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Case Analyses Submission Guidelines & Rubric
Case analyses should be approached as though you are a
marketing manager whose responsibility it is to assess the situation and
present three long-term strategies to the board of directors. Based on your
understanding of the case and external research on the CURRENT situation, what
are the three best strategies to revitalize and/or improve public perception to
the same target market and/or alternative markets? Please do not limit yourself
to the specifics of the case when formulating your strategies. Think 'BIG
PICTURE' (ethical objectives, internal/external factors, complementary
products/industries, sustainability, alternative products/services, cultural
assessment, pricing changes, etc.).
Your strategic recommendations should be 1) measurable and
2) broad enough to encompass the direction of the brand for at least 5 years.
At the same time, analyses should explain IN DETAIL the logic and process
behind implementing such initiatives. Please do not provide vague
recommendations. Please use the critical thinking rubric below as a guideline
and checklist for your submissions.
Solution
Strategic
Management for Netflix
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Contents
Strategic Management for Netflix
1
Introduction
Netflix
is an American company which provide the leverage to the subscribers to watch
their favourite movies and TV shows on
their most loved device. The company has also offered
the facility to the consumers can also order their movies in the form of DVD through
the mail or internet-based streaming. The
company has also introduced its mobile phone app due to which the consumers can
watch the content on it without facing trouble (Virginia, 2012) . Netflix is facing the issue of engaging
consumers with the brand. In the year 2018, there were total revenues of word
$4 billion. However, the company is facing severe
challenges which needed to be solved on an
immediate basis for improving the overall rating and creating value for
the consumers (cnbc.com, 2018) .
2
Critical
Problems in the Case Study
There
are various challenges which Netflix is facing currently. Some of the fundamental problems
have been discussed below:
Netflix
was famous and loved by the consumers due to its lower price. However, in the year 2011, the company increased its rate by 60 per cent which gave a wrong impression to the consumers and they left the platform. The subscriptions for the company decreased significantly. There
was justifying reason behind the whole procedure as the company was facing a problem in acquiring the new content because of
raised costs.
The
company also made a new decision such as it split the two services. the DVD
mail-order service renamed as Qwikster while the online-streaming service
remained Netflix. This is mainly because the CEO of the company sees them as two
different businesses due to which the company decided to handle them
differently. The company needs to work on these two services for building their
separate reputation among the consumers. even after taking this challenging
decision the company failed to maintain the attention of consumers. the overall
stock price of Netflix reduced by 77% in just a period
of 4 months which highlights that the company lost the trust of consumers very severely. The total blame was put on the CEO of
the company who was also verbally bludgeoned. His qualification was seriously
questioned (Jaka, Baloh, Ribière, & Desouza, 2011) .
The
acquisition of content is also becoming quite tricky
for Netflix because most of the companies are employing licensing policies
which are more stringent and costly. This thing has made it difficult for Netflix to acquire even the DVDs of movies which are not a recent release. This thing has further slumped
the revenues of the company and overall
it could be said that the changes which were made by thinking are necessary to
save the company instead caused serious
damage to it (Ricardo, Broder, & Maarek, 2011) .
3
Stakeholders
At this
time there is more than one stakeholder
on which the company is dependent and
without them, the progress of the company
seems almost impossible. For instance: consumers are the major stakeholders of
the company and at this time they are the
big worry for it. This is mainly because
Netflix is unable to capture their attention due to which the revenues have
been reduced significantly and subscriptions are going down. Even the most
loyal consumers are shifting due to attractive
low pricing strategy of the competitors.
Secondly, the media partners from which the
company buys content are also important stakeholders for it. However, over the
time they have understood their worth and
now they are using their bargaining power for hurting the reputation of the
company such as Starz did not have any issue in giving the content to Netflix
in the past but from the day it was
understood that the company can be a serious
threat to its own channel, it is not ready to do the deal even in $30 million.
Even after trying to pursue them so many times the company still fails to crack
the deal.
Partners
of the company are also important stakeholders who
help it in promoting the content and increasing the interest of the consumers.
for instance, in the past it did a partnership with Amazon, although it failed to
put the charm on consumers, but it could
have worked if used in an effective manner.
4
Recommendations
After
analyzing the situation carefully, it has been evaluated that Netflix still has
many ways to save its reputation and run
the business successfully. There are following three of the strategies which
the company can use for grabbing the attention of the consumers:
4.1
Premium Subscription
The
company had a solid reason to increase the price, but the strategy which has been implemented was wrong thus it is
necessary that it immediately reverse its decision and also roll out an
apologizing statement for its consumers. it will help in gaining the trust of
consumers back. However, after the period of one month the company announce its
real reason to the consumers and then roll out a premium subscription option
for them. the basic subscription fee will remain $7.99 for the consumers, but they will only have access to unlimited
dramas and movies which are too old.
