Socio-Economic & Legal Environment Analysis: A Netflix Perspective

This report provides a comprehensive analysis of Netflix's business environment, focusing on the socio-economic and legal factors that impact its operations. It begins with an executive summary and an introduction that outlines the company's overview, history, and business model, including a Business Model Canvas. The report then delves into a literature review, examining macroeconomic dimensions and drivers of change relevant to Netflix's industry. A key component is a PESTEL analysis, evaluating the political, economic, social, technological, environmental, and legal factors influencing the company. Finally, the report concludes with recommendations and a discussion of the long-term implications of these factors on Netflix's strategic decisions and overall success. The analysis covers market trends, subscription models, and the competitive landscape within the media and entertainment industry.

Socio-Economic & Legal
Environment

Contents
QUESTION 1..................................................................................................................................1
Executive summary.....................................................................................................................1
QUESTION 2..................................................................................................................................1
INTRODUCTION...........................................................................................................................1
Overview of the company............................................................................................................1
History of the organisation..........................................................................................................1
Understanding business model....................................................................................................2
Current business model of Netflix...............................................................................................2
QUESTION 3..................................................................................................................................4
LITERATURE REVIEW................................................................................................................4
QUESTION 4..................................................................................................................................7
IMPACT OF LEGAL POLITICAL FACTORS.............................................................................7
1. Political factors influencing Netflix.........................................................................................8
2. Long term implications............................................................................................................9
3. Legal framework....................................................................................................................10
QUESTION 5................................................................................................................................12
Conclusion and Recommendations............................................................................................12
REFERENCES..............................................................................................................................13

QUESTION 1
Executive summary
There are several socio-economic aspects that can influence the business operations of an
establishment. Thus, it is crucial for the administration of the company to improve plan of
actions that are essential for its all development. Also, there can also be numerous political
aspects which can affect the business activities and operations as well as position of the company
in the marketplace. These can consider instability of the national authority and several rules as
well as laws. The written assessment is based in Netflix which is a entertainment and mass media
organisation and visions and mission of the company is to offer effective and quality services
and products to its target audiences so that their expected demands and requirements can be
fulfilled and meet in more developed manner. Netflix is a subscription based business model
making money with three simple plans such as basic, standard and premium, offering access to
stream series, movies and shows. Within the second question, the report will explain about
overview and history of Netflix as well as business model and trends which affecting its
business. Further, the third question is n form of literature review which covers information
regarding macroeconomic dimensions and drivers of change. Moreover, in next question 4 and 5
are covered data about PESTEL analysis of Netflix and conclusion & recommendations
respectively.
QUESTION 2
INTRODUCTION
Overview of the company
Netflix is an American over the top content platform and manufacturing organisation. This
business firm was incorporated in 1997 and is headquartered in Los Gatos, California
(Baboshkina, Savina and Morozov, 2018). This company was established by Reed Hastings and
Marc Randolph in Scotts Valley, California. The main business of the establishment is a
subscription based streaming services providing online streaming from a library of films and
television series, considering those produced in-house. In current time, the respective firm
steams movies and has more than approx 151 million paid subscribers in more than 190 nations
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across the globe. It provides a range of TV series, documentaries and feature films crosswise a
variety of genres and languages considering original productions.
History of the organisation
Netflix Inc. basically known as Netflix which is media streaming and video rental
organisation established in 1997 by American entrepreneurs Reed Hastings and Marc Randolph.
It is also considered in the designing of original programming (Song and et. al., 2018). In 1999,
the respective venture starts offering an online subscription facility with the help of internet.
Target audiences and subscribers select movie and television titles from Netflix’s web sites, the
show were then mailed to consumers in the form of DVDs, along with prepaid return envelops,
from one of more than 100 distribution centres. Even if consumer, basically rented for a flat
monthly fee because they wished for many movies per month and the quantity of DVDs in their
control at any one time was restricted as per to their payment plans. In 2006, the particular firm
launched the $1 million Netflix Prize contest to see if anyone could develop through 10 percent
its suggested system, an algorithm for forecasting an individual’s movie preferences supported to
past rental information.
