...Strategic Plan Strategic Plan ------------------------------------------------- ------------------------------------------------- Netflix: Strategic Plan Prepared by Carlos Contreras Jasprit Dyal Jessica Hoeschen Francisco Solano-Downs Yen-Chen Wang Prepared for Dr. Gary Wishnjewsky Date submitted August 22, 2013 Seminar in Strategic Business Management Department of Management California State University, East Bay at Hayward, CA Management - 4650 Industry Analysis Relevant Industry Trends Netflix falls under the broad umbrella of the movies and home entertainment industry. The company has been part of the wave that is taking this industry into the future in terms of how consumers are interacting with home video entertainment in particular. In general, we can observe that consumers are increasingly demanding more instant and personalized experiences when watching video entertainment as well as more mobile availability. There seems to be a “when I want it, how I want it” type of movement among consumers with declining interest in DVD’s and scheduled television programming and increasing use of online streaming or rental alternatives. Netflix is catering to these trends with its streaming service and seems to be well positioned, at least for now, to be successful in the future if it can manage to avoid more strategic “missteps” along the way. It is important to note how the public perceives and values films as an entertainment source here in...
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...THE DIGITAL SUPPLY CHAIN AND BUSINESS ANALYTICS by FRANCES STACKS Business analytics, data based decision making, data solutions – it goes by many names but is the lifeblood of many businesses. It is nothing new and certainly not a new concept that more effectively running a business makes a more successful and profitable business. Since the very first company came about, utilizing the information at hand to provide inventory, knowledge of customer needs, wants, and desires; it has been integral in sustaining a business and making it grow. As stated by Robert Jacobs and Richard Chase what we must recognize now is, “…so much more data is now captured and available for decision-making analysis than was available in the past.” To be sure, the sheer volume of data that is now available to companies is astronomical due to ever-expanding technology, application of complex mathematical models, and ever advancing ability to extrapolate mountains of data and whittle it down to useful knowledge for businesses. Where data was once available after the fact, a “post-mortem” approach, if you will, companies can now utilize data for analysis, forecasting, optimization, revising of business processes, more efficient decision-making, and ultimately (and conversely most important) greater customer satisfaction. Business analytics has moved from being a process of analyzing customer behavior after the fact to being a tool that can help predict customer behavior in the future. This is an invaluable...
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...activities are those activities that are geared towards the creation and delivering of a product. Examples of primary activities include component assembly (Schmitz, 2005, p.20). Support activities on the other hand are not directly related to the production of a product or service. Such activities are those activities that can increase the efficiency or effectiveness within a business. For example, human resource management is an example of support activities. This essay is going to evaluate the process of value chain analysis and its application in the following two companies; Netflix and Redbox companies. 2.0 Background information. Netflix is an online movie streaming and email DVD Company. The company offers consumers a chance to stream live various movies over the internet. In order to use Netflix, consumers are required to register on the company’s website. The registration will involve paying a monthly subscription fee. Consumers are able to stream movies and watch live televisions show to their personal computers or even television sets. Netflix is only...
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... The report starts by identifying creativity and innovation as the key to Netflix past success as Harold has consistently shown in his decisions throughout the history of the company taking bold action to chase un-ventured routes to satisfying customer needs. The essence of the report however, is to highlight the issues surrounding the current technological advancements in the DVD rental market now that VOD has become a feasible and realistic platform that can be supported. Netflix is faced with a multitude of options and my argument is that it must base its decision upon the long term strategy of the business. There is still a growing demand for DVD’s in their physical format proven by their increasing rate at which Netflix acquires new prescriptions to their existing DVD postal service and this is predicted to continue to grow for many years yet. Netflix currently has 45 million copies in distribution whilst it holding a huge investment in its offline, sorting and distribution network. Therefore the company does not want to risk cannibalizing its core business at the expense of innovation. Although I think the switch over to streaming content via VOD is where Netflix should be heading, I feel it’s vitally important to place an emphasis upon gradual integration. It is proposed that Netflix enters the VOD market by opening a new subsidiary company reducing the risk to its existing operations whilst testing the market and venturing into foreign markets to maximize growth...
