2021

BUSINESS MANAGEMENT
ASSIGNMENT 1
BMNG7311

BACHALOR OF COMMERCE IN DIGITAL MARKETING

‘Stories move us. They make us feel more emotion, see new perspectives, and bring
us closer to each other’ (Netflix, 2020). Founded in 1997 by American entrepreneurs
and co-founders Reed Hastings and Marc Randolph (Hosch, 2021), with around 208
million paid memberships in over 190 countries and a wide range of award-winning
TV shows, anime, feature films, documentaries and more, Netflix is one of the
world’s leading entertainment services (Netflix, 2020). What was once a small,
scanty DVD rental service launched in 1998 has now become one of the most well-
known and influential media streaming services around the world with a subscriber
base of almost 158.3 million subscribers. An estimation of nearly 37% of internet
users around the globe make use of Netflix today (Rangaiah, 2021). With a low
monthly price ranging from R99 to R169, you can watch as much as you want,
whenever you want, on a variety of different devices (Netflix, 2020).

As a consultant in strategic analysis and development, I have been approached by

Netflix and tasked with compiling a report on three major aspects of their strategy,
namely the conceptual fit between their internal and external environment, their
strategic intent, and the sustainability of the company. The following report will
provide information pertaining to Netflix’s utilization of either an “inside-out” or an
“outside-in” perspective, an analysis of Netflix’s mission statement and the purpose
of having one, and an evaluation of the extent to which Netflix has implemented the
concepts of “inclusive business” and “shared value”.

Question 1

Under the inside-out perspective, strategic leaders have the belief that strategies
should be designed and established around the resources, strategic architecture,
goals, values, and the dynamic capabilities of the organisation in addition to having
the ability to convert business intelligence into knowledge which can be used to take
advantage of opportunities within the external environment. This is otherwise known
as strategic stretch. The outside-in perspective also known as the market-driven
strategy and the industrial organisation model, follows the belief that strategies ought
to be designed and developed subject to market needs and based on an
understanding of and response to the external environment (Louw & Venter, 2019).

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The inside-out perspective follows the belief that the organisations inner strengths
and capabilities will be the driving force behind a sustainable future. On the other
hand, the outside-in perspective is driven by the belief that the key to success is
customer value creation (Ozeritskaya, [s.a.]).

These two perspectives can be further differentiated. The inside-out perspective

looks at the organisation first and starts with what it already possesses before
looking at anything else. This perspective raises questions like what the organisation
has in terms of talent, customer relationships, core competencies, resources, and
networks as well as how can these be leveraged. With an organisation that adopts
an outside-in perspective, the key word is not product but need, and the knowledge
used to form business plans and value propositions is derived from the marketplace.
The people within this organisation think expansively and are completely immersed
within the minds of their customers, seeking ways to increase demand (Ozeritskaya,
[s.a.]).

Netflix has a customer-centric approach to doing business and spends a great deal
of their time focused on enhancing its customer experience. ‘The company maintains
that member satisfaction is critical to its growth’ (Pratap, 2021). Based on this Netflix
uses an “outside-in” perspective.

To boost and enhance its customer experience, Netflix utilises several technological
algorithms (Rangaiah, 2021). Data is collected from each user, and with the aid of
data analytics the company can understand the behaviour and watching patterns of
subscribers. Data analytics is leveraged to form a recommendation algorithm which
suggests customized content to subscribers as per their needs, choices, and
preferences (Markivis, 2021). This suggests that Netflix places great emphasis on
the needs and opinions of their subscribers when doing business. Hence an
“outside-in” perspective.

To further support the idea that Netflix utilizes such a perspective, one could look at
their use of feedback. Apart from the monitoring of user online behaviour, Netflix has
a feedback system set in place. The company encourages their audience to give
their feedback. This aids Netflix in better understanding the preferences of
consumers and with making better show suggestions and the creation of better
content (Markivis, 2021).

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For example, ‘Netflix spent around $100 million on 26 episodes of House of Cards by
analysing the data of its viewers, i.e., based on their customer behaviour as well as
feedback’ (Rangaiah, 2021).

Another example of how Netflix uses the needs of the market to form business
strategies (i.e. “outside-in” perspective) is how it shifted its focus to mobile
experience. The company recognized early on that majority of people accessed the
internet on mobile devices, and in turn shifted their focus to its mobile experience to
accommodate the market. Netflix focused on both growing its relationship with
smartphone brands, mobile/ TV operators, and internet service providers, as well as
user interface, streaming efficiency for cellular networks, signups, and credentials to
grow emphasis on its mobile experience (Pratap, 2021).

