Netflix Inc: Streaming Away from DVDs - Case Study Example

NETFLIX INC STREAMING AWAY FROM DVD’S INTRODUCTION Netflix Inc. is a service provider of rental DVD’s which also has an online streaming business. In this report the company has been evaluated on the basis of 3C’s, STP and four P’s. The SWOT of the company has been developed and on the basis of this analysis, options available to Hastings have been discussed. The entire case has been studied and recommendations have been presented to discuss alternate measures which can take place. ANALYSIS The company analysis of Netflix can be done by analyzing the position at which the company stands. This will enable the strategic decision makers in taking the decisions which suit the company best. On the basis of this an overview of analysis tools has been discussed such as the 3C’s, STP and the 4 P’s. OVERVIEW OF 3C’S MODEL The 3 C’s model is used to provide an overview of the company. Based on this overview the market conditions can be assessed which help the managers in forming strategies for the company. Based on this the company can rectify its weaknesses and progress towards success. Company: Netflix is a DVD rental and online streaming business. The services offered by the company are in a combined form and these have attracted the customers. The services of the company are slow but once the videos are acquired then the services and facilities which are offered are unmatchable and incomparable. Customers: For the success of the business, the needs and requirements of the customer are important and therefore they should be assessed. The company has faced losses when a new strategy of separating both the practices was introduced. This also increased the subscription charges of the company. Competitors: The business faces competition from products like Apple iTunes, Amazon video on demand (VOD), Google TV and YouTube and others. All these provide similar services and have benefited highly from the splitting decision of the company (Dau, and Wesley). OVERVIEW OF STP MODEL Segmentation, targeting and positioning require that the target market is assessed appropriately. On the basis of these Netflix offers services to those customers to meet the specific needs. Segmentation: In this process the company will identify the segment which will be interested most with availing the services of the company. The company has segments its consumers in order to market them in a better way. by segmenting consumers, the company can do well in the market. Targeting: Finding the most appropriate segment and finding the factors which will satisfy these individuals most must be assessed. On the basis of this all the price and the product related strategies are formed. By targeting different segments in a different way, the company can get better results. Positioning: In this segment the appropriate industry is chosen so that an image of the company can be created. This will enable selection of the segment which requires being appealed. Positioning in front of the consumers is critical and therefore Netflix needs to position itself as a premium service provider with a sufficient collection of videos and movies. OVERVIEW OF 4 P’S MODEL (Dau, and Wesley) The analysis of the 4 P’s shows the standing of the company. Based on this the strategies which the managers apply for assessing the position of the company can be assessed. Analysis of the company on the basis of this model shows the assessment of the progress of the company. This strengthens the actions of the company and suggests the methods for the development of the business. SWOT Analysis For the evaluation of the company’s internal and external environment, SWOT analysis is used (Chang, and Huang, 158-169). This analysis will enable the managers with designing the strategies that can contribute to the progress of the company in the future. SWOT ANALYSIS Strengths Home delivery of the DVD Unlimited movies and episodes High end technology employed Large base of subscribers First movers advantage through innovation Weaknesses Loss of subscribers Consumers have become price conscious The updating facilities of the movies are less Opportunities Business penetration in the international markets and offering a unique experience to the customers Delivering original content with utmost efficiency Using increased technology Threats The industry is competitive and the profitability margin is also less The price of the content is also high Innovation can lead to a shift in the technology Using this analysis all the factors of the industry can be assessed. Based on this the strategies can be developed for the progress of the company. OPTIONS FOR HASTINGS The decision which Hastings took as the CEO of the company resulted in fatal damage to the reputation of the business. Dividing the businesses and increasing the subscription cost significantly and it damaged the company’s reputation. Moreover, this strategy gave a chance to the competitors to progress and enhance their market share. Based on this, Netflix faced huge damage with its share price which fell by nearly 50% of its original price. The subscribers of the business also left and acquired the services of the competitors. Changing the business structure must have been done smoothly. Policies for slow measures and appropriate communication must have taken place. Based on this the charges of subscription must have been kept steady so that the response of the customers could have been assessed. The measures taken must have noticed that changes in the structure would damage the reputation of the company. Criticism could have been avoided if the change process was slow. Drastic change in the structure made the customers switch the services. If the application of change would have been slow and steady then the customers would have adapted more quickly. The business would also not have faced the loss of subscription. Considering the competition within the industry the most suitable decision would be to make the customers adapt to change slowly. The changes in the business structure must have been slow and the feedback of the customers must have also been taken. The strategic managers must have channeled the process based on research and findings to conclude the response of the existing customers. The change in the structure drastically damaged the reputation and at the same time decreased the stock price. Fall in the stock prices and loss of subscription damaged the sustainability of the company. Slow change would have gone unnoticed and users would have slowly adapted to the change. Strategic positioning and analysis of the company would have shown that getting both the services together was the only reason for the retention of the customers. CONCLUSION In this analysis the position of the business has been discussed. Based on this assessment the decisions of the company have been assessed. The application of various model helps in developing an idea of the company position and based on this the strengths and weaknesses of the decisions which have been taken have also been assessed. Works Cited Chang, Hsu-Hsi, and Wen-Chih Huang. "Application of a quantification SWOT analytical method." Mathematical and Computer Modelling 43.1 (2006): 158-169. Dau, Luis, David T.A. Wesley. “Netflix streaming away from DVDs”. IVEY. Read More