Introduction
As Heraclitus in 400 B.C said change is the only constant in life, such happens to be true, mostly in today’s business world. Whether it is a discovery or a response to an event that impacts the organization’s core functions, change is a must to ensure proper workflow and a fluid business model that responds to new innovations and has the responsibility to innovate itself as well. Change is inevitable for organizations and where there is no change, the organization lacks innovation and prosperity. While many organizations expect and experience the pressure of needing to change more often than others, every organization must recognize and plan the factors that invite the changes and forge strong internal competencies that can help adapt to the change. In order to become unsusceptible to the disruption brought by the changes in the business environment, the major roles are being played by the management in every business.
Manager service is possible to carry out the specific task that helps the business to reach success and future prospects as well as prosperity. However, a business desiring to excel in the industry not only needs a potent manager but a manager who is instilled with the professional skills that are required to embrace change and adapt to it without compromising the stability of the company. That requires critical business management practices that allow the growth and development of the business. In this study, the organization of NETFLIX has been taken to demonstrate the business strategies and change management within the company. Netflix is a company that has been through ebbs and flows to make sure that it has a stabilized culture amidst the dynamic business environment. Netflix operates among the online business giants and encounters stiff and constant competition.
However, the success that the world sees today in Netflix is due to the unique business management practices and the embracing of effective policies that allowed the business to understand the external and internal drivers to change, and helped them further allocate employee engagement programs in management. This report aims to describe the management practices of Netflix, their innovations to embrace and adopt change and the business challenges the company faces in this constantly changing business environment, and the company’s ability to overcome the everyday business challenges through strong business management. Moreover, the report also sheds light on the innovation and creative business practices of Netflix and describes the core processes, and draws necessary conclusions from such.
Task 1 – Management Practice at Netflix
For years, Netflix has made great leaps with its innovations and marketing strategy, entering into different segments of the media and entertainment sector. The company started with DVD by mail service, but expanded to DVD subscription plans and further into video streaming services. According to market analysis, around 50% of adults residing in the US have a Netflix subscription today. With its innovative strategy and quick and adaptive management policies, the company has made huge strides and become a frontrunner in the industry of media and entertainment and allowed the emergence of new competitors in the streaming industry (Lobato, 2019). Two of the most significant of its rivals are Amazon Prime and Disney+, which have disrupted the streaming industry.
However, Netflix has been still enjoying its market reputation and success as a pioneer, and the core strength of the company is its strong strategic planning and frequent new content addition. Today, Netflix is a pioneer of the streaming industry that has established the foundation of the OTT or over the top services, and further introduced new trends to the sector. The company was established in 1997 by two US residents, Marc Randolph and Reed Hastings in California. From there, the business has penetrated online media, Video streaming and more making its huge media footprint and now enjoys over 150 million global paid subscribers. The company that started with DVD by Mail service today now enjoys global fame in the industry.
Started in 1997, the company launched its first DVD rental site in 1998 and debuted its subscription service a year later offering its subscribed members monthly unlimited DVD rentals. In 2002, the company started its first IPO under the Nasdaq ticker by selling its shares at one dollar each. Up in 2003, the company reached a milestone of 1 million subscribers and that figure doubled in the next few years. In 2007, the company introduced the first streaming service which emerged to be a turning point for the company. With a new streaming service, Netflix became a wide sensation that grew exponentially with its innovative strategies and content.
The company brought a new way of viewing movies and shows and eventually became quite popular among subscribers that the normal DVD suppliers could not stay in competition with the media giant. Fast forward a few years, Netflix expanded into the global market by diversifying in Canada and further expanded its operations in 2013 (Lobato, 2018). They eventually started producing their original content, for instance, House of cards, Orange Is the New Black, and more such. At the same time, Netflix also received Emmy nominations and continued its expansion into new markets and territories, ultimately offering media content in 62 different languages across almost 200 countries. As of 2020, the company had a total of 193 million subscribers and has emerged as a multibillion-dollar enterprise, continuing to innovate in order to remain in the evolving media industry. Today, the media and entertainment industry in the USA accounts for more than 700 billion dollars and accounts for around one-third of the global market share, which makes the country the largest across the globe.
Figure no 2: Netflix Strategy
(Source: https://www.netflix.com/in/)
The USA entertainment and media industry is segmented into five different components including television, films, gaming, music, and publications. Netflix operates in the television and film industry, which almost accounts for 74% of the entire media and entertainment sector of the country (Burroughs, 2019). Netflix has a global market valuation that surpasses all entertainment mammoths, particularly the traditional ones. For years, Netflix has been enjoying the title of a pioneer in the streaming industry and its success is the key aspect of different factors such as creativity, consumer demands as well as technological developments.
