CORP5039 International Strategic Management Assignment Sample
Part A: Question 1
Introduction
This essay analyses and critically evaluates the streaming industry and analyses the
positioning of Netflix based on the case study in the industry using appropriate strategic
management frameworks. It involves using Porter's five forces model, Pestle analysis, and
assessing the impact of the micro environment on the company. Netflix is an American
company offering streaming media, on-demand video, pay television, and mobile gaming.
Structure of the movie streaming industry
The worldwide market size of the streaming industry was valued at $38.56 billion in
2018 and is expected to reach $149.34 billion by 2026 (Allied Market Research, 2019).http://CORP5039 International Strategic Management Assignment Sample
Video streaming is content that can be sent in compressed form over the internet and played
immediately instead of stored. The biggest contributor to the worldwide video streaming
market is the subscription revenue model. Based on the revenue model, the market can be
categorized as transactional, hybrid, advertisement, and subscription.
Positioning of Netflix in dynamics in operating macro and micro business environment
Porter’s five forces of industry of Netflix
This model helps the company understand the competitive landscape that a company faces in
the industry and how it can be positioned within it.
Concerning the first dimension, Netflix deals with intense competition in the industry due
to the availability of various players such as Disney plus and Amazon prime video. Thus, this
serious threat can adversely present the positioning of Netflix in the coming years (Lobato
and Lotz, 2020).http://CORP5039 International Strategic Management Assignment Sample
Apart from this, the threat of new players or entrants in the industry is moderate and has a
neutral force. This is because entering the industry requires high investment and engaging
content. However, Netflix has a strong image in the industry it takes work to replace the new
players.
Customers' or users' bargaining power will continue to rise in the upcoming years, creating a
stressful situation for Netflix. This bargaining power of the users is rising because of the
innovations and attractive offerings by the competitors and new players. The customers are
available with a lot of alternatives (Bajaj, 2020). http://CORP5039 International Strategic Management Assignment SampleThis sector is not price-sensitive, and almost
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all the services are offered at similar rates. Thus, viewers can choose their own based on the
content's originality. In addition, the subscribers are not tied to any contracts; they can pay
monthly and are free to cancel the subscription.
Further, another aspect of this model to evaluate the positioning is the threat of substitute
products or services. YouTube accounts for a large part of overall video viewing, as 12% of
the time spent watching videos is on YouTube, providing recorded and live-streaming
content. As conventional broadcast television is declining, mainly among teenagers and
youngsters, the threat of substitution is quite low.
Lastly, the bargaining power of suppliers can be said as high. The reason behind this is the
high degree of influence on pricing because only some entities produce entertainment-based
and media content. As per the case study, Netflix faced numerous uncertainties, and these
impacted while developing a pricing model.
Hence, based on this analysis, these forces have a different impact on the positioning of
Netflix. The forces that will have more impact on the company in the upcoming time are the
increasing competition and the bargaining power of the customers (Bobmanuel, 2022). http://CORP5039 International Strategic Management Assignment SampleThe
possible response for Netflix can be to maintain a strong connection with its existing users by
keeping them engaged with original content. Also, the focus must be on attracting new users
by identifying their preferences and serving the same.
Pestle analysis and impact on Netflix
To analyze the company's macro environment, Pestle analysis is a useful tool as it examines
the external factors that affect the organization.
Political factors The policies and laws of the government of every nation are different,
and Netflix needs to work as per that. For instance, for Netflix, there is
censorship on some content shown; thus, some nations do not allow it
to screen. Moreover, in EU countries, the applied tax rate is high,
which is a threat to Netflix.
Economic
components
These factors evaluate the supply-demand graph of the company. The
changing exchange rates impact the economy when purchasing other’s
content (Morris, 2022). http://CORP5039 International Strategic Management Assignment SampleAlso, to survive in a particular country, it is
important to look at the disposable income of the people, and as per
that, pricing needs to be done. Following the case brief, Netflix pays a
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strong focus on the pricing model.
Social
dimensions
These factors influence the brand's sales, and this indicates the
customers' preferences, needs, cultural trends, etc. Thus, the company
conducts market research in various segments to understand people's
needs to grow in the market (Kannisto, 2019).http://CORP5039 International Strategic Management Assignment Sample
Technological
factors
This is vital because the advanced and latest technologies improve and
enhance the company’s positioning in the industry. Moreover, 5 G
technology is a transformation for the brand as this increases the
speed.