In2007, Netflix started providing subscribers the option to stream some of its movies and
television demonstrates instantly to their homes by the Internet. For most subscription plans, the
streaming facilities were unlimited. The particular organisation subsequently partnered with
producers of different customer electronics commodities, considering video game console and
Blue ray Disc players, in order to assist its videos to be rivulet over an Internet connection to
those devices (Okewu and et. al., 2018). In 2010 the specific venture launched a streamlining
only plan which provided unlimited streaming facility but no DVDs Netflix then expanded
beyond the US through providing the streaming only plan in Canada in that year as well as in
Latin America and Caribbean i 2011 and in UK, Ireland and Scandinavia in 2012. In the starting
of 2013, with the episodic drama series House of cards, the establishment provided video content
manufactured particularly for its streaming facilities and in the end of 2018, it offered
approximately 1000 original titles. Its notable series considered Unbreakable Kimmy Schmidt,
Stranger Things, Narcos and The Crown. It also produced several movies particularly Roma that
won three Academy Awards considering best foreign language film.
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Understanding business model
The term business model indicates to an establishment’s plan for making profitability. It
finds out the commodities or facilities the business plans to sell, it’s found out target market and
any anticipated expenditures (Hălbac-Cotoară-Zamfir, Keesstra and Kalantari, 2019). Business
models are crucial for both new and incorporated businesses. They assist new; developing
enterprises attract investment hire talent and encourage administration and staff.
Current business model of Netflix
Business Model Canvas
Key Partners Key Activities Value Propositions Customer RelationshipsCustomer Segments
 Alliance
with
Smart
TV
organisa
tions
 TV
network
firms
 Google
and
Amazon
 Recruit and retain
 Maintain and
expand
 Develop it pricing
strategy
 Retain current
consumer base
 Views shows
and movies in
high definition
 Stream content
 Unlimited
access to TV
shows and
movies
 Self
establishme
nt made
easier
 Online live
chat
services
 Social
media
 Netflix gift
cards
 Content for
children and
adults
 Interested in
watching movies,
TV shows and
documents
Key Resources Channels
 Software
developers
 Recommendation
system
 Online
streaming
by the
website
 Mail
delivery for
DVDs
 Streaming
o TV apps
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and gaming
consoles
Cost Structure Revenue Streams
 Cost of producing movies
 DVDs and mail rented shipping costs
 Subscription maintenance cost
Monthly subscription plans
 Basic
 Standard
 Premium
5. Socio-economic Trends of Netflix affecting its Business Model
Success regularly breeds copycats, and the rapid ascent of Netflix is no exception. Its
initial version of sharing products through mail has attracted a wave of start-ups and big stores
hoping to be the Netflix of toys, books, style, fashion designer rings and extra.Some of those
businesses rate a club price, just like Netflix, while others provide pay-in line with-use on line
rentals. All are a part of the sharing economy: they make cash with the aid of sharing the
identical products in place of by promoting extra products. The sharing financial system also
consists of Airbnb, which rents private rooms, flats and houses; and Zipcar, which charges a
month-to-month rate to participants who share motors in place of owning them. But as the
Netflix version gains reputation, how sustainable is it – and has each person besides Netflix
actually been capable of make a profit. Without doing credible lifecycle analyses, a lot of these
companies that embrace the model are banking at the intuitive notion that it’s extra
environmentally friendly to reuse the same stuff over and over, via distinctive humans, instead of
to promote new products with a purpose to maximum probably sit unused in a closet corner. The
idea, simplified, is “less stuff is higher.”
QUESTION 3
LITERATURE REVIEW
The external atmosphere of company involves different elements which are external and
positive effect on whole performance level at marketplace. In addition to this, it has been
analyzed that micro atmosphere is connected to cycle of organization in an appropriate manner.
