AMN442 Report: Strategic Analysis of Netflix in the Indian Market

This report critically analyzes Netflix's strategic position in the Indian market. It begins with an executive summary highlighting the issues and problems Netflix faces, followed by an introduction outlining the company's entry into India and the competitive landscape. The report then delves into a detailed analysis of the macro and micro forces affecting Netflix, utilizing PESTEL and Porter's Five Forces models to assess the political, economic, social, technological, legal, and environmental factors, as well as the competitive dynamics within the industry. The analysis identifies key challenges such as competition from local streaming services and cable providers, as well as the impact of social and economic factors. Finally, the report concludes with strategic recommendations for Netflix to improve its market position in India, focusing on strengthening its distribution network, adjusting subscription pricing, forming collaborations, and creating original content tailored to the Indian market.

Running head: STRATEGIC MANAGEMENT
Strategic Management
Name of the Student
Name of the University
Author note

1
STRATEGIC MANAGEMENT
Executive Summary
The report has thrown light in analyzing the different kinds of problems and issues which have
been faced by Netflix in the Indian market. In the current scenario, it has been noticed that there
are various competitors present in the market of India, in such scenario, the PESTEL and
Porter’s Five Forces Model analysis are being adopted for understanding the opportunities and
threats which can be impacting the growth of the firm. At last, the recommendations have been
provided to Netflix for growing in the strong manner in the competitive market of India.

2
STRATEGIC MANAGEMENT
Table of Contents
Introduction......................................................................................................................................3
Analysis of Issues and Problems Involved in Relation to Macro and Micro Forces of
Environment of Firm.......................................................................................................................3
PESTEL Analysis............................................................................................................................3
Porter’s Five Forces Model Analysis..............................................................................................5
Recommendations for Reacting to Changes in Marketing Environment........................................6
References........................................................................................................................................8

3
STRATEGIC MANAGEMENT
Introduction
Netflix has been popular in different countries and they have their presence in more than
190 countries. In the year 2016, the company has been successful in introducing their operations
in Indian economy for catering to the large group of customers. The main aim of Netflix was to
offer the SvoD service and within the small span of time, the population in India will be
increasing which will be increasing the disposable income and they will be able to spend more
on the goods and services (Harvard Business Review, 2020). However, in the Indian market,
Netflix has been facing high stress from the different other competitors which are present which
includes Eros or Hotstar. Moreover, the other challenge is from the different cable providers
which impacted the growth rate of Netflix. On the contrary, due to the strong growth as well as
the technological advancements, Netflix has been successful in generating opportunity in
diversifying culture which helped the company in their growth.
Analysis of Issues and Problems Involved in Relation to Macro and Micro Forces of
Environment of Firm
PESTEL Analysis
With the help of the PESTEL Analysis, it will be beneficial in understanding the factors
which are not in control of the company and business in a direct manner.
Political Factors- There is volatility in the political scenario of the Indian economy
which can be impacting performance of Netflix in Indian economy. However, there is an
opportunity for Netflix wherein the government support and intervention can be beneficial for
Netflix in granting for the purposes of growing business in India through innovative work
performance (Stoyanova & Harizanova, 2017). On the other hand, there are taxation policies
which can be influencing the cost of doing the business in India and it will be impacting the
profitability of Netflix in the Indian economy as well.
Economic Factors- In case of the economic suitability, the main aspect which needs to
be analyzed is related to the opportunity regarding the high GDP of the Indian economy which
will be helping Netflix in increasing their sales and level of profitability to a large extent.