Legal aspects To operate in the streaming industry, Netflix is needed to abide by
various laws and legislations such as managing IPR laws, consumer
protection laws, etc.
Environmental
aspects
At present, the global focus of individuals globally is on sustainability,
and a strong emphasis on these aspects can improve the company's
positioning in the future. For this, Netflix is investing in various
projects globally that remove carbon from the atmosphere. Also, to
address the indirect emissions, the company is financing projects that
restore the ability of nature to store CO2 (Netflix, 2023).http://CORP5039 International Strategic Management Assignment Sample
Impact of microenvironment on Netflix
The micro business environment involves the elements and factors that affect the
performance and decision-making of the company (Cherunilam, 2021). http://CORP5039 International Strategic Management Assignment SampleThe micro
environment can be defined as the key operating environment of any business organization.
This is because the micro environment's functioning creates an immediate and direct bearing
on organizational performance. Some key micro-environment factors are competitors,
suppliers, employees, shareholders, media, and customers (Vinichenko et. al. 2021).http://CORP5039 International Strategic Management Assignment Sample All these
stakeholders affect the company's positioning and performance. For instance, considering
customers or, in the context of Netflix, its subscribers are responsible for the existence,
survival, and success of the company. The key purpose for the existence of Netflix is to
satisfy the preferences, wants and needs of its subscribers. This is why Netflix focuses on
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offering original and quality content to its users so that they can remain loyal to the company.
Hence, the ultimate aim of Netflix is to offer its users the best services and continuously
attract a new target base. Apart from this, another micro factor that can affect the positioning
of Netflix is its competitors. Major rivals of Netflix are Amazon prime video, Disney plus,
YouTube TV and HBO Go. The company is required to evaluate the strategies of its rivals'
strategies so that it can come up with the most innovative and efficient approach to attract
users and retain them for a longer time.
Conclusion
Thereby, it can be articulated that Netflix operates in the streaming industry and gets
impacted by various macro and micro factors. The key forces that affect the positioning of
Netflix are the intense competition in the industry along with the increasing choices of
consumers. The company must focus on macro and micro factors to develop a strong
positioning strategy.
Part B: Question 3
Introduction
This answer focuses on analyzing the competitive advantages of Netflix along with
evaluating its weaknesses and identifying the rival that threatens Netflix’s positioning in the
streaming industry.
The competitive advantage of Netflix
Netflix is considered the best movie streaming company in the world as it has an impressive
line-up of various acclaimed original series such as Squid Games and Stranger Things.
Netflix has an extensive library, including original content, mainstream shows, kid-friendly
programs, and movies (Gregory, 2021). Parents also appreciate the parental controls that
offer them options to block certain titles from the child's profile and set maturity ratings.
Netflix has various competitive advantages over other entertainment companies. This
advantage is fuelled by spending on original content development and a more decisive market
share of the industry (Onyusheva and Baker, 2021). http://CORP5039 International Strategic Management Assignment SampleFurther, in order to demonstrate the
competitive advantage of Netflix, a VRIO analysis can be done. This framework is a planning
tool specifically designed to help organizations uncover and protect resources and capabilities
that provide them a long-term competitive benefit.
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Valuable resources: One of the key valuable resources of Netflix is its technological
innovation. This is the competency that highly supports the continuous and quick growth of
the Netflix platform. It offers a superior experience to the customers, which has been made
possible through a recommendation system that makes it easy for the users to select the best
titles to watch. Innovation also impacts the consistent user engagement
Rare resources: Brand equity is one of the leading core competencies that drive superior
growth through brand recognition and higher user loyalty. Netflix enjoys strong word-of-
mouth publicity driven by strong brand awareness and equity (Fleischman et. al. 2021).http://CORP5039 International Strategic Management Assignment Sample
Netflix has always proved its excellence in innovation, marketing and developing a customer-
centric image. It can be stated that it is easy for Netflix, in comparison with its competitors, to
grow its penetration of the existing marketplace, retaining subscribers and attracting new
suppliers.