There are different external environment which impose positive effect on operations of Netflix.
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As per view point of (Buheji, 2018), Netflix focuses on used approaches related to
knowledge based economy is determined as a major element that imposes direct effect on the
operations of Netflix in an appropriate manner. Gross National product as well as Gross
Domestic Product is determined as a rate of economic growth which is adopted by administration
of organization to analyze whole growth.
According to viewpoint of long term implication from political side the political components
can be explained as the components which are impacted by the determinations of the national
authority, infrastructure, taxes and many more. Several political components can also pose
certain threats for the business and as a results, the business has to suffer losses and other issues
as well
As per viewpoint of author, it is assess that long term implication from legal perspective a
legal framework can be explained as the policies, regulations and procedures which are
established through the nation authority of the nation. All business establishments running within
a specific nation are desired to remain to these legal structures as they can have an influence on
the execution and entire profit margin of the company.
Due to change in sales is due to economy, it is significant for organization to provide
response accordingly. In addition to this, the management team of business organisation recruits
subordinates when the economy related to nation is determined as a strong that helps in
achieving competitive edge over rivalries at marketplace.
As per point of view of (Bui and Nguyen, 2016), Interest rate the other dimension related
to external environment is determined as rate of interest that impose success and growth of
organization. Before starting any operation in innovative market, it is significant to organize
market research. They also provide an idea regarding interest rate in addition with changes in
need as well as preferences. In addition to this, the Netflix focuses on keeping in mind the
dimension related to external atmosphere for organizing its activity of organization in proper
way.
According to view point of (Morris, 2020), Unemployment there are different country
where employment rate is low that imposes direct effect on success and growth of organization
in an appropriate manner. Due to low rate of employment signifies buying power of user will
low that results in reducing profitability as well as sales of business organization. In addition to
this, it has been assess that rate of unemployment can impose direct effect on whole operations
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of business organization. Therefore, due to decrease in buying power of consumer that results in
reducing sales and profit margin of company.
As per viewpoint of (Schüz, 2017), International trade the company focuses on
conducting external economic study in order to conduct different activity in an appropriate
manner. The issue related to macroeconomic that impose positive effect on the business
organization and related product which is sold in foreign places. Therefore, the company focuses
on operating their business globally which impose direct effect success and growth of business
organization. The company focuses on experiencing double digit enhance rates. Therefore, the
external environmental factor imposes direct effect on operations of company during particular
phase of time period.
Rate of inflation this is determined as a simplest way to capture inflation that increases
prices. If the monetary system in nation increase growth in future period of time then it is
beneficial for organization (Bogoviz, Sozinova and Ostrovskaya, 2018). This method help
manufacturer is able to sell or market its commodity at excessive Marketplace. If the nation faces
depression within financial system, it decreases buying power of the customer during particular
phase of time period. In addition to this, it imposes negative effect on organization during
particular phase of time period. Therefore, the manufacturer focuses on establishing their
expenditure of commodity for individual person to possess enough money for it.
Technological factors signify the innovative technology in order to provide superior quality
product and services to its customers during particular phase of time period. It is significant
study related to technological force in present time is Wi-Fi communication. And, now a day’s
phone, tablet and laptop perform their work in a speedy manner that is beneficial for business
organization during the particular phase of time period. Mobile focuses on improvement of
innovative technology such as gadgets as well as replacing one that help in conducting different
task in an appropriate manner. It helps in increasing experience level of client in particular phase
of time period. And, there is a knowledge related to economy in which it is necessary to produce
product and services that is completely depend upon implanting different activities in an
appropriate manner (Mehdizadeh, Nordfjaern and Mamdoohi, 2018). Therefore, it is necessary to
implement innovative technology for providing unique services to its user in order to satisfy
them
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A knowledge related to economic imposes direct effect on the operations of business
organization. This kind of economy has three significant elements which involve salary,
innovation and incentive system. In addition to this, there are different driver related to economic
change that imposes direct effect on chosen company named as Netflix. Therefore, it is
significant for administration team of Netflix to ensure that this kind of driver is necessary to
implement different changes during the period of time. There is different kind of changes which
is taken place within business organization (Bacher and et. al., 2018). And, a Netflix is
determined as a leading organization and they operate their business around various countries in
order to adopt changes during the particular phase of time period.
