Netflix Incorporation Case Study

Document Type:Case Study

Subject Area:Management

Document 1

is an entertainment corporation structurally organized, managed and operating under three fundamental segments: domestic DVD, domestic and international streaming. Company subscribers view original documentaries, feature films, movies and television shows directly on internet connected devices. Consequently, the company avails both domestic and international streaming services and it’s the world largest provider of online movie rental services (Green, 2018). As such, the consumers paid for the delivery of DVDs in their respective places and homes through shipping and mail companies and also the online streaming service enabling them to watch online streaming videos, movies, and unlimited television programs. In 2011, Reed Hastings, who is the Netflix Incorporation CEO and Co-Founder stated that the incorporation was separating its physical rental DVD by delivery service from the virtual online video and movie streaming service, thus, rebranding the physical DVD rental delivery service to be Qwikster. Therefore, Netflix incorporation asserted its intention of restructuring and rebranding its DVD rental services Qwikster, the independent subsidiary, and distinguishing streaming services and DVD rental. Netflix had at least twenty-six million subscribers globally. However, after the rebranding, the incorporation announced unsubscribing of 800,000 (Grinapol, 2014). Thus, incorporation had a decline in profit of about 87% due to subscribers’ confusion and outrage and the company anticipated more losses. The research explores the ultimate decision of rebranding Netflix Company by separating the physical renting DVD by delivery service from virtual online streaming service, therefore, rebranding rental DVD system as Qwikster, to distinguish it from virtual online video streaming service. Furthermore, the paper analyzes the implications of the rebranding of Netflix and its future development and growth.

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The research establishes Netflix content strategies, pricing structure and streaming versus mail order distribution respective management guidelines of incorporations. Objectives. The key objective of the research is examination and analysis of Netflix incorporation decision of rebranding implications. The study aims to evaluate Netflix pricing structure and consequential effect of rebranding to pricing, profit, and growth of online opportunities. In addition, the paper intends to explore the company original content approaches and discuss the distinction between streaming and mail distribution order. Historical Background Netflix incorporation was founded in 1997 by Reed Hastings and Marc Randolph. In 1998 Netflix Company was officially launched with about nine hundred DVDs available. Subsequently, the incorporation introduced subscription ideology in 1999. Since then, the incorporation has established its reputation in the enterprise. Between 2007 and 2011, the company relished dazzling growth becoming United States success story for a company that effectively and efficiently managed, customer, satisfied and ideal incentives for employees.

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Hence, there dramatic increase in revenue and number of subscribers. By 2011, Netflix incorporation is the principal in the entertainment industry and most successful enterprise venture with the rapid increase in the number of subscribers. Netflix asserted splitting out and rebrand its DVD through mail service giving rise to Qwikster. The CEO justified rebranding decision which was to differentiate online video streaming and mailing DVD. Furthermore, the company has successfully achieved $100 billion in capitalization of the market in January 2018, becoming the prevalent entertainment corporation in the world today, larger than any media syndicate with exception of Disney and Comcast. Governance information Effective leadership is crucial to the success of a corporation through clearly defined goals and vision created by administration management. Organization leaders have an intrinsic charisma which they influence others in attaining goals.

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Reed Hastings is the CEO Netflix Corporation with leadership skills that transformed the company from a small DVD by mail service to global principal internet virtual streaming subscription service availing diverse television shows, videos, and movies to consumers. The corporation today operates in about fifty countries and over fifty million subscribers. Furthermore, pricing for the two services will be different posing an intense hassle to potential subscribers and competitors emerging such as Hulu and Redbox. In addition, the rebranding move was highly criticized and caused the adverse decrease in the number of consumers. The significance of the split in corporate services. Differences between DVDs physical mail and virtual online streaming increased rapidly the market for pre-recorded videos and movies mainly in the virtual streaming market. The two models needed distinct models of capabilities and assets to flourish again and each encountering different competition.