Premium
subscription option will be for the VIP’s who have to pay premium prices to get
access to the latest dramas and movies. They have spent the cost. Thus, the
company will fully facilitate them. some of the consumers are keen to watch a drama in one go which currently Netflix is not
providing this facility currently, but to the premium consumers, this option will be given. However, there will be a
twist only one episode with the whole
series will be available per month. Polls will be created among the consumers and the drama series which got the more likes
will be available to the consumers while the other ones have to wait (Thomas & Hunger, 2011) . Moreover, the
latest collections of dramas will be given to these consumers on an immediate basis. These consumers will also
have the ability to cut the piece of 1 minute for posting on their social media
pages and attracting others which will increase the subscription of Netflix.
4.2
Production
The
company is facing too many problems because it is too much dependent on the
other for content and the suppliers are taking advantage
of this thing. Now instead of relying on the other parties, the company can focus on its own production house.
Although it has produced some series like “Big Mouth”, “The Kissing Booth” and
“Nailed It.” However, it has not focused much on it, but now the current situation demands that Netflix work on its own
production more. For this purpose, vigorous
research can be conducted on the market for evaluating which of the drama niche is more famous among them. moreover, in which genre the consumers are more
interested. Later according to that the series can be designed (Fred & David,
2016) .
In starting Netflix should work only on two projects. The episodes can be released after 15 days alternatively to keep
the consumers curious.
During the starting days, the premium and ordinary consumers both
can enjoy the episodes because the company
needs broad perspective to evaluate the weaknesses and amend them in the future
and having the reviews from a large
number of consumers will do the trick. There is a possibility that in starting the Netflix face criticism and
discouraging reviews because the company needs this thing in the future so no
one can threaten it (Axel & Gollenia, 2016) . the latest technology can be used for the
production of the dramas to deliver high quality.
4.3
Bandwidth:
As the significant concern of Netflix is with videos
and thus it needs to work on the bandwidth for streaming high-definition
streaming. DVD selling will be dominated by online
streaming due to which it will be useless to invest money on it. although the
company can gain few millions for now by promoting the DVD, but for the long
run it is not a profitable business. the money of DVD’s business can be
invested in the bandwidth. By this, the
company can secure its future in the online streaming video. This will give a
plus point to it.
The
high-definition videos can be flaunted on YouTube ads for attracting consumers to subscribe. Facebook can also be
used for this purpose because there are millions
of the users who daily visit Facebook. The TV
is the primary source which the consumers
are using for watching the videos. Although smartphones
and other devices are famous, thus, once
the production house of Netflix produces quality content which is popular among
the subscribers, then it can sell the
rights to the cable operators so the consumers can watch it. this thing will
also be the source of revenues for Netflix.
5
Conclusion
It can
be concluded that although Netflix is facing too many challenges at the moment but there are several ways to touch the peaks again. The company only
needs to craft a significant strategy so
the attention of the consumers can be grabbed. Premium subscription option,
focus on the production house and bandwidth have been suggested as the critical strategies for Netflix.
6
Bibliography
Axel, U., & Gollenia, L. (2016). A handbook
of business transformation management methodology. . Routledge.
cnbc.com. (2018). Netflix surges after crushing
earnings. Retrieved from cnbc.com: https://www.cnbc.com/2018/10/16/netflix-q3-2018-earnings-and-revenue.html
Fred, D., & David, F. (2016). Strategic
management: A competitive advantage approach, concepts and cases.
Pearson.
Jaka, L., Baloh, P., Ribière, V., & Desouza, K.
(2011). Deploying information technologies for organizational innovation:
Lessons from case studies. International Journal of Information Management
31, no. 2, 183-188.
Ricardo, B.-Y., Broder, A., & Maarek, Y. (2011).
The new frontier of web search technology: Seven challenges. In Search
computing, Heidelberg, 3-9.
Thomas, W., & Hunger, D. (2011). Concepts in
strategic management and business policy. Pearson Education India.
Virginia, W. (2012). Waiting and watching in
silence: Closed captioning requirements for online streaming under National
Association for the Deaf v Netflix, Inc. and the CVA. North Carolina
Journal of Law & Technology 14 , 135-166.
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