Netflix : Case Study

By : - Mansi
Naveen
Mayank
Devender
Lalit
Arpit
Shivangi
 Porter’s five forces model on Netflix
Porter' s five forces model analyze an industry or company on the basis of five competitive forces
such as threat from new products, threats from substitute products, rivalry among existing ,
Bargaining power of buyers and bargaining power of suppliers. These forces determine the
competitive environment which affects the profitability of the industry or company. The bargaining
power of suppliers forces the ability of suppliers to raise prices , reduce product quality and
availability, Factors to be considered includes number, size, substitute product , product
differentiation etc. In this industry the supplier power is high because the suppliers in this industry
make the needed content and the companies in this industry demands large volumes of movies and
TV series. To reduce the supplier power industry could use backward integration. Buyer power
includes determinants like number, switching cost, importance of individual buyer. To mitigate the
threat of bio power companies in this industry innovate on addressing these major issues. Like
switching cost, video and viewer preferences . Threat of substitute, In this industry the threat of
substitute is high as the gone customers get same level of entertainment from other industry. The
threat level is high in this industry , cost and products key factors that separate each streaming
providers from each other. Competitive rivalry shows the significant competition . The competitive
environment of the company's in this industry is high such as competitors like Netflix, amazon
prime, You tube etc. The switching cost are low, easier for subscribers to switch among competitors.
Threat of new entrance ,for smaller companies the threat level is low because the large companies
like Netflix is offering on high economies of sale with high product variety while maintaining low
cost and increasing profit. For bigger companies with technology and capital to acquire content they
could pose a threat to new entrance. The overall profitability in this industry is high due
characteristics like unique products or content , control over prices, barriers to entry is high etc.
 SWOT Analysis of Netflix
It is an analytical tool that determines the strength , weakness, opportunities and
threats, that is both internal and external factors that will influence business and
marketing strategy. The strengths of Netflix include exponential growth with
global customer base and adaptability. For Netflix the online content library which
gives access to content any time, anywhere , it also translates to consumer value
with comfortable and legal way to watch wide variety of content at convenient
time, it also act as weakness as Netflix has to continually invest new content to
satisfy the demand raised by customers, increasing operational cost is also a
weakness. There are countless opportunities available to all type of businesses as
they develop, Netflix identified the emerging online trend and successfully pivoted
its DVD distribution into an online model before the entry of competition in that
area. Threats may come from the competitors, or from external factors like change
in government policies or a new technological disruption could negatively affect
company if not anticipated . The strategy that can be suggested on the
basis analysis is that the company has wide opportunity in current situation so it
has to expand the customer base and must be able to provide some exclusive
trends and contents , different from competitors . Netflix has to continue
innovation or new ways to grow and out perform its competitors.
 Netflix uses its technology to
maintain its competitive advantage
The growth and innovation are other major factors that
act as its competitive advantages. The unique business
strategy followed by the company is another major factor
determining its competitive advantage. The global
growth of Netflix with Huge customer base is a huge
factor for the company success. The company had a clear
understanding on how to attract content to large
audience widely and building their brand loyalty also
another key for its success.
Netflix overcome its challenges in the
international market
In the international market , the challenges faced by
Netflix includes legal restrictions in several countries for
protecting their domestic companies , regional
adaptation , reach to global customers. So in order to
overcome these challenges in the international market ,
some recommendations are: Creating more regional
contents that is by cross selling best regional shows,
entering into strategic alliance with companies could
enable to reach customers and thereby attain loyalty,
Identification of market , adopting transnational
strategies.
Future Strategic Initiatives
Technological advancement is key in this industry , Future
strategic initiatives that can be considered by Netflix is
entering into new areas by using the latest version of
technology as the company has made a series of
innovation .The company could develop new strategies to reach
customers in those countries were there is legal restrictions by
getting permission , developing relationship .Netflix aims at
reaching everywhere , that is to get the entire world
watching .As the streaming technology develops , Netflix has to
find those opportunities first as it isn't exclusive for Netflix. The
strategy initiatives to increase the customer base and increase
the content , as content is the king in this industry.