6. Understanding Macroeconomic Dimensions
There are several demographic factors which can also influence the business of Netflix to a
high level (Leijten, 2018). The several aspects considered within this are age, gander, purchasing
power, social class, income and interest. The region also influences the purchasing behaviours of
consumers. Organisations that intention to get more profits and income require to acknowledge
how the geographic region in their consumers come in to play. For example, the respective
company is catering to a global audience and it becomes important for the enterprise to pay more
attention to the varying taste and preferences of its target people from different communities and
cultures, Cause of which, Netflix has brought content that spans different genres and languages.
It provides a wide range of information suited for consumers of different ages and from several
regions. However, this has assisted the firm get attention a diverse set of consumers from
globally since individual can identify a nice collection of movies and shows in their local
languages on Netflix. The demographic composition of the international population has changed
a lot during recent years (Von Szombathely and et. al., 2018). The millennial are the key target
of respective firm and the company has tailored its commodities to cater majorly to the demand
of the modern generation. This generation is greatly tech-savvy and consumers mist its
entertainment online.
Whereas interior forces can still be hard, they have got higher control over these
modifications. It is essential to consider the fact that any kind of exchange may be complex and
those components of change will push them to find out their comfort zone and method work in a
complex form. Individual tend to crave the status quo and withstand things that interrupt familiar
and based on demeanours, processes and systems. It can experience unstable to alternate, so they
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lean to look up to things which seem unexpected to their. When teams require to be reorganized,
a new executive is engaged, a new commodity is carried or a brand new coverage is rolled out,
it’s far going to encounter some questions, carefulness and beat back.
7. Understanding Drivers of Change
Drivers of Change’ (DoC) is an approach advanced by way of DFID to address the lack of
linkages between a rustic’s political framework and the work of improvement organizations. The
method focuses on “the interplay of monetary, social and political elements that support or
hinder’ poverty discount. The evolution of this method has gone hand-in-hand with an method to
development that emphasises that: i) the manner development takes place, or does now not show
up, is fashioned via political context; and ii) to be powerful, donors’ us of a strategies ought to be
based on a sound expertise of historic and political context. More especially, DoC is rooted in a
challenge to better apprehend how to make exchange take place in precise. The “Drivers of
Change” (DoC) method recognises that there are context-particular foundational factors that
have an effect on the capacity for reform and opportunities for change. It strives to capture the
interplay among the actor’s behaviour and economic, social and political factors that support or
hinder political reforms. The DoC approach specializes in the energy relationships and the
institutional and structural factors affecting the political will for pro-negative guidelines at nation
level. Change drivers are not truly character champions of reform (a common assumption by
donor organizations) but rather the interaction between structural functions, establishments and
agent.
8. Drivers of Change for Netflix
Competition is determined as a greatest change driver that results in implementing or
executing changes in business organization. The diver related to economic change within
company can be internal as well as external. External force is determined as a challenging and
there are various changes that normally don't choose. They focus on using these forces such as
generation, guidelines providers, and client options as well as forcing instability. Disruption is
considered as a continuously hard to innovate as well as for purpose of adoption. Therefore, it is
necessary to bring necessary changes for achieving competitive advantage over rivalries at
marketplace. It aids assistance in increasing sales and profit margin in future period of time.
