Running head: Netflix Case Study
Neflix: Case Study
Reuben Ichwara, Mike Kleinschmidt, Paul Krause, Jeffrey Modder, Joseph Wallis, Amy Yates
Metropolitan State University
Strategic Management
Professor Stockhausen
June, 28 2014
1
Running head: Netflix Case Study
Table of Contents
Company Profile…………………………………..……………………………………….3
SWOT/Situational Analysis……………………………………………………………..3-4
General And Direct Environments………………………………………………………4-5
Analysis Of The Firm……………………………………………………………………5-6
Internal Audit Of Firm’s Resources……….……………………………………………6-7
Distinctive Competencies………………………………………………………………….7
Competitive Advantages…………………………………………………………………7-8
Identification Of Strategic Issues………………………………………………………….8
Important Problems/Opportunities………………………………….…………………..8-9
Strategic Concern………………………………………………………………………9-10
Strategic Alternatives…………………………………………………………………….10
Recommendations………………………………………………………………………..10
Strategic Planning…………………………………………………………………….11-12
International Expansion………………………………………………………….11
Culture………………………………………………………………………..11-12
Consumer Brand Loyalty…………………………………………………………12
Company Profile
Netflix Inc. (hereby referred to as “Company”) launched its Internet streaming service in January
2007, with instants-watching capability for over 2,000 titles on personal computers. The
Company saw instant and rapid growth resulting from its “one of a kind” service, emphasis on
providing high-speed streaming content to all subscribers, and commitment to customer
satisfaction. The Company developed market shares through aggressive partnerships with several
industry leaders to create “Netflix-ready” devices. With rapid expansion came rapid challenge.
The Company’s subscribers can receive standard definition digital versatile disc (DVDs), and
high definition Blu-ray discs delivered quickly to their homes. However, The Company
drastically altered their product offerings in July 2011 that resulted in a massive decline in
2
Running head: Netflix Case Study
membership and overall customer satisfaction. The Company now operates in three areas:
Domestic streaming, International streaming and Domestic DVD. Domestic and International
streaming segments draw revenues from monthly subscription services consisting solely of
streaming content. The Domestic DVD segment derives revenues from monthly subscription
services consisting solely of DVD-by-mail. The Company’s DVD rentals has gradually seen a
decline, with membership at 8.2 million—an effect of $128 million in contribution to 4th quarter
earnings of 2012. Additionally, The Company is facing continuous pressure from competitors
that possess assets in far greater quantities than those of Netflix. The Company competes with
companies such as Time Warner, Comcast, DirecTV, AT&T Inc., Verizon, Google, Amazon,
Blockbuster and Best Buy. The Company’s future is one of hope for growth, but this growth will
be met with strong competition that will require various successful strategic management
decisions on behalf of leadership.
SWOT Analysis
3
Running head: Netflix Case Study
SW
T
Strengths
Brand Recognition.
Extensive customer
base.
Low DVD rental fees.
Apps on all platforms.
Large New Release
Inventory.
Excellent
Technologies.
Opportunitie
s
Bid for more popular
TV titles.
Target/market to
kids/young adults.
Better contracts with
Threats
Competitor
Partnerships.
Competitors offering
similar
streaming/gaming
services.
O
Weaknesses
Older titles.
Expired Contracts
with Sony/Stars.
Lost video provider
EPIX to Amazon.
Competition has more
liquid cash.
Damaged reputation
since restructuring.
Streaming and
subscriber growth are
slowing.
SWOT ANALYSIS
Netflix Inc.
4
