Netflix 1 From our lecture 34 below

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1. From our lecture 3-4 below is the five competitive forces and our book on chapter 3 on
page 55
Competition from rival sellers: Netflix has rival among Blockbuster, Red box, rental
movies and recently with the new online stream on laptop and television which has been
growing in high speed ratio. The rivalry in this movie industry is high in DVD rental. All
of these firms are using any type of new technology to gain that market place where they
can easily sell their products. The cost of switching is also low which tell also about less
customer brand loyalty.
Competition from potential new entrants: This is always a high threat of new DVD
rental industry. The factor for high threat on new entrants is low entry barriers and high
buyer demand. All new entrants are attracted to this field due to huge market rate and
maximum profit. Since Netflix come to the market it has become biggest barriers to all
new entrants because of Netflix brand loyalty, copyright and patents and better channels.
Netflix has taking advantage of cost from their long knowledge and technology.
Competition from producers of substitute products: The idea of DVD doesn’t exist any
longer because consumers now can download movies or using their cable for and
demanded movies. There are also substitute for this DVD rental industry like cinema hall,
download and on demand. The threats of substitute of DVD rental are high.
Supplier bargaining power: The pressure of the supplier bargaining power in the DVD
industry is high. The movie studios is one who have bargaining power over Netflix and
other movie rental industry because they have heavily influence on pricing and some other
required requisites and setting.
Customer bargaining power: Individual customer doesn’t have power to bargain with
movie rental industry in terms of pricing on movies. Customer can make their own choice
regarding the movie rental with it pricing, terms and conditions.
2. From our textbook Crafting & Executing Strategy page C94 Netflix’s Strategy are as
follows:
Providing subscribers with comprehensive selection of DVD titles.
Acquiring new content by building and maintain mutually beneficial relationships with
entrainment video providers.
Making it easy for subscribers to identify movies they were likely to enjoy
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Giving subscribers a choice of watching streaming content or receiving quickly delivered
DVDs by mail.
Gradually transitioning subscribers to streaming delivery rather than mail delivery as the
popularity of internet delivered content grow.
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