4
STRATEGIC MANAGEMENT
However, there is moderate level of unemployment which can be impacting the business of
Netflix and it can be impacting the profitability of the company as a whole as well (Munro &
Belanger, 2017).
Social Factors- In the Indian economy, the different customers prefer to spend less and
deliver the quality products and services. There are various competitors available for Netflix
such as Hotstar which will be capable of providing the customers with same services at a much
lower price. In such scenario, the business of Netflix in India can be affected as there are
different changes in the social patterns of customers (Moreno-Izquierdo, Ramón-Rodríguez &
Perles-Ribes, 2016). The social trends in education can be impacting the firms like Netflix in a
positive manner as the customers are having knowledge on the different offerings which are
present in market and make their choices wisely. In order to sustain in the Indian market, Netflix
needs to be customer centric through making products which are highly accessible at various
touch points which are common to target markets socially (Meyer & Cohen, 2018).
Technological Factors- In the Indian economy, there is advent of internet as well as
online retailing which can be proving to be the opportunity for Netflix to utilize the current social
network to retail as well as e-commerce for boosting the sales in the respective economy. The
technological innovation is the key element which can be utilized for building on competitive
advantage through incorporation of less expensive production, improved marketing,
improvement in the quality of the product along with increased level of business intelligence
than the competition which is present (Madhavaram, Hunt & Bicen, 2017).
Legal Factors- In the Indian economy, there are different labor laws which are required
to be implemented by Netflix as to provide the suitable working atmosphere for the different
individuals who are present in the economy. Working environment is capable of building the
suitable kind of guidelines that will be helpful and become the opportunity for improving the
growth prospects of the company in comparison to other companies which are offering similar
kind of services to the customers (Li & Li, 2016). Netflix, while operating in India needs to
follow the different discrimination rules as these are strictly adhered to such as fair compensation
system along with no discrimination in process of recruitment as well.

5
STRATEGIC MANAGEMENT
Environmental Factors- In India, in the present scenario, the different individuals are
highly focused towards the consumption of the sustainable products and services.
Environmentally sustainable is the key element which is needed to be implemented for Netflix in
order to operate successfully in the economy (Leitner, 2016). The improvement of the cost
management as well as operations will be observed in the entire business as well which will be
effective for growth of the company as a whole and in a positive manner.
Porter’s Five Forces Model Analysis
Threat of New Entrants- It is the first and foremost aspect which is needed to be
analyzed wherein the threat is low as there are strong capital requirements such as strong
financial position is necessary for operating and cushioning their operations to be sustained in the
Indian market. In such scenario, Netflix in India will be safe in managing and operating
successfully in the Indian market through offering the customers with various services and with
high economies of scale as well (Islam, Gyoshev & Amona, 2018). Moreover, Netflix will be
capable of gaining the loyalty among the customers which is not possible for the new entrants as
customer loyalty is built on the longevity and brand image of the company which is difficult to
form within the short span of time.
Threat of Substitutes- It is the other aspect which is high for Netflix as there are
different competitors available in Indian economy which includes Eros or Hotstar and they are
performing quite well in the market. In such scenario, the subscription fees of Netflix is quite
huge which cannot be affordable by the different individuals and in this manner, it will be
affecting the growth of the company as a whole. In addition, the other factors which need to be
analyzed in the respective scenario is related to the fact that switching costs of the different
customers is high and they can be changing their operations within spur of time (Huang, 2019).
In such scenario, Netflix needs to provide the similar benefits and unique experience to
customers in lesser subscription fees which will be the opportunity for them in operating in
Indian market.
Bargaining Power of Buyers- It is the other factor which is high as well as there are
availability of the substitute companies which are capable of offering them with the similar
services like Netflix at a quite lesser price. The multiple offerings of the products from the other

6
STRATEGIC MANAGEMENT
competitors can be increasing purchasing power of buyers and it will be impacting performance
of Netflix in the scenario (Gollay et al., 2016). In such scenario, Netflix needs to employ the
moderate economies of scale for managing the costs related to production which will be suitable
for improving the growth prospects and deliver the appropriate solutions to customers and gain
the strong market share.
Bargaining Power of Suppliers- The respective aspect is moderate as there are multiple
suppliers available in Indian economy and in such scenario, Netflix can be getting the contracts
from various suppliers which will be helpful for them in improving their position and gain
competitive advantage in the market as well (Chenyu & Wen, 2016). The number of independent
suppliers will be helping them in analyzing the situation in the market and gain high level of
shares successfully to achieve the successful outcomes within the stipulated time frame.
Competitive Rivalry is high in nature as there are different other competitor companies
present in the Indian economy which will be capable of offering the customers with various
products and services that will be ineffective for Netflix in maintaining their position strongly in
the economy. In such scenario, Netflix needs to focus on the research and development related
activities for identifying niche market and delivering their products successfully (Chenyu &
Wen, 2016).
Recommendations for Reacting to Changes in Marketing Environment
From the analysis of the external environment and the industry in which Netflix operates,
it can be seen that there are various kinds of recommendations for Netflix which can be followed
by them to improve their position in Indian market and sustain well.
Firstly, strengthening the distribution network is the important strategic recommendation
for Netflix which will be allowing higher control to company over the competitor products in the
market. In order to enhance the accessibility and getting easy availability of the products, it will
be capable of strengthening their relationship with the customers.
In addition, as there is high penetration of the SvoD providers, in such scenario, Netflix
needs to offer the subscriptions to the customers at lower cost which will be beneficial for them
in attracting the maximum number of customers in the market and improve their performance