Question 2

A mission statement is a brief explanation of an organization's reason behind

existing. It offers a description of the organization's purpose and its overall intention.
It supports the vision and serves to communicate the organisation’s purpose and
direction to stakeholders such as employees, customers, vendors etc. (SHRM,
2021).

An organisation’s mission statement can be altered in accordance with changing

environmental conditions. In the current dynamic and turbulent competitive business
environment, detailed formal planning is often considered to be problematic.
Reasons for this being that these plans are based on uncertain forecasts. Due to
this, a mission statement is seen as being quite important. A clearly defined mission
statement offers executives the necessary guidance and direction (in the form of
‘real-time planning’) needed to develop strategies in line with changing trends (Louw
& Venter, 2019).

The company’s mission statement is ‘we promise our customers stellar service, our
suppliers a valuable partner, our investors the prospects of sustained profitable
growth, and our employees the allure of huge impact’ (Mission Statement Academy,
2021). The above mission statement reflects what Netflix is best known for. This
being providing customers with excellent and unparalleled entertainment services.
The statement also demonstrates how it balances customer satisfaction with the
financial needs of other stakeholders (Mission Statement Academy, 2021).

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When forming a mission statement, there are a number of questions which should be
answered. With a typical mission statement, one or more of the following questions
are answered within it. Why is the organisation in business?; What are the
organisations economic goals?; What is its operating philosophy in terms of
organisational image, self-concept, and quality?; What are the organisations core
competencies and competitive advantage?; What customers do and can they
serve?; and how does the organisation view their responsibilities to employees,
shareholders, competitors, communities, the environment and social issues? (Louw
& Venter, 2019).

Although not exceedingly long and comprehensive, the statement describes the
fundamental objectives of Netflix. When analysing their mission statement majority of
the above questions were answered, either implicitly or explicitly. As stated within
their mission statement, the organisation is in business to provide stellar/ outstanding
service in terms of video entertainment. At first glance, this statement seems
simplistic, but clearly expresses why the company is in business. The company
states that it aims for sustained profitable growth, this explicitly indicates the
economic goals of Netflix as actively seeking survival through growth and
profitability. Netflix aims to provide stellar service, being a valuable partner, and
making a huge impact. This highlights their stance towards excellence and in turn
their operating philosophy in terms of quality. However, their organisational image
and self-concept does not appear within their mission statement. Both core
competencies and competitive advantage, as well as the company’s target audience/
market is not conveyed or included within Netflix’s mission statement. The
company’s mission statement includes its primary stakeholders (i.e. customers,
suppliers, investors, and employees) and also indicates their commitment to them.

Although the mission statement describes Netflix’s fundamental objectives, one

cannot get a sense of who the company is and what they actually provide customers.
The mission statement also does not convey the company’s core competencies and
competitive advantage in terms of cost and differentiation. I would recommend that
the product/ service be mentioned as well as what differentiates the company from
other media streaming services, such as Amazon Prime, Disney+, Showmax, Hulu,
HBO etc (Business Strategy Hub, 2020).

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A potential mission statement could be “Our mission at Netflix is to offer the world a
unique entertainment experience by providing the highest quality and most
affordable media streaming and video entertainment with creativity, ingenuity, and
originality”.

Question 3

The concept of “shared value” refers to the benefits that an organisation can create
concurrently for both itself as well as its stakeholders. Related to this concept is the
idea of “inclusive business” which prioritises stakeholders which are typically
excluded from markets or supply chains. According to Louw and Venter (2019),
Porter and Kramer developed the notion of “shared value” as a way to counteract
and rectify what they see as an outdated approach to value creation. This approach
views value creation quite narrowly, missing the most significant customer needs
and overlooking and ignoring the wider influences which determine longer-term
success, all whilst optimising short-term performance within a bubble. Therefore,
rather that separately fulfilling economic and social objectives for both shareholder
demands as well as social responsibilities, they argue that these (economic and
social objectives) should be combined in the pursuit of “shared value”. Meaning that
value is created for not only the organisation but also for society as the organisation
meets the needs and challenges it faces.

“Shared value” is a business strategy which was designed and created to profitably
solve social issues. This is achieved by leveraging the innovative ways and
resources of the private sector in order to create novel solutions to some of the
issues faced by society. This ultimately results in a more prosperous environment to
operate within, making it so that business can be more resilient and sustainable
(Shared Value Project, 2021). “Shared value” is all about the creation of new policies
and operating procedures which allow companies to maximise their revenues, whilst
at the same time, offering benefits which add value to local communities (British
Assessment Bureau, 2016). Inclusive business on the other hand, involves providing
goods, services, and livelihood opportunities (in ways which are still profitable) to
individuals living at the base of the economic pyramid. Thus, making them a part of
the value chain either as suppliers, retailers, customers, employees, or distributors
(InclusiveBusiness.net, 2020).

