Strategic Management Assignment: Strategic Analysis Report For Netflix

Question

Task:
Pick a company of your choice and prepare a detailed and well-written strategic management assignment.

You are required to develop a Professional Strategic Analysis Report addressing the four specific tasks set out in the guideline below.

You are required to develop a comprehensive strategic management analysis of an organization of your choice. You need to conduct independent research focusing on the key developments inside and outside your case organization. The study should not stretch back beyond 10 years.

The report should address the following tasks:

Analyze the key changes in the strategic position i.e. external environment and internal environment (including changes in organizational resources, competences, capabilities, leadership, culture and other internal aspects) of the case study organization during the period identified for your research.
You have to use a variety of the theoretical paradigms and models as well as company/market/sector data to analyze the major changes in the internal and external environments of the case study organization.
Critically evaluate how well the organization responded to the external and internal challenges over the period concerned. Part of your critical refection and evaluation could be a discussion of whether the strategy of your case organization is prescriptive and/or emergent.
The focus of your critical evaluation is to determine how well the case organization responded to the changes analyzed in task 1. This evaluation should include considerations pertaining to the strategy implementation of the organization and an evaluation of its successes and failures. Your considerations should be supported by analysis and evaluation of the key performance indicators for the period studied i.e. from the end of the case study to the present.
Critically discuss the basis and sustainability of the competitive advantage of your case organization.
You have to use a range of theoretical frameworks/paradigms to develop a critical discussion focusing on the basis of the competitive advantage of the case organization and how it changed over the period studied. You are further required to conclude by focusing on how sustainable the competitive advantage of the case organization is going forward.

Based on the above, you are required to develop a range of strategic options available to your case organization to ensure its success and sustainability into the future. Choose the most appropriate option and critically discuss a range of implementation issues associated with it.

You are required to develop a range of strategic options for the organization to ensure its long-term success. This needs to be specific and relevant to the organizational context studied. They need to be strategic and not operational in nature.

Answer

Introduction
Here the main purpose of this report on strategic management assignment is to develop a comprehensive strategic management analysis of the organisation Netflix in terms of focusing on the key development’s insights for both the inside and outside of the company in this context effectively. Firstly, this report will be analyzing some of the most significant key changes in the strategic position that is the changes in the external and internal business environment for the company Netflix by taking into consideration competencies, capabilities, leadership, culture, and other internal aspects significantly. Next, this report is going to critically evaluate the company Netflix effective responses to the external and internal challenges over the period, and in addition with that in this section, this report is going to discuss whether change strategies implemented by the company Netflix is prescriptive or emergent significantly.

Furthermore, this management analysis report for Netflix will critically discuss the basis and sustainability of the competitive advantage in the company Netflix. The company can develop effectively in response to this wide range of strategic options. At the very tail end of this report, justification for choosing the right strategic option for Netflix followed by a critical discussion on implementation issues of that approaches option will be highlighted. In this context, the report's main significance is to explore effective management analysis for Netflix in terms of its long-term strategic planning.

Analysis of the key changes in the strategic position of Netflix
Currently, the most significant aim of the organisation Netflix is considered to continue as one of the leading business organisations of the entire internet entertainment community or era. The company's main agenda is to remain at the top of the market competition effectively (Amat et al., 2018). In this context, there occurs a need for upgrading and managing the whole strategic position of the brand so that the company can adopt a high margin of extra sustained competitive advantages to help them stay at the top of the competition significantly. In response to this, the firm is required to identify and address the changes in its strategic position both internally and externally as well. The PESTLE analysis and SWOT analysis model respectively is considered appropriate for this analysis process effectively.

External environment analysis
PESTLE Analysis

Factors	Description	Impact	Threats or opportunity
Political factor	In the context of political party’s influence and government policies, these factors are considered to be highly significant for the strategic position changes on Netflix (Tajeddini, Wittmer and Merkel, 2021). Limitation of contents differences in different countries due to government rules caused a huge loss for the company. Government restriction does not allow the brand to operate in some countries such as China, Korea, Syria etc. another huge complex area for Netflix is considered censorship that severely restricts limits for Netflix to reach out to China like the biggest economy.	High	Threats
Economical factor	Exchange rate fluctuation in many countries can affect the profitability of Netflix. Still, over time it has been discovered that Netflix original content doesn't suffer from this disruption and helps the company earn satisfactory profit. Being present in the digital platform expands the customer base for Netflix. It helps the company get loyal customers due to the money worth content and high quality of the Netflix content effectively. However, the generation of other streaming companies can cause a threat and a high tendency of content piracy.	Very high	Opportunity
Social factor	The good working environment of the company Netflix always works in favour of the brand in terms of creativity and productivity. It has been identified that the organisation leaders and managers are in favour of unity in diversity, and along with that, it has been found that they allocate some sound per cent of company annual income to the black community and also helps a low-income group of students and their families as well (Tajeddini, Wittmer and Merkel, 2021). Research shows that the most beneficial aspect of Netflix is its flexibility, which is to be able to watch on mobile, pads and laptops as well.	Moderate	Opportunity
Technological factor	Advancement in technology, automation, and innovation plays an integral role for the company Netflix, which has the potential to help the brand obtain high-quality video even with spending a very low amount of data. The inclusion of automating translating application software is proven to be very much beneficial for the users effectively (Jones et al., 2019).	High	Opportunity
Legal factor	As per Wayne (2020), country laws seem to be affecting the strategic planning process of the brand Netflix such as consumer laws, content copyrights, labour laws, safety laws, discrimination laws. These mentioned laws are must be required to be followed by the company at any cost. Continuous claims of content copyrights and a hike in the price of subscriptions caused a loss of customers.	High	Threats
Environmental factor	The company Netflix is considered to be highly aware of the movement of global businesses towards sustainability. Because of this reason, the brand Netflix has been found to be collaborating with EPA to showcase the intention of the brand to make a direct shift into renewable energy resources effectively (Lotz, 2021).	Moderate	Opportunity