Figure no 3: Revenue generated by Netflix in 2021
Source- Statista
The company has a very strong and innovative market strategy that allows the business to thrive despite challenging times. Netflix also has a unique corporate governance established. The board of directors of the company has a very independent hierarchy and the company boasts its governance as the epitome of a good corporate management approach. The corporate governors are independent minded, monitor good management and represent the demands and interest of the shareholders (Barker and Wiatrowski, 2017). The board of directors of the company is generally composed of members who are unique to Netflix, making the organisational culture more unique. The company has established many different approaches to shading information to the CEOs and the board of directors.
The sole purpose of the management is to increase transparency in every management process and establish good communication among the three parties, the CEO, the board of directors and the executive management. The company’s board of directors attend the senior management meetings to oversee the management interaction and communication and ensure that the company follows a systematic approach towards operation. The boat communications are in the form of written narratives that support the data and open access to several information and data, which make the process of communication further efficient and transparent (Lamkhede and Das, 2019). This in turn, reflects the culture of the company. Overall the board of directors of the company is diverse and adds value to the company. The unique approach taken by the company in communication and sharing information reflects the strategic decisions and processes that are also inclusive and meaningful.
The company’s governance is diverse and allows the inclusion of different ideas and concepts as the directors come from different cultural backgrounds outside that of the company. This makes the company culture more receptive and stronger which paves the path for tomorrow’s innovation and creativity. The unique approach taken by the company to handle corporate governance is not like most of the media companies operating in the entertainment sector which further adds to the value of the company.
Task 2 – Key Business Challenge for Netflix
Netflix was a DVD rental company initially that used to deliver DVDs services to people. It started to take away the market of the entertainment industry. Netflix had foreseen the adaptation of the market in the field of entertainment. Netflix founder Reed Hastings understood that the globalization of the internet might cause Netflix to provide this DVD rental service online and he can also get international customers. Buy anticipating this Netflix slowly shifted from DVD rental to online streaming services (Pilipets, 2019). This kind of online streaming service was launched by Netflix in 2007.
Figure no 4: Business Model Canvas of Netflix
(Source: https://www.netflix.com/in/)
Initially, Netflix provided a monthly subscription service through which users could watch online streaming services for a fixed number of hours online. Slowly these online streaming services were globalised in the year 2010 when Netflix started to provide international services. But when this happened competition also arose. Amazon prime videos and several streaming services & subscription services started. This helps the consumers to enjoy streaming services even if they would cancel their cable packages at a very lower cost. In order to increase the customer base, Netflix started the original production of films and series which were exclusive in content. These movies and series featured popular actors.
Created by Netflix like this. Netflix forecast on creating shows that users preferred to enjoy and watch on their platform. They also used the analytics of their website and researched properly what the subscribers were willing to watch and for how much time I watched a particular series or movie. They also research when these users were watching their series and movies. With the help of these observations, Netflix plans out waves to gain new members. The cost of switching to an online sub-streaming subscription is relatively low and this was recognized by Netflix as a potential way to earn profits (Biesen et al, 2019). If in a broad manner the problems and challenges of Netflix are categorized then they are would be the content challenge through which Netflix had to ensure to provide good quality content. Another is the pricing challenge where Netflix had to provide subscriptions at a reasonable price that people can afford. And the third challenge is the infrastructure challenge where Netflix had to develop long-term plans for international market growth.
Figure no 5: present status of Netflix
(Source: https://www.netflix.com/in/)
The success of Netflix lies in its constant involvement to reinvent its platform by changing the technology and the regulation related to online content and by waiting properly for what the subscriber desires to view. This is how Netflix gained an immense amount of popularity as an online streaming service. A company kept on aligning itself to the requirement of the market the culture by understanding the behaviour of people and encouraging them to adapt to the desired result. With this kind of combination of complex and dynamic processes and amalgamation of technology and by hiding people who could create a proper balance and give oriented solutions result Netflix is having a clear conscious gold and understanding of what the market once and in which direction it is headed (Shattuc, 2020).
With the global economy turning upside down during the 19-situation started to go down as several manufacturing units had to discontinue their operation and close down due to the lockdown. But it was extremely resilient on Netflix’s end that they continued their operation and even though with several challenges they portrayed positive financial reports amidst the challenges. During the first quarter of the year 2020, it was reported by Netflix that almost 15 million US dollars were paid subscribers and it also projected an increase of around 7 million US dollars. The second quarter was also a rosy picture for Netflix as the customer base bumped by another 12.5 million US dollars.
