USE OF BUSINESS TOOLS SAMPLE
Introduction
The business market is emerging to be a highly competitive place for the organisations to operate successfully. In this relation, the following study will focus on a business tool which will help in analysing and evaluating an organisation. Through the utilisation of effective business tools, it helps in increasing best possibilities and prospective weaknesses which might hinder the overall performance if they get addressed soon. Additionally, the study will majorly focus on Netflix for greater insightful approach and further efficient target marketing.
1. Introduce the tool and what it is designed for
This section is being undertaken to comprehend the toll which is being selected for analysing Netflix throughout the study. Therefore, Porter’s Generic Strategies and 5 Forces is being considered for structuring this entire study effectively.
Business strategies are very essential in offering success and better productivity to the organisations. Porter’s Generic Strategy in a business environment is about analysing competitive advantages along with sustaining and creating premium performance (Islami et al. 2020). The focus of this framework is especially designed into three strategies including cost leadership, focus and differentiation. Each of them are being framed for proving a business success in the industry where there are several corporations doing the same business (Firoz Suleman et al. 2019).
Moreover, in terms of Porter’s 5 Forces, this framework is used to identify the structure of the industry in order to be ahead in the competition. The model has five different forces, which helps the organisation to design their strength and weakness along with acknowledging the areas which need more efficiency (Bakir et al. 2019). In this relation, the prime five forces are competition in the industry, power of suppliers, perspective of new entrants in the industry, power of customers and lastly, threats of products which can be substituted. Through undertaking these forces, any organisation can significantly boost their revenue; however, they also need to continuously monitor the business and marketplace tactics to act accordingly.
2. Prepare the diagram using the tool on the case study
Figure 1: Diagram for porter’s generic strategies and five forces
(Source: Created by learner)
3. Conclusions on the case study company going forward based on the issues arising from the business tool
Porter’s generic strategies
In respect to aligning the framework to Netflix, it can be stated that the organisation is one of the well-known corporations in the online video streaming industry. The generic strategy of the company ensures that the organisation is working on their competitive advantages as there are already numerous firm who are competing in this sector such as Amazon, HBO, Disney, Hulu and many more (Zhang et al. 2020). The pricing strategy of Netflix is found to be a cost leadership approach, in order to ensure that the users are gaining the access to their services that have priced them in a competitive way. In contradiction, the tactics that specifically target market sectors are mostly the users who are currently on the plan along with focusing on foreign consumer base. Netflix is an organisation of the United States however; they are attracting a huge number of population in India, which can be highlighted through the figure below.
Figure 2: Growing Netflix users in India
(Source: Khan, 2019)
The organisation is allowing their respective users to watch the content on a range of devices which are being structured as per the cost. As reflected above, the company focuses on their foreign consumer base, recently, it has been reported that Netflix has reduced their prices in India amid the intense competition among Amazon Prime and Disney+ Hotstar. The basic plan of ₹199/ month has been reduced to ₹149, similarly, the premium one is reduced down to ₹649/ month which was earlier ₹799 (Mahanta, 2021).
In terms of differentiation, Netflix is the top player by proving the most loved and original content in web streaming platforms. The key strategy of Netflix is their services and product differentiation with a variety of genres. However, Amazon Prime is still there and who has now been in this race for years are also focusing on original content. Netflix, in order to offer greater consumer experience, they are largely investing on technological innovation. They have created a Cinematch algorithm that makes recommendations to their users based on their preferences and previous search history (Pratap, 2021). These activities are the areas, due to which, Netflix is gaining a huge level of consumer trust and support in the marketplace.
Porter’s 5 Forces
Competitive rivalry (High)
In respect to competitive rivalry, it can be easily acknowledged that the competition in the online video streaming industry is very high with organisations such as Amazon Prime, HBO, Disney+ Hotstar and many more.
Figure 3: Increasing competition in market
(Source: Griffith, 2020)
However, Amazon Prime is found to be the ultimate competition of Netflix as they not only provide online streaming services with original content, but with many other benefits such as music, books, and fast delivery of products (Song, 2021). The evidence reflects the existence of intense market competition due to which the threat of competitive rivalry is high.
Bargaining power of consumers (High)
In the context of the power of buyers, it can be stated that consumers and their preferences are always changing, the more there will be online services, and the viewers will find it hard to focus on any operating network. Consumers are being signed up for any contract or irregular, which makes them free of choices and preferences which cannot be underestimated. Therefore, the power of consumers will always be high as there are easy mediums and modes that are accessible for them to join (Patro, 2018).
Power of suppliers (High)
Traditionally, the organisation was fewer and lack of technological support was one of the reasons, which has restrained them to several aspects in production and constructing a movie.
Figure 4: Friends popularity among online web shows
(Source: Molla, 2018)
For example, one of the most popular sitcom comedy shows Friends has been removed from Netflix has HBO has launched their very own streaming services (Lüders and Sundet, 2021) Friends was one of the biggest names among Netflix shows, this implies that the risk in the supply is high.
Threat of substitutes (Moderate)
The prime deal of Netflix is to offer services related to online streaming with content, in this respect, YouTube is playing a major role in the market that provided movies, other thoughtful contents, motivational videos, DIY video and many more.
Figure 5: YouTube user by region
(Source: Dean, 2021)
The platform allows the users to streaming live along with record content (Tadbier and Shoufan, 2021). However, the young population are mostly onto Netflix and others while people have financial issues prefer YouTube as their means of entertainment. Therefore, the threat of substitution is moderate.
