Netflix, Inc. is an American provider of on-demand Internet streaming founded by Reed hasting and Marc Randolph in 1997. Behind this multi billions dollar company, there is unique story of how, Hasting, one of Netflix founder came up with the Idea of Netflix. The idea for a rent-by mail video business came up because he was forced to pay a late fee for an overdue copy of Apollo 13. After he realized no one has ever come up with this business model yet, he then sells his company, Pure Ateria software and invested 2.5 million to a new company called Netflix. In September 1999 Netflix introduce the new concept which allow them to provide flat-fee, unlimited rentals, and late fee free, called monthly subscription concept (O'Brien). The problem Netflix is experiencing now is that a hypercompetitive market with really high threat of new entry. By analyzing their strategic management and strategic competitiveness, we are going to formulate and implement the best strategic action for Netflix to earn Above-average return.
a. Netflix business strategy is a cost leadership with variety product and service which allow them to gain revenue up to US$4.37 billion in 2013 (Hastings and Wells). What make Netflix different is preferable is because its subscriber are able to select, receive, and watch/stream content in an unlimited time with 8.99 per month. The fact that, this market is not yet heavily regulated and not much capital needed to enter the market, make anyone in internet based service company could be Netflix new competitor.
b. The market where Netflix is currently competing is indeed a fast-cycle market. Competing in this kind of market means, Netflix has to keep being i...
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... other company at big scale in the market.
Hastings, Reed and David Wells. "Netflix, Inc. - Annual Report." Financial Report. 2013. http://web.archive.org/web/20140308004838/http://ir.netflix.com/secfiling.cfm?filingID=1065280-14-6&CIK=1065280.
Nemcick-Cruz, Margie. Netflix SWOT Analysis- Strengths and Weaknesses. Valuation too high. 11 December 2013. http://obvious-stock-picks.blogspot.com/2013/12/netflix-swot-analysis-strengths-and.html. 4 april 2014.
Noren, Eric. Digital Business Models. 21 January 2013. http://www.digitalbusinessmodelguru.com/2013/01/analysis-of-netflix-business-model.html. 4 april 2014.
O'Brien, Jeffrey M. Wired News. December 2002. http://archive.wired.com/wired/archive/10.12/netflix.html?pg=2. 2 April 2014.
Stelter, Brian. "Netflix Hits Milestone and Raises Its Sights." The New York Times, 21 October 2013.
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