BBA 4951 Unit III Case Study: Netflix

BBA 4951 Unit III Case Study

Columbia Southern University

Introduction

Within the functional areas of business, all organizations have internal strengths and weaknesses and no organization is equally strong or weak in all areas. According to David and David (2017, p. 631), internal strengths are “an organizations controllable activities that are performed especially well, such as in areas that include finance, marketing, management, accounting, and MIS, across a firm’s products/regions/stores/facilities.” On the other hand, internal weaknesses are essentially the same controllable activities within an organization, however these are the activities that are carried out especially poorly (David & David, 2017).

Netflix Strengths and Weaknesses

One great strength of Netflix Inc. is the company’s ability to analyze the buying trends and desires of its customers and incorporate this information into its strategic planning process. Netflix gathers an immense amount of data on each customer’s usage and content choices and develops patterns among subscribers. Netflix then uses this information to match customers with the proper content offerings. Netflix does such an outstanding job of gathering, analyzing, and using this data, that it is said that the company accounts for nearly one third of the prime Internet traffic in the United States. Additionally, the company’s internal strengths include it ability to look to what customers may want in the future and this is evident with the services shift to focusing more on popular television shows versus focusing more on top movies. This strategy by Netflix proved very successful as at the time, the streaming service accounted for approximately one third of the top 75 television shows and in 2015, Netflix’s stock hit an all-time high at over $500 and growing to over $700. Additionally, experts predicted that the number of global subscribers would grow from around 61 million to over 207 million within a two-year span. One of the weaknesses of Netflix is that the streaming service competes based on convenience and does not appeal to or provide products to its customers looking to watch newly released movies. This is due to the fact that many top movies are not available on Netflix until nearly two years after their release. Netflix does however allow customers to pay an additional $8.99 DVD rental fee to watch some top movies much sooner (David & David, 2017).

Competitors

Competitors to Netflix include the large movie theatres themselves; though not directly, iTunes, Red Box, and Hulu to name a few. Amazon has also presented itself as a top competitor to Netflix with the introduction and expansion of its Amazon Prime Video streaming service (David & David, 2017). Amazon may present itself as a formidable opponent as the company includes the video streaming service as part of a larger package to Amazon Prime subscribers. Users are able to take advantage of all of the shopping benefits of Amazon Prime and the company includes the streaming service as part of the package at no extra cost whereas Netflix subscribers are paying solely for the streaming service.

Netflix Strategy Effective?

Overall I do feel that the strategy used by Netflix is effective. The company has created and implemented a strategy that is geared towards giving customers and users what they want and the numbers prove that the company is doing just that. The company implemented a means of tracking the desires of customers and matched them with the appropriate content. Doing this very well is a primary factor as to why the company exploded in popularity, boosting the stock of Netflix stock by 42% in 2015. Additionally, the company has continued to grow and expand across multiple European countries while also reaching Australia and New Zealand, followed Japan in late 2015 (David & David, 2017).

Conclusion

Identifying the internal strengths and weaknesses of an organization is a vital part of business. Companies must know, understand, and take advantage of the controllable activities that it performs especially well while using these strengths to overcome and combat it’s weaknesses.

Reference:

David, F. R., & David, F. R. (2017). Strategic management: A competitive advantage approach, concepts and cases (16th ed.) [VitalSource Bookshelf version]. Retrieved from https://online.vitalsource.com/#/books/9780134167947