Threats of new entrants (Low)
Netflix is currently one of the most loved online streaming channels for the population when it comes to original content in different genres. However, there are still numerous competitors residing in the industry who have the prospective to hinder the established market and economy of Netflix as discussed above. Due to the high level of investment required, the entertainment industry is safer in terms of entrants (Hutchins et al. 2019). Organisations like Netflix already have their consumer base that is loyal, which directly lessen the chances of new corporations in the same industry.
4. How the tool should be used and any weaknesses it has.
The strategy of Porter’s Generic strategy and 5 Forces can be used to strategically align the business models and objectives that will also help the organisation to enhance their competitiveness and prospective advantages residing in the industry. In case of generic strategy, selection of a strategy is essential along with understanding the core of the business and researching are the possible traits which are required while conducting an analysis of a company through utilising Porter’s generic strategy (Islami et al. 2020). There are limitations to evaluating business-level strategies of generic strategies. Certain characteristics are common among companies that follow a generic approach; the major one among them is the inclination to apply the framework to an individual company rather than a whole industry.
Furthermore, in the case of Porter’s 5 Forces, determining the competitive analysis along with possible future aspects of the industry can be utilised. In contrast, the framework has major issues including its backward looking, rendering its conclusions only applicable in the near term; this shortcoming is exacerbated by globalisation’s impact. Another significant flaw is the inclination to apply the five forces model to an independent organisation rather than a whole sector. Furthermore, the structure is set up in such a way that every business is assigned to a single industry body, despite the fact that some businesses exist in multiple industries (Firoz Suleman et al. 2019). Additionally, the requirement to evaluate all 5 forces identically relates to highlight considerable strategic implementation and competition where an organisational market standings could be critically measured.
Conclusion
Based on the overall understanding of this study, it can be concluded that the business tool, which has been utilised, has several advantages, which can be effectively reflected through the analysis which has been made through undertaking Netflix as an organisation. Moreover, through the evaluation of Porter’s generic strategies and 5 forces, several elements which are related to the business environment are being attained. On the other hand, several limitations and drawbacks of business tools are being identified which has helped to comprehend the knowledge of the entire framework effectively.
References
Bakir, D., Engels, F. and Bakir, J., 2019. INNOVATORS 5 FORCES APPROACH TO INCREASE THE STRATEGIC ACCURACY OF TECHNOLOGICAL SME-INNOVATIONS. International Journal for Quality Research, 13(4).
Dean, B., 2021. How Many People Use YouTube in 2022? [New Data]. [Online] Available at: <https://backlinko.com/youtube-users> [Accessed on 19 February 2022]
Firoz Suleman, M., Rashidirad, M. and Firoz Suleman, S., 2019. The applicability of Porter’s generic strategies in pure online firms: A case study approach. Strategic Change, 28(3), pp.167-176.
Firoz Suleman, M., Rashidirad, M. and Firoz Suleman, S., 2019. The applicability of Porter’s generic strategies in pure online firms: A case study approach. Strategic Change, 28(3), pp.167-176.
Griffith, E., 2020. Amazon Prime Video Has the Most Shows, but Netflix Slays the Competition With Quality. [Online] Available at: <https://in.pcmag.com/the-why-axis/136995/amazon-prime-video-has-the-most-shows-but-netflix-slays-the-competition-with-quality> [Accessed on 19 February 2022]
Hutchins, B., Li, B. and Rowe, D., 2019. Over-the-top sport: live streaming services, changing coverage rights markets and the growth of media sport portals. Media, Culture & Society, 41(7), pp.975-994.
Islami, X., Mustafa, N. and Topuzovska Latkovikj, M., 2020. Linking Porter’s generic strategies to firm performance. Future Business Journal, 6(1), pp.1-15.
Islami, X., Mustafa, N. and Topuzovska Latkovikj, M., 2020. Linking Porter’s generic strategies to firm performance. Future Business Journal, 6(1), pp.1-15.
Khan, A., 2019. Netflix Users In India By Year: 2020 – 2023. [Online] Available at: <https://dazeinfo.com/2019/10/31/netflix-users-in-india-graphfarm/> [Accessed on 19 February 2022]
Lüders, M. and Sundet, V.S., 2021. Conceptualizing the experiential affordances of watching online TV. Television & New Media, p.15274764211010943.
Mahanta, V., 2021. Netflix India reduces prices across its streaming plans. [Online] Available at: <https://m.economictimes.com/industry/media/entertainment/netflix-india-cuts-prices-across-its-streaming-plans/articleshow/88267582.cms> [Accessed on 19 February 2022]
Molla, L., 2018. Here are some of the most popular shows on Netflix — which may be leaving Netflix soon. [Online] Available at: <https://www.vox.com/2018/12/21/18139817/netflix-most-popular-shows-friends-office-greys-anatomy-parks-recreation-streaming-tv> [Accessed on 19 February 2022]
Patro, C.S., 2018. Predicting Consumers’ Acceptance of Online Shopping on the Internet: An Empirical Study. International Journal of Cyber Behavior, Psychology and Learning (IJCBPL), 8(1), pp.33-60.
Pratap, A., 2021. Generic and Intensive Strategies of Netflix. [Online] Available at: <https://notesmatic.com/generic-and-intensive-strategies-of-netflix/> [Accessed on 19 February 2022]
Song, M., 2021. A Comparative Study on Over-The-Tops, Netflix & Amazon Prime Video: Based on the Success Factors of Innovation. International journal of advanced smart convergence, 10(1), pp.62-74.
Tadbier, A.W. and Shoufan, A., 2021. Ranking educational channels on YouTube: Aspects and issues. Education and Information Technologies, 26(3), pp.3077-3096.
Zhang, M., Qin, F., Wang, G.A. and Luo, C., 2020. The impact of live video streaming on online purchase intention. The Service Industries Journal, 40(9-10), pp.656-681.
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