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The corporate brand was built on innovativeness, and customer oriented firm from that transformed renting of videos and movies. The corporation allowed people to move from inopportune brick and mortar chains to easy online home delivery model. Nonetheless, strategies should be iterative and dynamic. Thus, having the agility to change the decision based on customer feedback is an effective and fundamental strategy for success. Netflix new pricing structure According to Robinson (2011), at the beginning of 2007, the corporate started giving mail rental subscribers chance to access an unlimited number of videos through internet online streaming with no additional price. mail order distribution Streaming was virtual relying on the internet access to watch movies and videos online. On the other hand, mail order distribution was the physical delivery of the DVDs by mail and shipping company to the customer.

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Netflix Inc. has about 5. million DVD subscribers falling from twenty million in 2010 due to global internet access development. Netflix Incorporation mission is to grow video streaming subscription service not only domestically but also globally. Furthermore, the corporation is constantly enhancing the consumer experience by an absolute spotlight on diversifying virtual streaming video and movie content and improving the user interface to more devices connected to the internet to aid in profit contribution. The corporate mission is to revolutionize the way people watch videos, movies, and television. The company has more than thirty million video-streaming subscribers in the United Kingdom, United States, Nordics, Canada, Latin America, and Ireland making Netflix incorporation the global leading entertainment video subscription service. In addition, the mission, vision, and goals are aimed at customer, suppliers, investors and partners' prediction of sustainable profit and revenue growth through productivity, creativity, reliability, and intelligence (Chopra, 2017).

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In addition, efficient utilization of Netflix resources to develop novel television programs for self-production and distribution which has a potential to attract new subscribers. Furthermore, developing and diversification of the corporation international enterprise to increase the revenue. However, Netflix faces external threats which encompass: increased competitiveness in the market with the emergence of various streaming sites and television programs. Consequently, some service providers are providing content with no charges. Suppliers and consumers. Netflix reliance on third-party companies for content delivery to the consumer is an internal setback to the corporation. The global international market is not yet quite profitable with respect to Netflix services. Analysis of Strategic Factors Industrial factor. The crucial factors that impact the competition in content streaming industry encompass: competing for corporation rivalry over dominance and market access, the emergence of new competitors, for instance, Hulu and redox, the potentiality on the development of new products.

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Furthermore, television online streaming is affected by suppliers ‘bargaining power and consumers bargaining power. Consequently, Netflix eternal analysis encompasses examination of suppliers and consumer behavior and feedback on the splitting ideology. The internal analysis involves analysis of pricing, management, competition and delivery of services such as convenience and profitability of separating video streaming and physical DVD by mail services. An analysis result helps the manager determine distinctive organizational competence and establish potential alternatives available for the company. Subsequently, Netflix ensures element in implementation are functional and outline guidelines on policies, objective and programs which are fundamental to strategy implementation. Therefore, the corporate goal defined is translated into objectives that are precise and specific to goals of the incorporation. Strategic Alternatives and Recommended Strategies The corporation should enhance further attempts to improve consumer services.

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Through conducting online surveys, the corporate will collect adequate feedback to enhance delivery to consumers. Online feedback from customer suggests that the company services are overpriced. The corporation should carry out competitor analysis to establish ways of availing their services at comparatively more affordable prices. The company should focus intensely on promotion technique and marketing strategy to increase and diversify their market and spread awareness on their brand. Consequently, the company offers a diverse range of subscriptions monthly that vary in charges. The critical target market for the services includes male and women and general household. The corporation has identifiable easy to use website and also effective online service and makes it easy to search and find videos and movies. Online DVD by mail rental pioneer Netflix Corporation has a diverse movie entertainment market within the entertainment industry.

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Rapid technology transformation has influenced the rental dimension into of the company changing from physical DVDs to digital service availed via streaming channels. O'Rourke, J. S.  Netflix, Inc: Risks of a new business model. Barker, C. In Wiatrowski, M. GUNTHER, D. A. N. I. E. A. L. I. B. W. N.  STRATEGIC ANALYSIS OF NETFLIX INC. S. l. GRIN PUBLISHING. Shaw, R. B.  Extreme teams: Why Pixar, Netflix, AirBnB, and other cutting-edge companies succeed where most fail.

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