University of Hertfordshire: Netflix Business Strategy Report

This report examines the business strategy of Netflix, focusing on a situation analysis conducted using the SWOT model and the BCG matrix. The analysis highlights Netflix's strengths, such as its first-mover advantage and subscriber growth, while acknowledging weaknesses like the cancellation of Marvel dramas and financial expenditures. Opportunities include business expansion and the production of comic books, whereas threats include increased competition and expenditure rates. The BCG matrix places Netflix in the 'star' segment due to its high market share. The report identifies key problems such as rising expenditures and the Tendo Nagenda deal. Short-term and long-term recommendations include hiring a skilled workforce to manage expenditures and severing the deal with Tendo Nagenda to boost business growth. The report concludes with a brief overview of the models used and the challenges faced, along with recommendations for improvement.

Business strategy
of Netflix
executives

Introduction
 The study will provide information
regarding the Netflix executives by
evaluating it situation analysis using
two different models
 Portfolio model and SWOT model will
be used for demonstrating the
situation analysis of this company
 The study will also discuss the
problems faces by this company
 Furthermore, some short-term and
long-term strategies will be
recommended that must be beneficial
for this firm

Situation analysis of Netflix
Company
 Situation analysis is used to understand the external
and internal factors that affect the business. In today's
environment, Netflix is serious about its products,
which influences them to improve their business
situation in the market. The two models that have been
used for a situation analysis of Netflix executives are
the SWOT model and Portfolio model.
SWOT model
 SWOT model is used for matching the threats and
opportunities of the external environment with the
strengths and weakness of the internal environment

Continue…
Strengths Weaknesses
 Netflix firm become serious about
consumer products
 The firm has huge first-mover benefits
 Increases 25 million subscribers in the
nation every year
 Apparently, cancel the shows of Marvel
dramas which affected their business
 Spend huge money on populating their own
platform
Opportunities Threats
 Predicted to increase their business
revenue from 132.9 million US dollars
in 2019 to 169.3 million US dollars in
2022
 Production of comic books increases
their opportunity to expand business
 Expenditure rate of business has been
increased
 Intense rate of competition affected
company profit
 Netflix company become stuck in a deal
with Tendo Nagenda company

Continue…
Portfolio models are used for handling the
strategic business unit that can be
perfectly be fitted in one matrix. Thus for
this Portfolio model, the BCG matrix of
Netflix executives has been chosen.
 BCG matrix provides an idea regarding
the external and internal environment
of Netflix in relation to four factors,
such as the star, cash cow, question
mark and dog
 Star segment consists of the growth
rate of sales and market share of Netflix
 Being an international streaming firm
they occupied high industry share that
enables the firm to fall in a star group

Continue…
 The cash cow segment of
this company constitute the
low industry grow and the
high rate of subscription
approach
 The industry growth rate
declined due to this high
subscription rate
 None of the segments of
Netflix falls under the
category of question marks
and dogs

Key problems faced by the company
From the article, it is seen that
various problem has been facing
by the company and they are as
follows:
 Increases the expenditure rate
for populating their platform
 The firm becomes stuck with
the deal of Tendo Nagenda
firm as it affected their
business growth
 Reduces the company profit
because of canceling the five
dramas of Marvel

Recommendations
 Short-term and long-term strategies that
should be used by this firm are given below:
 It is recommended that the firm should
appoint a skilled and experienced workforce
that can easily manage the expenditure rate
 Another recommendation is that the firm
should permanently break the deal with
Tendo Nagenda so that they can increase
their business growth

Conclusion
 The study concludes that for the
situation analysis both SWOT
model and Portfolio model of BCG
matrix are used
 Both these model provide a brief
view of the industry situation
 Increasing expenditure rate and
reducing profit are the key
challenges faces by the firm and
thus it some recommendations
are provided that help the firm to
resolve it

References
 Cueman, S., 2016. The Netflix Tax: Chicago's Extension of Its Amusement Tax to Include Electronically Delivered
Entertainment Faces Numerous Challenges and Sets the Stage for Taxing on Streaming-Based
Entertainment. DePaul Bus. & Comm. LJ, 15, p.159.
 Daidj, N., and Egert, C., 2018. Towards new competition-based business models? The case of Netflix on the
French market. Journal of Research in Marketing and Entrepreneurship, 20(1), pp.99-120.
 Govindarajan, M., 2019. Challenges for Big Data Security and Privacy. In Advanced Methodologies and
Technologies in Network Architecture, Mobile Computing, and Data Analytics(pp. 57-66).
 Hallinan, B., and Striphas, T., 2016. Recommended for you: The Netflix Prize and the production of algorithmic
culture. New media & society, 18(1), pp.117-137.
 Pfeifer, P.E., Conroy, R.M., and Pfeifer, P.E., 2017. Valuation of Netflix, Inc. Darden Business Publishing Cases,
pp.1-13.
 Richthammer, C., and Pernul, G., 2016, September. Explorative analysis of recommendations through interactive
visualization. In International Conference on Electronic Commerce and Web Technologies (pp. 46-57).
 Wenzel, P., Mahle, I. and Pätzmann, J.U., 2016. Streaming Services & Service Design: An Analysis of Netflix and
Amazon Video Based on the Gap Model by Parasuraman, Berry & Zeithaml. Markenbrand, 5(5/2016), pp.20-31.
 Yao, D., Shu, X., Cheng, L., and Stolfo, S.J., 2017. Anomaly detection as a service: Challenges, advances, and
opportunities. Synthesis Lectures on Information Security, Privacy, and Trust, 9(3), pp.1-173.

Appendices