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...Netflix Netflix was founded in 1997 in Scotts Valley, California, USA by two entrepreneurs named Reed Hastings and Marc Randolph. In its early days, Netflix offered unlimited movie rentals to its subscribers without due dates for a flat monthly fee with no per title rental, shipping or handling fees or late charge fees. In 2007, the company introduced new business model based on video on demand via the Internet, which was considered by some to be a departure from its original business model of movie rentals. With video streaming, online DVD and Blue-ray Disc rental tripod and with a global streaming subscribers of over 50 million, Netflix reported a revenue of US$4.37 billion US$112 million of which being net income and a total asset of US$5.4 billion in 2013. The company estimates its total equity to be US$1.33 billion and it has over 2000 full-time employees (www.netflix.com). Netflix’s vision as expressed by one the co-founder focuses on global distribution, licensing entertainment contents across the world, market accessibility for film makers, and finding global audience for content creators. (10K Item 1). It’s mission emphasizes growing global streaming subscription business, continuous customer experience improvement, enhancing user interface while at the same time remaining profitable. Mission. Netflix core values revolve around judgement, productivity, creativity, intelligence, honesty, communication, selflessness, reliability and passion. Tepper (2014)...
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...are very time consuming for both, the service provider and the customer. Both parties needed to keep track of a lot of paperwork which included: the submission of orders, specific requirements for those orders, level of inventories, invoices, receipts, delivery instructions… Companies would spend a lot of time and money to keep good track of all of this information being exchanged; which in return decreased their speed, profits and quality of service provided. Large orders could cost Cisco up to $500,000; which decreased their bargaining power with their buyers and opened opportunities for industry competitors that could provide a better service. In the late 1990’s, Cisco developed the Cisco B2B Operations group to automate data links, processes, improve sales orders, inventory management; and allow partners to place their own orders, giving them more up-to-date information on the status of their orders. This challenge allowed Cisco to keep the competition from developing substitute products or achieving a competitive advantage over them. The primary activity impacted by the problem is service and the secondary includes firm infrastructure and technology development. Manufacturing and shipment logistics In spite of the improvements that Cisco B2B brought about - very large orders still caused Cisco and their partners many problems. To enter a...
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...Analysis 4 Porter’s Five Forces of Competition Analysis of Netflix 4 1.2 Opportunities and threats (Partial SWOT) 5 Part 2: Internal Analysis 6 2.1 Value Chain Model 6 2.2 Competencies Framework 7 2.3 VRIO Framework 8 2.4 Strengths and Weaknesses (partial SWOT) 9 Part 3: Netflix Issues and Challenges……………………………………………………………………………………………..10 Part 4: The selection of strategic options 11 4.1 Strategy Clock model and the Porter’s Generic Strategy Model 11 4.2 Strategic Options 12 Part 5 – Conclusions 14 References 15 Appendix 17 Introduction Netflix, set up in 2000, is a television show and movie rental Company. It slowly became a leader in this field by offering DVD-by-mail and online video streaming services. It provides a subscription based model. According to this model the customers utilize the products and services of Netflix through a monthly fee rather than a pay as you use rate. Netflix has been expanding its reach of providing services to other geographies with its two service lines to places like the UK, Ireland, Canada, Latin America and the Caribbean. Among the Porter’s generic strategies, Netflix has adapted the Differentiation/Cost Leadership strategy as their target customer base is broad and they also provided to renters a low cost alternative to the otherwise traditional video rental stores. The major stakeholders of Netflix are the content owners who provide video content to Netflix, the subscribers of this content and the equity owners. ...
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...In this discussion I will give a little insight about what global operations management is, give examples of companies that are approaching global operations management, explain why it has become important for companies to become competitive in the global business environment, and what investments and operations management and other countries will affect the way companies in the United States operate. Global operations management is about how multinational companies expand their business on a global scale, how they operate in those countries and what operation strategies are used in order to be successful. There are a few issues that need to be considered when going global which are: Global Sourcing, Global Manufacturing and Global Distribution. An example of a company that is taking the global approach is Netflix. Back in September of 2009, Reed Hastings launched his company in Canada and made hints about continuing and international expansion for 2011. Although he has the means to do so, they will not be as easy as many may think. But it is not all big companies that are taking the global approach. Mary Domenico and Philip Chigos are taking the global approach to building a children's pajama business and having their garments made in China. Technology has made it very easy for these two individuals to make the dream possible. 1. Why has it become so important for companies to become competitive in the global business environment? It is very important for businesses...
