Key strategic issues
Prior to 2008, Netflix had successfully dominated the DVDs-by-mail industry by developing an effective network of distribution centers that made delivery of over 120,000 titles across the United States in one business day possible. In recent years, technology has advanced to the extent that household are rapidly shifting from renting physical DVDs to watching movies and TV shows streamed over the Internet to over 700 different devices. While the company has benefited from a phenomenal increase in the stock price, revenue and the amount of subscribers, a series of strategy changes and new initiatives in July of 2011 led to a downward spiral for Netflix.
The major strategic issue facing Netflix is how to recover from its strategic mistakes that resulted in a significant plummet in stock value and revenues, disgruntle consumers and reduced customer loyalty in addition to a whopping amount of canceled subscriptions and deterred potential customers. Not to mention the deterioration of brand image and reduced operating profits. If Netflix does nothing to address the strategic issue at hand, it can be detrimental to the future of the company. In the worst case, in light of the intensely competitive nature of the industry and the oversaturation of movie rental and instant streaming rivals, Netflix may in fact become a thing of the past. Unsatisfied consumers can be very unfavorable to a company when there are numerous substitute services.
It is likely that Netflix will continue to experience negative customer reaction and a continued slide in stock prices and revenue. It is obvious that if the company takes no action to increased customer satisfaction in the midst of immense dissatisfaction the company’s brand loses recognition. In the best case, those consumers that may consider the service provided by Netflix to be superior to that of the