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With being one of the world’s leading entertainment services and one of the most
well-known and influential media streaming services around the world, there is no
doubt that Netflix is a highly successful company. Throughout this report information
pertaining to Netflix’s utilization of an “outside-in” perspective, an analysis of their
mission statement and the purpose of having one, and an evaluation of the extent to
which they have implemented the concepts of “inclusive business” and “shared
value” was discussed.

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REFERENCES

British Assessment Bureau. 2016. Creating shared value – A new way of doing
business?, 13 January 2016. [Online]. Available at: https://www.british-
assessment.co.uk/insights/spotlight-introducing-concept-creating-shared-value/
[Accessed 29 April 2021].

Business Strategy Hub. 2020. Top 15 Netflix competitors & alternatives. [Online].
Available at: https://bstrategyhub.com/top-netflix-competitors-alternatives/ [Accessed
29 April 2021].

Hosch, W.L. 2021. Netflix, Encyclopedia Britannica, 9 November 2020. [Online].

Available at: https://www.britannica.com/topic/Netflix-Inc [Accessed 24 Apr 2021].

InclusiveBusiness.net. 2020. What is inclusive business?. [Online]. Available at:

https://www.inclusivebusiness.net/IB-Universe/what-is-inclusive-business [Accessed
29 April 2021].

Louw and Venter. eds. 2019. Strategic management. Towards sustainable strategies
in southern Africa. 4th ed. Cape Town: Oxford University Press Southern Africa.

Markivis. 2021. How analytics can be a game changer: A Netflix case study. [Online].
Available at: https://www.markivis.com/insights/marketing-analytics/how-analytics-
can-be-a-game-changer-a-netflix-case-study/ [Accessed 26 April 2021].

Mission Statement Academy. 2021. Netflix mission and vision statement analysis, 12
July 2019. [Online]. Available at: https://mission-statement.com/netflix/ [Accessed 29
April 2021].

Netflix. 2020. Company Profile. [Online]. Available at: https://ir.netflix.net/ir-

overview/profile/default.aspx [Accessed 24 April 2021].

Netflix. 2020. Frequently asked questions. [Online].

Available at: https://www.netflix.com/za/ [Accessed 24 April 2021].

Netflix. 2020. Stories move us. They make us feel more emotion, see new
perspectives, and bring us closer to each other. [Online]. Available at:
https://about.netflix.com/en [Accessed 24 April 2021].

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Ozeritskaya, E. [s.a.]. Inside-out versus outside-in – what’s the better strategy?,
Hype Innovation, 14 May 2015. [Blog]. Available at:
https://blog.hypeinnovation.com/inside-out-versus-outside-in-whats-the-better-
strategy [Accessed 24 April 2021].

Pratap, A. 2021. Business growth strategy of Netflix: a case study, Notesmatic, 23

October 2020. [Online]. Available at: https://notesmatic.com/2020/10/business-
growth-strategy-of-netflix-a-case-study/ [Accessed 24 April 2021].

Rangaiah, M. 2021. Using data handling and digital marketing to maximise customer
experience: a Netflix case study, Analytics Steps, 13 January 2020. [Blog]. Available
at: https://www.analyticssteps.com/blogs/using-data-handling-and-digital-marketing-
maximise-customer-experience-netflix-case-study [Accessed 24 April 2021].

Shared Value Project. 2021. What is shared value?. [Online].

Available at: https://sharedvalue.org.au/about/shared-value/#:~:text=Shared
%20value%20is%20a%20business,of%20society's%20most%20pressing%20issues
[Accessed 29 April 2021].

SHRM. 2021. What is the difference between mission, vision and values
statements? [Online].
Available at:
https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/
isthereadifferencebetweenacompany
%E2%80%99smission,visionandvaluestatements.aspx#:~:text=A%20mission
%20statement%20is%20a,customers%2C%20vendors%20and%20other
%20stakeholders. [Accessed 29 April 2021].

World Bank Group. 2021. Understanding inclusive business. [Online]. Available at:
https://www.ifc.org/wps/wcm/connect/Topics_Ext_Content/IFC_External_Corporate_
Site/Inclusive+Business/Understanding+Inclusive+Business/ [Accessed 29 April
2021].