journal of Economics and Financial Issues.
6(8S).
Su, Y.S., Zheng, Z.X. and Chen, J., 2018. A multi-platform collaboration innovation ecosystem:
the case of China. Management Decision.
Valaei, N., Rezaei, S. and Emami, M., 2016. Impact of exploitative learning strategy on
Malaysian SMEs' creativity and innovation capabilities. International Journal of
Management and Enterprise Development. 15(4). pp.328-354.
Verbano, C. and Crema, M., 2016. Linking technology innovation strategy, intellectual capital
and technology innovation performance in manufacturing SMEs. Technology analysis &
strategic management. 28(5). pp.524-540.
Wahab, N.A.A. and Jabar, J., 2017. Organizational Innovation Strategy Towards Small Medium
Enterprise Performance in Malaysia. International Journal of Arts Humanities and Social
Sciences. 2(7). pp.1-9.
Wonglimpiyarat, J., 2016. The innovation incubator, university business incubator and
technology transfer strategy: The case of Thailand. Technology in Society. 46. pp.18-27.
Zhuravel and et. al., 2017. Forming the strategy of financial development for highly
technological enterprise. Journal of Advanced Research in Law and Economics, 8(6 (28)
pp.2041-2053.
9