Along with this, there is several kind of issues and challenges are also faced by the
respective firm. Netflix’s biggest issues are that it is paying high and more to obtain new
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subscribers. Marketing and streaming content spending has increment from $308/new subscriber
in 2012 to $581/new subscriber TTM. Along with this, thigh competition and rivalry is another
threat and risk affects the business of respective company. There are number of companies like
Disney+, Apple TV+, AT&T’s and many offers similar kind of ventures which create
completion for this enterprise. The US is its most mature market and comprises about 40% of its
total subscribers; any loss of domestic subs could mean a punishing hit to shares. Netflix’s stock
slid for weeks after it posted its first sequential drop in US subscribers in July 2019. In context of
it, the management of Netflix may require to add lower cost tier better compete with the likes of
Disney and Apple that are $7 and $5 per month respectively. With local users possibly hitting a
wall, Netflix added just 500,000 US users last quarter and saw a subscriber reduction in the
second quarter-global development is Netflix’s next frontier. The administration of particular
venture has it eyes trained on India (Nikiforov and et. al., 2018). The company planned to spend
$420 million creating content for the developing market in 2020, roughly matching its pace of
spending in targeted nation compared to 2019.
QUESTION 4
IMPACT OF LEGAL POLITICAL FACTORS
A legal framework can be explained as the policies, regulations and procedures which are
established through the nation authority of the nation. All business establishments running within
a specific nation are desired to remain to these legal structures as they can have an influence on
the execution and entire profit margin of the company. Netflix operates its business in number of
nations and thus, it is crucial for it to obey to all the laws and legislation. Along with this, the
organisation has to face the unenthusiastic confronts. Political aspects can significantly donate to
the financial development of the respective establishment.
1. Political factors influencing Netflix
Political components can be explained as the components which are impacted by the
determinations of the national authority, infrastructure, taxes and many more. Several political
components can also pose certain threats for the business and as a results, the business has to
suffer losses and other issues as well (Ohotina and et. al., 2018). There can be a change in the
political aspects cause of changes in the policies or certain activities of the national authorities.
Thus, it is crucial for a business to remain to date about any modification in the political aspects
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in context of avoid any sort of negative impact as well as assure that the business actions operate
easily. This is because political aspects can either influence the business operations in a
optimistic or unfavourable form. Since Netflix is a leading technology organisation running
crosswise different enterprise, it is significant for it to comply to several rules and legislations
that are establish through the national authority, it is essential for it to comply to several
legislations that are set through the government of a nation within it runs. Political aspects can
either create the market more or less friendly for the establishment. It can be viewed that the
political aspects can modify the overall results for an establishment in forms of profitability as
well as earnings.
Employment legal guidelines are made to shield the rights of personnel and include of
everything of organisation or employee dating. Employment regulation is an aspect this is very
complex and considers several pitfalls as nicely (Catacora-Vargas and et. al., 2018). When
businesses’ are in stroke with the ultra modern tendencies in this legislation, they can control to
take their establishment within the right way however, people who get it inaccurate needs to be
absolutely conducted for the high cost consequences it will create. In exiting units, personnel are
closely 98%of the company for the attainments or lack therefore and any alterations within
employment law will, of course, have a top indentation consequence in the commercial
establishment operations. At one stop of the extremes of political philosophies, or philosophies,
is disorder that runs that individual should administrate political actions and public authorities
are both pointless and undesirable. At the option intense is despotism that challenges that each
aspect of a person’s existence must be administrated and stated via a strong essential national
authority. In actuality, neither strong survives in its purest shape. Instead, maximum nations have
a mixture of each, the stability o which is mainly a reflected image of the US of America’s
records, culture and loyalty. This collective is acknowledged as pluralism which declares that
each public and persona venture are critical in a nicely functioning political mechanism.
Although several global destinations are pluralistic politically they will tend higher t one
excessive than the contrary.
Thus, it can be viewed that if the establishment observes to the diverse regulations and
laws in the nations of its operation, it will be capable to get attention a number of individual. It
will further lead to a maximisation in its all over profit so it can be analysed that the future of
Netflix can be successful if it improves and executes efficient plans (Roy and et. al., 2018). It
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