Essentials of Strategic Management - Research Paper Example

Essentials of Strategic Management Introduction Technology has set a fertile ground for some organizations to grow. Some industries have fully grown to unimaginable positions because of technology. One of these industries is the Rental industry that mainly deals with the sell of DVDS, and TV shows. This industry took a new pace in 2008 after many organizations realized the high profits the business was fetching. With increased, technology there arose more advanced ways of selling the movies, DVDs, and the series of TV shows. One of the organizations that have remained firm in this trading is Netflix. They offer an online service of renting movies whereby one has to subscribe. There are subscription fees that are usually paid on a monthly basis. Most of the industries that embrace technology, more so electronics, are known to be very competitive. This is the same case with rental industries where Netflix is facing stiff competition from some other organizations like Blockbuster who are offering almost the same services. Netflix has to lay down critical strategies that will help it to retain its position in the movie industry. There is a need to have a fertile basis of technology to ensure that they are able to cope up with technology that is changing at the speed of lightning (Barringer, 2010). Thesis Statement Rental industry is one of the risky businesses to venture into because of some reasons. The main reason is that it deals with the technological skills that you employ and how. An organization may make many cash from this trading while another one may incur high losses at the same time. This paper will look at some essential ways and methods that can be employed to this business. It will be based on a sample case study of Netflix, which is one of the successful trading in the industries. As managers of other organizations in the industry, what would be important to consider being successful. Improvements do not come up abruptly thus there is a procedure that must be followed to the latter to get to that better place. This is only through proper planning and proper research. All the companies in this strategy have their own marketing structure that ought to be structured in accordance to changes in the market and technology. All this will be analyzed in depth with regard to Netflix (Olsen, 2011). Netflix Current Situation As compared to other companies in this industry, Netflix has the highest number of subscribers. The sales that are done on a daily basis are high however at times they have been observed to be low. The market structure is therefore not constant. In 2002, a case study carried out showed that there were around 190,000 discs sold per day to the 670, 000 subscribers. This number of subscribers grew from that number to around 8.4 million at the end of 2008. Currently the number of customers is estimated to be 23 million. The company is the highest selling in America covering over 75% of the continent. The company has not yet ventured to other business places apart from America however it has some plans that are still cooking to venture into United Kingdom (Olsen, 2011). The subscription fee in this industry, usually on a monthly basis has been changing but the range is between $4.99 and $17.99. The main reason that this has been changing is the fluctuations of the subscription fee in other rental companies more so Blockbuster who has been working hard to ensure that their subscription fee is below that of Netflix. To fight the changing monthly subscription fees, the company set a one percent deduction fee on the total based on the overall annual fee. There are also Netflix plans in place for people to rent many DVDs will get a reduction in the total. This company is offering rental services online; people can also watch movies online, together with TV shows. Online streaming is aimed at getting users who rely on other electronics apart from computers for instance, iPod users, and smart phones users. Most of the transactions that are done are done online thus limiting it to those who are computer literate (Belgard & Rayner, 2004). Problem Statement There are few but technical issues in this company that ought to be addressed. One of the main issues is the market size. The market size of this company is small despite the fact that the small one is based on a potential area. The market size should be changed to meet other companies, as Amazon.com who is in the whole world provided there is a network connection (Miller & Jentz, 2010). Another issue at hand is the number of services offered. In any business, diversification is very fundamental for fighting risk. Netflix offers less than five services thus; there is a need to set more in place. The delivery process that is used is comprehensive. This has limited some people from accessing the DVDs. There is the need to adjust them in order to accomplish the needs of the customers (Gitman & McDaniel, 2008). The last problem that is normal in an industry like this one is competition. The competition is stiff since changes in a minute can benefit the company or make the company become a failure. It is so tricky thus; many of the organizations involved in this toil and moil day and night to ensure that they are the best. It is the best who will obviously make high sales (Barringer, 2010). Analysis of Problems The problems are so tricky to handle. If they are not handled well Netflix may become a total mess. A market research should be carried out after some periods to analyze what the competitors are offering. This will help to adjust the subscription fee accordingly (Olsen, 2011). The customers should be involved in a survey that will help to identify their needs from the company. The market size should also be looked into so that customers are increased. The ways of delivering the DVDs are complex whereby people have to use the internet. Simpler ways ought to be found and customer servers set in place to handle all the issues customers have (Miller & Jentz, 2010). Competition in Rental industry is very stiff with many companies from different areas flocking the trading. Two main competitors are threatening the future success of Netflix in this industry. The two companies are Amazon.com and Blockbuster video with still more likely to sprout. These companies are using Netflix as a base for making their strategies through thorough analysis of Netflix’s objectives. Most of their strategies aim at surpassing those set by Netflix (Barringer, 2010). Core Concepts and Analytical Tools for Change IT Infrastructure IT in this industry is the base for success of any company. There are many changes involving IT that must be done. This is very essential to consider before laying down any strategy. When the company updates its services with technology, then it is likely that it will continue holding its position in the rental industry. Technology infrastructure should be improved to ensure that services are reached from different backgrounds. Although