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...Research Paper: Netflix Founded in 1997, Reed Hastings observed; noticed and assessed that there was a growing demand for motion picture rentals. Netflix began with an offer for their ever-growing customer base in which competitors like Blockbuster and Hollywood Video had not – the allowance for customers to select and purchase movie rentals from the privacy of their own home. No one needed to wait in a snake like line in a retail store anymore for a secondary movie pick because their primary selection was ‘sold-out’; as such, the rivalry of the Netflix against all other competitors came into existence. In 2010 the conditions that all the home entertainment companies must implement to meet or exceed current standards is more important than any previous time in history. This research paper will address a brief history of Netflix, the competitive industry in which they compete, potential breakdowns, and finally an offer of speculation for how to address forecasted future breakdowns in a way that will turn them into positive possibilities. The vision of Netflix is simplistic: “Our vision is to change the way people access and view the movies that they love.” (Netflix.com, Hastings Reed, 2011). With more than 15 million current members, Netflix is the world’s largest subscription service for the streaming of television and movie picks and sending movies in the mail. New entrants are always a threat to existing companies like Netflix in the industry; however, Netflix continues...
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...Netflix With advancing technologies and the ever-explosive popular movie industries around the world, Netflix has turned itself into a global master of entertainment at the click of a single key on a laptop computer, iPhone, iPad or television. Netflix has mastered the monopoly on bringing the newest, latest movies to you home worldwide making them the front-runner, and most stable on demand movie and TV watching system on the planet. In the middle 1980’s Blockbuster came on to the scene in small stores across America with videos and dreams, starting with the video home system (VHS) and then transitioning to the digital versatile disc (DVD) dominating the video rental business. It brought fantasy and imagination to almost every home in America and in some other countries. “Blockbuster dominated the video rental industry, possessing over 9,000 stores in 2002 (over 5,000 in the United States) and boasting $6.1 billion in sales (Blockbuster Inc., 2005)” (Abraham, 2012 p.1.8). When Netflix and Redbox came into the mix of home viewing entertainment, Blockbuster lost significant revenue with its stability beginning to weaken. In 1997, Netflix started followed by the Redbox, which entered into the competition in 2002. With both of these up and coming viewing franchising gaining popularity among consumers Blockbuster was forced to file for bankruptcy protection on September 23, 2010. Then in April of 2011, satellite television provider Dish Network bought 1,700 stores. Today there...
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...Internal and External Factors To stay competitive in todays’ market it is important for a company like Netflix to stay up to date with growing trends and to continue to make improvements on how to do things to keep the bottom line intact. In order to keep up with competitors a successful company must take a look at both internal and external factors and how they impact or operations to measure the company’s longevity. In every business environment there are four management functions found which are planning, organizing, leading, and controlling and each of these are used by everyone in a company from upper level management to the entry level employee. When thinking about internal and external factors we must look at globalization, technology, innovation, diversity and ethics which all affect these business functions. According to Bateman and Snell (2011, p. 4), “Companies that want to grow often need to tap international markets, where incomes are rising and demand is increasing.” Internal factors include production, customer service, and marketing strategies. For example, company branding can affect a company’s image. One can associate with the quality of products and services with a company’s brand and is often the first thing that people see when interacting with a company. External factors include new market environments to which a company must be accustomed, consumer analysis, and market analysis. A new product introduced into a new market depends upon consumer reactions...