Netflix also registered a very high stock price when other companies were dipped and extremely doing critically bad, due to the COVID 19 pandemic. Even for the investors, Netflix was a safe stock to invest in. When the analyst studied Netflix, they also found out that in the long-term Netflix might become an object of luxury for many people who might have to dial down their expenses on many fronts to get a Netflix subscription on the other hand many subscribers might become addicted or habituated to Netflix and they might stay in the same platform for a longer period of time. If Netflix keeps on providing similar quality content, then there is a chance that the subscribers will not run away from any other competitors (Wayne, 2021). If Netflix is compared with other platforms, it is in a better position than others in terms of technology and in terms are production and release of several episodes. Even with the pandemic pressure, Netflix continues to shoot and complete all the projects. It also tries to release content on time. Going to movie theatres after love is a little bit difficult and many people are opting out for the Ott platform rather than going to the movie theatres. Even with the pandemic pressure, Netflix had hired a lot of employees around 2000.
For streaming services like Hulu, it was extremely problematic when sports were cancelled due to the pandemic but Netflix has gained on these kinds of subscribers who were trying to find out an alternative to search platform and streaming services. After the lockdown, Netflix gained a lot of subscribers and it has increased traffic by around 25%. This is the reason why Netflix is also trying to improve its popping-up system with the traffic by upgrading technology and features to make it run smoothly (Groshek and Krongard, 2016).
A problem that might occur on behalf of Netflix is that it depends upon the subscription fee as its revenue generation objective it does not support or show any kind of advertisements like other platforms such as Disney and Apple TV. This might cause them to give the service at a higher price compared to their competitors. Streaming services like Disney and Apple TV provide a cheaper rate than Netflix and when people have a tied budget and less amount of financial strength then they might consider subscribing to cheaper streaming services rather than Netflix. Netflix has also tried to overcome this battle of loss and price work by cutting down fees in the market where the amount of audience can compensate for the price that they are providing services (Rao et al, 2011).
Netflix also studied the Indian markets and observed that it has a very huge amount of audience over here. Netflix decided not to lower the prices of their services instead they decided to lower the number of streaming devices and the screen quality of service they have provided. Currently, Netflix has mobile plans in India of less than $2 which provide a 480p resolution and the devices which are supported are our phone and tablet. Since there are relax of subscribers in India for Netflix this huge amount of revenue generation per month might bring them back into the game of price wars.
Netflix has also provided a monthly plan of less than $3 with 480p resolution supported on devices like phones tablets, computers and TV. Netflix also faced a problem of account sharing in which people would share the premium plan and reduce the cost per month (Havard, 2021). Netflix is trying to overcome this problem by locating the best services where it will only allow weavers to watch the content if only, they live with the person who is using their account. In the premium plan, Netflix supports different devices at the same time. Netflix provides two device support with the standard plan and 1 device support with the basic and mobile plan. These types of smart planning and free services are still helping Netflix to stay as a leader in the streaming platform. After people were surveyed many have suggested that they would be unlikely to subscribe to Netflix after the start the normal life post-pandemic.
This might be a problem for Netflix but it has told her to come to this problem by providing better content to hook these users so that they can keep generating revenues from the users (Martin et al, 2013). Due to the social distance in norms, several shootings had also been delayed due to the pandemic Netflix also try to overcome this by shooting animated films where this social distancing problem was minimised. It is the scene in that Netflix has always tried to come up with unique solutions and try to work there up as a market leader. Their suggestion algorithm is also extremely accurate in providing content that the user will likely watch and enjoy. Innovative solutions and reasonable pricing and good content are the main weapons used by Netflix to remain in a better position in the online streaming services.
Task 3 – The Potential Impact of Netflix Managers’ Emotional Intelligence on Employee Engagement and Organisational Performance
Organizations today have transitioned from the conventional beliefs and implemented more agile business methods to attain higher productivity and performance from the individuals and align their mindsets with the organisational goals and objectives (Ellis, 2015). Emotional Intelligence is a measurement that contributes to the achievement of higher performance levels and productivity in work. With the current economic crisis due to the pandemic, it is becoming increasingly difficult for organisations to achieve higher performance levels and productivity with limited resources. The managers are becoming responsible to carry out heavy responsibilities on behalf of the employees. The performance of any organisation is measured by the magnitude of the potential outputs that allows the organisation to meet its goal and bring value to the stakeholders.