this has been planned by 2015, there will be a need of consistent research to get the best IT infrastructure. The IT infrastructure should also aim at ensuring that customers access services in simple ways. Technology is meant to make things become easier thus; they should have this in mind (Olsen, 2-11). Advantages of IT Infrastructure IT infrastructure is likely to minimize errors that have been evident in some transactions. For instance, it has been observed that when customers are paying their subscription fee there are some errors that occur mainly undercharging and overcharging. This may be a loss to the company wherever there is underpay. IT will help to fight these errors thus making the transactions to be effective and quick. Delays whereby customers have to wait for days will also be solved with incorporation of advanced IT infrastructure (Belgard & Rayner, 2004). IT infrastructure will help the company to reach many customers, from different places and within the shortest time. This will mean more transactions per given duration which will ultimately lead to high profits. When there is IT infrastructure in place, the number of employees will have to be minimized. This will mean quitting some workers that will lead to more profits (Miller & Jentz, 2010). Disadvantages of IT Infrastructure IT works two-way-traffic, it may make access of the services to be simple, yet at the same time, and it may make it to be very complicated. When IT makes services to be complicated to access, the customers’ number may be shifted to other customers who are offering simple services (Gitman & McDaniel, 2008). IT infrastructure is very expensive to install. This is more with IT infrastructure that is required for this kind of companies. Therefore, it may be a risk to invest in this since they future is never determined (Olsen, 2011). Competitors’ Analysis There are many competitors in this industry. Others have even been looking forward to make collaborations with Netflix but this has been denied. There is a need of doing a thorough research to get the objectives of the competitors. The two main competitors, Blockbuster and Amazon.com should be analyzed in depth. This may mean employing a team that will be involved in analyzing the latter so that they can make it to a point of drawing strategies for the company. The research may be done online since most of the objectives and plans of the competitors are drawn in magazines and scholarly materials. When the latter is attained, the company will be in a good position to come up with realistic strategies that may mean improving on those drawn by the competitors. This will help the company to hold its position in the industry (Barringer, 2010). Advantages of Competitors’ Analysis Competitors’ analysis will help to bring more techniques and methods that are required for improvement. When the research is personalized, it may not be easy to know the techniques and methods that are very successful in this industry. It will also help them to pick on the most effective ways of applying the methods and techniques they have (Belgard & Rayner, 2004). Analysis of competitors’ objectives will help Netflix to set future, realistic, and to point strategies. They will always aim at improving on what the competitors are offering so that they are in a better position than they are (Olsen, 2011). Disadvantages of Competitors’ Analysis When they analyze the objectives of the customers, it may make no impact since with time it is likely that they will have changed that. This is an industry whereby companies have to draw flexible objectives. Therefore, when they are bettering on what they have concluded, the competitors may have already done the same thus making their efforts to be futile (Gitman & McDaniel, 2008). Recommendations I recommend that Netflix should make their transactions to be quick. Customers have often reported cases where they have been told to wait for their transactions to go through. This has resulted to some even unsubscribing. They should also be available 24 hours a day, 7 days a week to ensure that customers are not inconvenienced whenever they want to access the services. The market size of Netflix is limited to only America. I recommend that they should cover wider and further areas since this will increase the number of customers. When the services are only limited to one potential area, the customers are likely to be less when compared to a scenario customers are from different ethnic grounds. I recommend that Netflix should make favorable adjustments on the subscription fee so that competitors do not win them in this. This does not however mean that they do not have to be realistic. They may use a technique of annual subscription so that customers are not inconvenienced within the year. They will only be a need to transact once per annum and they continue enjoying the services. Netflix has IT infrastructure that is not so stable. I recommend that they should some installation off IT infrastructure however; it does not mean that they will have to go beyond their capabilities. They should only install what will not make them to be in a risk. Diversification of assets is very important in any company. I recommend that there should be diversification in this company. This will ensure that the business is not in a risk incase one of the assets fails. When there are many services offered, the number of customers is considerably like to rise. Conclusion Netflix is one of the companies in rental that have greatly prospered. The prosperity that they have achieved so far does not mean that they can sit back to enjoy profits. This is a very competitive industry that requires many changes. There is a need of doing thorough research to come up with the best ways that will help them to retain their positions. There are two critical competitors, Blockbuster and Amazon.com who must be closely monitored so that they do not surpass them. For managers in this kind of industries, it is necessary to do things that have been keenly analyzed since a business may fail within hours due to some poor decisions they made. Decision-making should be timely and precise. In the implementation of infrastructure, there is the need to install what will not make the company to be at a risk. On considering the subscription fee, there is the need to consider the input cost so that they do not make charges that will favor customers while at the same time making losses to themselves. References Barringer, B. (2010). Managing Your New Business' Finances. London: FT Press. Belgard, W. & Rayner, R.S. (2004). Shaping the future: a dynamic process for creating and achieving your company's strategic vision. Washington, DC: AMACOM Div American Mgmt Assn. Gitman, J.L. & McDaniel, C. (2008). The Future of Business: The Essentials. Stamford: Cengage Learning. Miller, L.R. & Jentz, A.G. (2010). Business Law Today: The Essentials. Stamford: Cengage Learning. Olsen, E. (2011). Strategic Planning Kit for Dummies. New Jersey: John Wiley & Sons. Read More