7
STRATEGIC MANAGEMENT
successfully. Moreover, there can be implementation of collaboration with the other internet
streamers which are present in Indian market as it will be developing the new opportunity for
Netflix to operate them successfully without much difficulty and improve their operations
appropriately without much difficulty as well (Chenyu & Wen, 2016).
Lastly, creating the own content for satisfying Indian market which will be affecting the
growth of the company in a suitable manner that will be capable of improving their performance
and sustainability as a whole in the market.

8
STRATEGIC MANAGEMENT
References
Chenyu, F., & Wen, X. (2016). Analysis of Development Strategies of Online Pharmacies in
China Based on Michael Porter's Five Forces Model. Chinese Pharmaceutical Affairs,
(11), 6.
Gollay, I. N., Gollay, A. V., Shindina, T. A., Salimonenko, E. N., & Chuvashova, A. D. (2016).
Priority areas of analysis of the external environment of a company-innovator depending
on a type of introduced innovations. Polish Journal of Management Studies, 13.
Harvard Business Review (2020) Netflix in India: The Way Ahead (Online) Retrieved from
https://services.hbsp.harvard.edu/api/courses/706909/items/W17100-PDF-ENG/sclinks/
ba3d3f1049cfefcdb9b084a9ae6f1646 [Accessed on 21st March 2020]
Huang, Y. (2019, December). Strategic Environment Analysis of Logistics Enterprise based on
SWOT-PEST-Michael Porter's Five Forces Model--Taking SF Express as an Example.
In 2nd International Symposium on Social Science and Management Innovation (SSMI
2019). Atlantis Press.
Islam, N., Gyoshev, S., & Amona, D. (2018). External complexities in discontinuous innovation-
based R&D projects: Analysis of inter-firm collaborative partnerships that lead to
abundance. Technological Forecasting and Social Change, 119303.
Leitner, I. (2016). STRATEGIC DIAGNOSTIC ANALYSIS SERVICES OF WATER AND
SANITATION IN ROMANIA. EXTERNAL ENVIRONMENT ANALYSIS. Scientific
Bulletin Series D: Mining, Mineral Processing, Non-Ferrous Metallurgy, Geology and
Environmental Engineering, 30(1), 71.
Li, Y., & Li, F. (2016, August). Internal and External Environment Analysis on Financial
Strategy in Chinese PV Enterprise. In 2016 International Conference on Education, E-
learning and Management Technology. Atlantis Press.
Madhavaram, S., Hunt, S. D., & Bicen, P. (2017, May). The FREE (Firm Resources and External
Environment) Framework as an Alternative to SWOT: An Abstract. In Academy of
Marketing Science Annual Conference (pp. 49-49). Springer, Cham.

9
STRATEGIC MANAGEMENT
Meyer, C., & Cohen, D. G. (2018, July). Porter’s Five Forces in the Post-industrial Age.
In Academy of Management Proceedings (Vol. 2018, No. 1, p. 16589). Briarcliff Manor,
NY 10510: Academy of Management.
Moreno-Izquierdo, L., Ramón-Rodríguez, A. B., & Perles-Ribes, J. F. (2016). Pricing strategies
of the European low-cost carriers explained using Porter's Five Forces Model. Tourism
Economics, 22(2), 293-310.
Munro, M. M., & Belanger, C. (2017). Analyzing external environment factors affecting social
enterprise development. Social Enterprise Journal.
Stoyanova, Z., & Harizanova, H. (2017). Analysis of the External Environment of Green Jobs in
Bulgaria. Economic alternatives, (1), 122-136.