SWOT Analysis of Netflix: Examining Internal and External Factors

This report presents a SWOT analysis of Netflix, a leading American entertainment company specializing in online video-on-demand and DVD services. The analysis identifies Netflix's strengths, such as its popularity and convenience through an ecosystem of internet-connected devices. Weaknesses include the decline in DVD memberships and challenges in international markets. Opportunities lie in expanding its original content and further international growth. Threats include increasing competition and rapid technological changes in the entertainment industry. The report utilizes the SWOT framework to evaluate Netflix's internal and external factors, offering insights into its strategic position and competitive landscape. References include academic journals and online resources, providing a comprehensive overview of the company's strategic position in the market.

SWOT ANALYSIS

In order to stay competitive in the marketplace, the organizations have to continuously
evaluate their position. An effective method to do this is by adopting SWOT analysis framework.
This helps in identifying the strengths, weaknesses, opportunities and threats (Helms and Nixon,
2010). These prove to be useful for planning the future projects of the business as well as for
making appropriate selection between the new product lines that are to be introduced. Netflix is
an American Entertainment company that specializes in providing video- on- demand online and
DVDs by mail (Napoli, 2014). The present essay provides information on SWOT analysis and
analyses the ways in which this theory applies to Netflix.
SWOT analysis is an acronym that denotes strengths, weaknesses, opportunities and
threats. Its purpose is to identify the internal and external factors that are significant for a
business to consider when it has to achieve an objective (Abdi, Azadegan-Mehr and Ghazinoory,
2011). Strengths and weaknesses are factors that are internal to an organization. In contrast to
this, opportunities and threats are factors that a business faces from external environment. In this
way, SWOT analysis is useful in strategy building by identification of factors that are internal
and external to an organization. Secondly, it is also useful in matching and converting. This is
concerned with matching the strengths to opportunities as well as converting weaknesses into
strengths or threats into opportunities.
While considering the strengths of Netflix, popularity and convenience li at the top.
There has been development of an ecosystem by Netflix that that allows for using various
internet connected devices such as mobile devices, televisions and computers. As the customers
opt for convenience, it has become a major strength for Netflix as the organization bestows them
with this gift of consuming entertainment online (Valentin, 2011). It popularity will help the
company to extend its international expansion.
Declining DVD membership has emerged as a weakness of Netflix. Earlier, streaming
and DVD- by – mail, both the offerings could be obtained by customers under one hybrid plan.
However, when the plans were separated by Netflix, it decreased the convenience of customers
as they now had to obtain two different subscriptions (Harris, 2010). Thus, memberships
declined and are still on the same path. Netflix has also been weak on the aspect of international
business as it has been less profitable for the company. The international operations of the
company still have not flourished well.
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European, Caribbean and Latin American markets. It has also launched its streaming
service in Austria, Belgium, Luxembourg, Germany and France. All these markets present
numerous opportunities for the company to grow its operations and strengthen them (Villarroel,
Taylor, and Tucci, 2013). Further, a number of original exclusive programs have ben distributed
by Netflix. These are also considered as an opportunity for Netflix to strengthen its image and
operations.
Increasing competition is an evident threat for Netflix because its concept cab be imitated
by a number of new entrants as well as competitors. Also, rapid technological changes take place
in the market of entertainment services (Napoli, 2014). If Netflix does not keep a pace with
them, it can pose a threat for the organization.
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REFERENCES
Journals and Books
Abdi, M., Azadegan-Mehr, M. and Ghazinoory, S., 2011. SWOT methodology: a state-of-the-art
review for the past, a framework for the future. Journal of Business Economics and
Management. (1). pp.24-48.
Harris, C.S., 2010. Terms of service, cramped budgets, and good library citizenship: the Netflix
dilemma. The Bottom Line. 23(4). pp.212-214.
Helms, M. M. and Nixon, J., 2010. Exploring SWOT analysis–where are we now? A review of
academic research from the last decade. Journal of strategy and management. 3(3).
pp.215-251.
Valentin, E. K., 2011. Away with SWOT analysis: use defensive/offensive evaluation
instead. Journal of Applied Business Research (JABR). 21(2).
Villarroel, J. A., Taylor, J. E. and Tucci, C. L., 2013. Innovation and learning performance
implications of free revealing and knowledge brokering in competing communities:
insights from the Netflix Prize challenge. Computational and Mathematical Organization
Theory. 19(1). pp.42-77.
Online
Napoli, M., 2014. Netflix: A Short SWOT Analysis. [Online]. Available Through:
<http://www.valueline.com/Stocks/Highlights/Netflix__A_Short_SWOT_Analysis.aspx#
.WOCQttKGOCg>. [Accessed on 2 April 2017].
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