The performance of a company is often related to the employee intelligence and their feelings and satisfaction and therefore, it becomes very crucial for an organisation to put focus on performance management to keep employees satisfied and improve their performance in the workplace (Hadida et al, 2021). Emotional intelligence is a measurement that measures the agility, access, and develops emotions in response to an array of thoughts, which further allows intellectual growth and enforce productive and professional activities in the workplace. In a company where employees are responsible for intense duties and tasks, emotional intelligence becomes a very crucial factor. Employees who are emotionally more intelligent tend to have a more positive mindset, and usually are more dedicated to the workforce and profession, thereby creating a conducive environment with lower burnout rates. Thus, under a broader perspective, company culture plays a very important role in developing the emotional capabilities among the employees that is fluid and conducive.
The organizational performance of the company is dependent on key performance values like-
Judgement- the company acid the root causes of the conflict and solve search in process of exercising a positive company culture (Sharma, 2016). The company ensures collection of authentic and available data that help them derive strategic decisions that are in alignment with organisational goals and future objectives.
Communication- the company employs a common ground of communication so that the employees understand each other and understand a situation before showing any response. The company also ensures that the employees feel satisfied and productive, and hence provide feedback periodically.
Curiosity– the company tends to have a curious culture such that the employees are curious in innovating new things that are beyond their speciality and learn something new in the process (Binns, 2018). This allows the employees to look for alternative processes when a solution or response doesn’t work.
Innovation- the company enforces an innovative culture so that their employees feel the need to exercise innovative thinking, and bring such into reality with their exceptional products, features, and addition of new customer engagement modes.
Passion- the company always makes the employees hungry for achieving excellence in every organizational process, which in turn allows the company to achieve prosperity and greater business success.
Selflessness and inclusion- employees are made to believe that every action is related to the development or downfall of the company and hence employees always act in a way that is directed towards the success of Netflix rather than what is best for them (Ramasoota and Kitikamdhorn, 2021). Moreover, the company also makes the employees collaborate and communicate with each other and bridge all cultural and background differences and develop a common team despite the individual disparities.
Integrity- the project aims of the company are renowned for their authenticity and being non-biased and non-political within the company. Employees are taught to admit their mistakes and communicate with others and help learn from their mistakes and bridge all disagreements.
Impact- the company always demonstrates work performance that is strong and interdependent and helps the survival of the company in this competitive business environment based on the incredible performance of the employees as well as the management.
The entire organization of Netflix is known to live and succeed by values and consistency is the sole core value of the workforce (Martins and Riyanto, 2020). Each person is responsible for being an inspiration for others so that the company follows an aspirational process, which allows the company to build a dream team that learns, performs, and improves over time, bringing the best content to provide an exceptional experience to the customers.
Task 4 – The Alignment of Netflix Values and Management Practice
The organization puts incredible emphasis on the values and mission of the company. The company enjoys stunning colleagues in mindset and excellence, to ensure a great workforce. The primary priority of the organization is to accumulate a phenomenal workforce (Berry et al, 2010). The organization focuses on nine core values that need to be abided by the employees of the organization including judgment, curiosity, innovation, honesty, selflessness, impact, and passion along with courage. The company provides room for different styles and several techniques but these nine core values allow the company to create an ideal workforce that helps the firm to grow. However, the concept of bringing value to the organization is segregated into four key areas: individual resilience, stakeholders relationship, resolving conflicts and resolution through negotiations, and establishing teamwork.
Resilience
Despite the growing market competition, the organization managed to reclaim its position and stay in business with mere turmoil (Wayne and Uribe Sandoval, 2021). With crisis and business challenges, the company understood the need to bring reinvention to the company’s core potential. In this way, the company ensured bringing an online streaming service. The company has introduced resilience in its organizational processes and established its concept of putting people before processes. Such processes help the company to become highly aligned with its core business processes and improve resilience by focusing on the workforce. Netflix allows the creation of availability of a reliable workforce. Focusing on strategies that bring success to the company can provide valuable insights into the phases of resilience within the organization. This further helps the company to pursue new ways that allow the employees to learn and establish a proactive workforce.
Teamwork
Netflix is known to exercise a positive culture that allows employees to voice their concerns and have independent decision-making processes and capabilities. The company achieves such by ensuring that the employees have a concrete ground to share information publicly and openly and are further candid with each other, and hence the company does not impose any rules over the employees’ independence and employs only emotionally intelligent people, and emphasizes the concept of keeping people over process (Ahmed and Nobanee, 2020). The company enforces team building skills in order to build a productive and highly performing team. The company further exercises a culture that focuses on team cohesion such that builds a strong company culture.