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...Netflix Assets We classify our streaming content obtained through a license agreement as either a current or non-current asset in the consolidated balance sheets based on the estimated time of usage after certain criteria have been met, including availability of the streaming content for its first showing. We amortize licensed streaming content on a straight-line basis generally over the term of the related license agreements or the title’s window of availability Content is obtained through direct purchases, revenue sharing agreements and license agreements with studios, distributors and other suppliers. DVD content direct purchases or revenue sharing agreements. Streaming content is generally licensed for a fixed fee for the term of the license agreement but may also be obtained through a revenue sharing agreement. DVD library is its non current asset. The Company amortizes its direct purchase DVDs, less estimated salvage value, on a “sum-of-the-months” accelerated basis over their estimated useful lives. The accounting method for backlog DVD’s was changed after 1994. Our recent survey work suggests that NFLX streaming offering is compelling and should get more so as it acquires additional streaming content. In turn, this is creating a virtuous cycle whereby NFLX sub base grows, leading to greater financial resources to acquire more content to improve the user experience and continue to grow the sub footprint. Additionally we believe DVD costs may fall quicker...
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...Assignment 2 1. What are some of the reasons a company would separate its online operations into a new company? The reasons why a company would separate its online operations into a new company would be that the predictable e-business volume will be large, a new business model has to be developed if there are constraints from the current one, there is no reliance on the legacy system or current operations, and the online company is given freedom to attract new talent, set their own prices, raise funding and make new alliances. Separating the online operations would reduce internal conflicts; build a new and more efficient system and also have the ability to create new brands more proficiently. To avoid store cannibalism, to settle a new subsidiary and look for new branding opportunities: 4/5 2. Explain why supply chain management should be aligned with corporate strategy. Justify your answer with an example. Supply chain management should be aligned with corporate strategy because supply chain is a process that runs through almost every division and operation in an organization. When supply chain is aligned with corporate strategy it produces optimal operational performance. Organizations have to manage inventory, get supplies on time for products, and arrange to have that final product reach its final destination in a timely manner. Aligning this with corporate strategy is important, as companies need to keep inventory manageable so they can keep cost down...
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...Netflix Anthony Farias Strategic Planning for Organizations MGT450 Professor: Vivian Scott December 8, 2011 Abstract Founded in 1997, Reed Hastings observed; noticed and assessed that there was a growing demand for motion picture rentals. Netflix began with an offer for their ever-growing customer base in which competitors like Blockbuster and Hollywood Video had not brainstormed with the idea that would allow customers to select and purchase movie rentals right from the privacy of their own home. No need to wait in line in a retail store anymore for a secondary movie pick because their primary selection was ‘sold-out’; Netflix posed its strategic move against all other competitors and thus came into existence. In 2011 the conditions that all the home entertainment companies must implement to meet or exceed current standards is now more than ever needed with a lagging economy of more than three years. At the same time, consumers are striving to save money, time, and gas as all three of these conditions effect the movie rental industry. This research paper will address a brief history of Netflix, the competitive industry in which they compete, potential breakdowns, and finally an offer of speculation for how to address forecasted future breakdowns in a way that will turn them into positive possibilities. Netflix The vision of Netflix is simplistic: “Our vision is to change the way people access and view the movies that they love.” (Netflix.com...
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...// TABLE OF CONTENTS BACKGROUND……………………………………………. 03 STRATEGY…………………………………………..…...... 05 FIVE FORCES…………………………………...…........... 08 DRIVING FORCES…………………………….…….......... 11 KEY SUCCESS FACTORS…………….……………....... 14 SWOT ANALYSIS……………………….……………....... 16 FINANCIAL PERFORMANCE………………………........ 22 KEY MANAGERIAL ISSUES…………..……………....... 24 RECOMEMENDATIONS……………….……………........ 26 APPENDIX……………………………….……………........ 28 BIBLIOGRAPHY………..……………….……………........ 35 // BACKGROUND The founder and CEO of Netflix, Inc. Reed Hastings, incorporated in 1997 and starting movie rental services in 1999. Netflix employed then and continues to employ a subscription-‐based business model. The company was originally only a DVD-‐by-‐mail service in which the customer paid for a certain level of membership that determined how many DVD’s could be rented at one time. DVD’s were mailed to the customer and then returned by the customer when they had completed viewing. After a couple years in business, the company began including ...
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