Inimitable resources: The key inimitable resource of Netflix is its extensive user base. This
is one of the most critical sources of competitive benefit for this brand. Netflix has
experienced a sharp improvisation in the subscriber base over the few years. Netflix has a
large user base than any other competitor in the industry (Fleischman et. al. 2021).http://CORP5039 International Strategic Management Assignment Sample Apart
from this, the human capital of this organization is also identified as the major driver of
competitive benefit for the company. Netflix has concentrated on strategically managing its
human capital, and it has engaged employees in such a manner that they can deliver superior
results. Netflix has established an organizational culture that fosters higher creativity and
greater innovation (Havard, 2021).http://CORP5039 International Strategic Management Assignment Sample
Organized resources: Lastly, the organized resources of Netflix are its user experience and
global presence. It is evident that Netflix streams its main shows and movies globally, and its
global presence provides an added advantage over its competitors. For that, the experience
which Netflix offers to its subscribers is also a critical source of advantage. The user
experience of Netflix is based on the quality of content, quality of user interface, use of
algorithms, and recommendation system.
Summing up, it can be elaborated that all these capabilities and resources provide a strong
competitive benefit to Netflix that helps drive maximum profit. The user experiences, the
global presence and its technologically innovative capability are the major sources of
competitive benefit for Netflix that helps the company compete with its rivals in the movie
streaming industry. In addition, the proper utilization and continuous improvement of these
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capabilities and dealing with the core weaknesses will help Netflix gain a competitive edge
over time.
Disney threatens Netflix's position.
The biggest weakness of Netflix is its rigid pricing structure. The users want a customized
pricing strategy with various options. However, the pricing model of Netflix is quite rigid,
with three tires that are premium, basic and standard. Furthermore, the operational cost of
Netflix is also rising. It is evident that offering and adding more content provides Netflix with
a strong competitive benefit (Onyusheva and Baker, 2021). http://CORP5039 International Strategic Management Assignment SampleStill, the cost of supporting this
content is also continuously rising, which is a key operational lapse for Netflix. also, it is its
biggest weakness. Apart from this, in the movie streaming industry, Netflix is dealing with
cutthroat competition with Disney. It can be stated that the leading rival, Disney, can impact
the positioning of Netflix in the industry because of its operational failures and weaknesses.
The weaknesses can be further utilized and exploited by the rival company Disney. Netflix is
the king of streaming, but Disney is expected to emerge as the new industry leader by the
year 2024. Disney Plus has gained more than a hundred million subscribers, and the company
also owns two other streaming services which are ESPN Plus and Hulu. The collective group
of this streaming service is projected to surpass 300 million users in the upcoming years. This
can create a risk for Netflix across the next few years. Although Netflix has surpassed 200
million users in the year 2020 the user growth for this brand has reduced year over year
(Business Insider, 2021).http://CORP5039 International Strategic Management Assignment Sample
One of the biggest reasons for the growing subscriber base of Disney is that it is cheaper than
that Netflix. In the price competition war in the movie streaming industry Disney plus wins
this war. Also, considering the range of content on these two platforms, the collection of
shows and movies on Disney for kids is unbeatable. It has around 100 years’ worth of
goodies and is a paradise for kids. The biggest weakness of Netflix is its pricing model, and
Disney plus is taking advantage of it. Disney plus offers high-quality content on par with
Netflix, but it's low-cost makes the competition stiff (CNET, 2022).
Disney is also launching an ad tier and focusing more on the preference of the consumers.
Hence it can be stated that the entertainment industry is shaking as Netflix is losing its
subscribers, and it is giving an opportunity to the other rivals to take the place of Netflix. In
the present scenario, the streaming services are enjoying flooded viewer TV screens with new
programming to attract new users. But, the subscribers are not sticking around. It has been
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observed that subscribers who joined the service to watch any show also leave the platform
within some months faster than the average streaming consumer. Therefore, the companies'
conclusions regarding customers' preferences and habits can prove as good news for Disney,
which has a strong reserve of hit content that increases customer stickiness (CNET, 2022).http://CORP5039 International Strategic Management Assignment Sample
The new content brings new users to different streaming platforms. For instance, Disney plus
has experienced an increase in user numbers. Disney had the second-lowest churn viewer
numbers in the industry in the year 2020. the company is taking advantage of the key formula
that library titles are important in minimizing churn rate and increasing engagement. Hence,
it can be stated that looking at the weaknesses and operational errors of Netflix along with
identifying the buying pattern of customers, Disney plus is most likely to take the place of
Netflix in the industry.
Conclusion
It can be concluded that Netflix enjoys various competitive advantages, from its global
presence to the enhanced customer experience. However, it has also been revealed that
Disney plus is more likely to take advantage of the weaknesses of Netflix.
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Netflix, (2023). Sustainability. [Online]. Accessed through:
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