Conflict resolution
The company exercises a culture that allows the team members to independently take strategic decisions and consult the team managers to make the decisions when they are unsure of something. The company believes in the right context to make strategic decisions. The company teaches, sets the context and keeps the team members informed always to avoid misunderstandings and conflicts within the workplace. Only at certain times when there are urgent situations that require the attention of the managers, do the company managers force their hand and make strategic decisions. The company enforces a culture where employees do not, please their manager but serve to make better business decisions. Though conflict and disagreements happen in the organization, the company proceeds with clear understanding and communication to promote peace.
Stakeholders’ relations
The primary stakeholders of the business are the customers and business partners, and further stakeholders include independent content producers. The company seeks to keep the customers satisfied and happy with great content. Institutional stakeholders also own a major share of Netflix and therefore the company keeps the shareholders informed about the financial interest and strategic decisions of the company. The company also proceeds to licence more content from independent producers in order to keep the customer satisfied and bring in more customers from different regions. The company also feels the need to monitor the activities and contents of the competitors and make developed content that helps them keep a competitive advantage over the rivals.
During the Covid pandemic, all industries suffered uncertainties and came to a standstill and Netflix has not been an exception of such. Businesses of every kind have suffered great uncertainties and difficulties in the process of continuing business in their respective sectors and more companies had to shut down their operations owing to such setbacks in the economy. There came a drastic shortage in demand and more companies were suffering the hazards of economic turmoil (Madanapalli et al, 2019).
Only a handful of companies survived the pandemic and kept conducting operations, experiencing a trajectory against all odds. Netflix belongs to this group which despite the grievances during the Covid pandemic, managed to continue operations due to its exceptional company strategy and unique management practices. The financial indicators of the company during such uncertain times explore a rosy outlook of the media giant.
Since the pandemic imitates shutdowns in most economies, streaming services become a source of entertainment that became very lucrative during such hard times and the only way to relieve stress and anxieties. In the first quarter of the pandemic, Netflix managed to score 15.77 million users which surpassed the estimated user projection made by the company of only 7 million users. The company expects its audience base to increase by another 12 million in the next few years, the positive surge in the company’s revenue that also impacted the stock price of the company. The company ensured the highest ever stock closing price in 2020 with 548 dollars when other companies were suffering from the economic setback. The company can therefore be considered as enjoying a much better position than the competitors in the industry. The strategy of the company to produce and release episodes of a season at one go provides a substantial competitive edge over the rivals in the same industry (Lobato, 2017). When the covid pandemic caused an initial shutdown globally, Global production houses had to suspend their operations and projects in the middle, but Netflix had already completed the shooting of the major projects beforehand at the beginning of the year and therefore it did not need to suffer from the uncertainty of production houses during or after the corona outbreak. The company continued with the post-production processes as planned and continued to release new content at regular and periodic intervals.
The chief officer of the company confirmed that the company is almost done with the shooting of most programs and further completed the project that is due next year as well. In this way, the company managed to confirm that, even if the pandemic disrupted the process of shooting, and should the production houses need to be shut down, the company would not suffer major losses or lose customers. Obviously, this will help the company to retain the subscribers and add more subscribers in the process, increasing the customer base further. Additionally, Netflix possesses a great archive of films and TV shows, in comparison with the competitors in the streaming industry and this further helps the company to get a competitive edge during such hard times as well (Dias and Navarro, 2018).
The present-day hence consider Netflix to be a major business innovator and continues to strive towards a positive business environment that allows its employees to function productively and provide customers with exceptional content without any advertisement distractions. The company has an exceptional marketing strategy and considers establishing a meaningful relationship with employees as well as the customers, so as to become a global frontier in the entertainment and media industry and hold its position in such.
Conclusion
From the business report analysis, it is evident that Netflix has a strong business framework, and enjoys a far more competitive advantage over its competitor. Technological developments and the internet have profound influence on the function of the company and allows the company to incur more revenue and bring greater prosperity in the market. The business model that helps it overcome the challenges and economic setbacks. The company also exercises a positive workforce that encourages employees and keeps them satisfied as well. Therefore, it can be said that if the company keeps track of the user demands and preferences and focuses on the choices of the customers and continues providing them with excellent customer experience, the business would have a strengthened brand loyalty where customers will feel treasured and employees will feel satisfied, and shareholders informed.
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