Essays on Netflix Thesis
Running Head: Research Proposal Research Proposal [Institute’s Research Proposal Introduction American based company Netflix offers on-demand streaming media facility in United States, UK, Latin America, Ireland and Canada. The Corporate Headquarters of Netflix has more or less 900 employees (Netflix, 2012). According to the statistics, gathered at the end of 2011, this leading online movie rental store has over 23 million streaming members. The appeal and achievement of Netflix is the result of a wide choice of DVDs, simple method of selecting movies and fast and prompt delivery (Garrett, 2000). It is listed on NASDAQ Stock Exchange as ‘NFLX’ (Vuru, 2012).
Making achievable strategic goals
Thompson, Strickland, and Gamble (2005) have stated that goals are strategic and ways to achieve them should be differently designed. The Research and Development (R&D) function should be improved and developed, and new links should be made with those who have expertise in ‘high volume file transfer systems’ and ‘video compression’ (Fitzpatrick, 2000) in order to become the market leader of digitally downloaded movies.
Strategy – supporting strategies to be made
Particularly, major aim is to gain more customers and subscribers. More aggressive approach should be adopted while advertising and enhancing website alliance programs. Moreover, goal is to make subscribers feel free to put forward any queries they face (Brass, 1998). The company should encourage employees to become active users of the service by offering them free Netflix subscriptions. This will facilitate the company to find and fix more problems and can be more reactive to the customers needs and concerns.
Strategy should be linked with financial budgets
Marketing along with R&D department should keep the track of work and strategic plans, such as expansion, should be balanced and must not go beyond the assigned budget.
Communication and Infrastructure
Creating systems that permit the storage as well as transfer of digitally downloaded movies is one of the important strategic objectives (Barker, 2003). Moreover, there is a need of a centralized system for contact numbers along with email addresses of workforce and the listing of customers’ database.
Thompson, Strickland, and Gamble (2005) states that geographically dispersed workplaces and internal communication systems are strategically important in framing the organizational culture and strategy.
Scope of the Industry
With the increase in trend of internet, TV, and widespread use of cheap DSL service, internet rental of movies has a future.
The management at Netflix (2012) has been making some hasty decisions to stay in business but it has been taking them backward. Now, same website offers DVD by mail and streaming content, but the company is facing problems in acquiring the license for streaming TV shows online.
Netflix & its Competitors
The major competitors of Netflix are “Vido, Hulu, Amazon, Greencine, Movie Gallery, and Redbox” (Herlocker et al, 2004). Particularly, Netflix operates in pure competition and compete with conventional rental stores for DVDs. The company has revolutionalized online subscription method whereas opponents, such as Walmart and Blockbuster, have brought their own versions in the scence. However, Netflix has exclusive copyrights for its business model. Moreover, the competitors with such deep interests may have the resources to develop their own systems and wait years for them to become profitable. According to Freeland (2003), companies can offer 24/7 access along with low cost via web in comparison with live service representatives.
Thompson, Strickland, and Gamble (2005) have witnessed that Walmart is smart and competitive enough to mount a persistent attack.
Financial Strength of Netflix
The financial position of Netflix is not ideal as the financials show that it is funding itself from debt. Although it has made constant increase in retained profits and in long run with R & D, it might flourish in future (Geoffery, 2005). By effectively using these retained profitable earnings, NFLX can greatly improve their long-term economic picture. However, currently it is not an ideal company to invest, although its quick and current ratios are fine. In first quarter of 2011, Netflix is projected to make $1.07 per share on revenue of $705.7 million (Netflix, 2012). It is a significant raise in comparison with the 2010’s profit of 59 cents on revenue of $493.7 million, as shown by a study of 25 market analysts surveyed by FactSet Research (Netflix, 2012).
Key Success Factors
Netflix CEO Reed Hastings said, "Our vision is to change the way people access and view the movies they love” (Netflix, 2012). Two key success factors required to materialize this vision are (1) Convenience, and (2) Cost-effectiveness.
Barker, R. (2003). “Can Netflix Keep Spinning Gold?” Business Week, p. 112.
Brass, K. (1998). “Netflix Sheds Its DVD Sales Arm, Cedes to Amazon.com.” Video Store, p. 8.
Fitzpatrick, E. (2000). Netflix Drops Per-Movie Rentals, Offers Monthly DVD Subscription. Billboard, p. 79.
Freeland, J. G. (2003). The Ultimate CRM handbook. McGraw-Hill.
Garrett, D. (2000). “Netflix, Pair Doing DVD Rev-Share.” Video Business, p. 1.
Geoffery, M. M. (2005). “Netflix Moving Forward.” A Strategic Plan. MBA9150 Professional Challenge.
Herlocker, J., Konstan, J., Terveen, L., and Riedl, J. (2004). “Evaluating Collaborative Filtering Recommender Systems.” ACM Transactions on Information Systems. Volume 22, pp. 5-53.
Netflix. (2012). Company Timeline. Retrieved on April 16, 2012: https://signup.netflix.com/MediaCenter/Timeline
Netflix. (2012). Netflix Prize. Retrieved on April 16, 2012: www.netflixprize.com
Thompson, A. A., Strickland, A. J., & Gamble, J. E. (2005). Crafting and Executing Strategy: The Quest for Competitive Advantage w/OLC/Premium Content Card. McGraw-Hill/Irwin.
Vuru. (2012). Netflix Inc. Retrieved on April 16, 2012: http://www.vuru.co/analysis/NFLX/financialStrength