Internal environmental analysis
SWOT analysis

Strengths	Weaknesses
The company Netflix has crossed more than 193 million paid customers and is currently available in more than 190 countries; thus, it has been able to gain a strong brand reputation of all time (Shtal et al., 2018). The brand has managed to get a global presence. Along with this, for the majority of south Asian countries, the subscription price is found to be very affordable, which strategically provides the company to expand its global market share. Hugh adaptability is considered one of the most significant strengths of the brand that helps the brand gain ample new business opportunities (Pérez, 2020). Highly technically experienced employees of Netflix who are continuously working on making the offerings of the brand superior in nature are the strength of the business.	Limited copyrights of the business organisation Netflix caused disruption in their revenue generation process. It is found to be continuously hiking up its debts. On a country basis, it has been identified that the company lacks original content to many countries, which is creating customer churning (Pilipets, 2019). The customers support service and customer care executive is weak, which is considered one of the main reasons behind the loss of customer satisfaction effectively.
Opportunities	Threats
Hugh level demand of the OTT platforms creates huge business opportunities for the brand Netflix (Wayne, 2020). Exclusive Netflix offerings can get the limelight because products inclusion, such as comic books and video games, are beneficial for the brand. As a result of the global presence of Netflix, the brand was able to solidify its strategic partnership locally effectively for business growth.	Government rules and protocols cause huge threats for the brand regarding its business expansion process. Another most severe threat of the brand Netflix is content piracy (Tajeddini, Wittmer and Merkel, 2021). The tendency to share one account with many, along with the pandemic outbreaks, limits the production of Netflix original content, causing strategic threats to the company significantly.

Critical evaluation of the Company response towards Internal and external challenges
In the context of the external and internal changes and over the period evolution of the brand, Netflix creates new ways of strategic business planning to strengthen the overall strategic position of the brand effectively. As discussed in the external analysis of the company Netflix that the margin of generation of other streaming services is getting emerged over time, creating intense competition for the brand (Lotz, 2021). In response to this, the brand Netflix has initiated intense growth strategies that can promote market success via confronting all the significant external forces, resources, and core capabilities of the brand, such as innovation in technology, loyal and dedicated employee base, and the advanced business model.

strategic-management-assignment-a

Figure1: Video Streaming service Netflix

(Source: Jones et al. 2019)

High-level competencies of the brand help the brand stay productive even in increased market competition. Previously over a long time, the brand Netflix had used the pipeline approached business model; however, in response to current changes in the internal and external market environment, the firm has initiated an unlimited subscription-based business model is considered to be the revenue model for the unlimited online service access effectively (Jones et al., 2019). This business model helps the brand overcome challenges and retain users to seek success. In addition, the business organisation Netflix opted for a generic competitive strategy including cost leadership and differentiation that enables aggressive growth and the gaining of more customers effectively (González, Membiela-Pollán and Cuns, 2020). In response with cist leadership in response with cost leadership strategies of the company Netflix, they can employ diversity in their content creation process to attract and retain more customer base.

Critical discussion on Netflix competitive advantages

Organisation sources of advantages	V	R	I	O
Competitive demerits Netflix has high margin dependencies on third-party content producers.
Merits Innovation in technologies present in Netflix IT assets	Yes Yes
Competitive advantage (temporary) Support of content copyrights holders	Yes	Yes
Competitive advantage (unexploited) Distribution of textual content Distribution of online music	Yes Yes	Yes Yes	Yes Yes
Competitive advantage (sustainable) Netflix brand high equity Large OTT platforms content consumers and producers High capacity of Netflix to produce original content	Yes Yes Yes	Yes Yes Yes	Yes Yes Yes	Yes Yes Yes

The Netflix brand is considered a value chain resource that can help out the brand towards obtaining long-term competitive advantages effectively. The large presence of the OTT platform gets changed over time, and it creates huge business opportunities for the brand, such as getting a scope for generating new diverse content for reaching out large customer base effectively (Dias and Navarro, 2018). High brand equity is considered to be supporting the company to become much more flexible and adaptive so that the firm can gain better customer attention and loyalty in terms of providing satisfactory services of online entertainment effectively.

Strategic options for Netflix
In the context of intense competitive strategies and the business model of the business organisation, it can be addressed that the firm mainly focuses on the business expansion process as the most effective planning process (Burroughs, 2019). In response to this, it has been identified that the most appropriate range of strategic options for adopting intense growth strategies of the firm is considered to be market penetration, market development, product development and diversification effectively. Among all of these growth strategies, product development and diversification is considered to be most appropriate for the brand effectively to ensure its long-term success (Aversa, Hervas-Drane and Evenou, 2019). Creating new content for the new potential users of the brand is extremely important for retaining them as long as possible. Flexibility and traditional business plan of the company Netflix are considered the main agenda to enhance the facts of diversification to reach out to all the countries citizens effectively.

strategic-management-assignment-b

Figure2: Content Strategy of Netflix

(Source: Aversa, Hervas-Drane and Even, 2019)

Critical discussion on implementation issues of company strategic options
In the context of the new product development process and diversification process as strategic options for the company Netflix, it has been found that the development of new original content for the brand Netflix is getting failed over time. Recently it has been found that the stocks of Netflix get dropped by 11%, and the margin of subscribers was also found to be getting lower over the period (Amat et al., 2018). Due to this reason, the firm's revenue generation is getting slower over time and causing financial issues for the brand in the creation of the diverse online streaming process. High complexities in copyright claim for the contents and censorship limitation in many countries is considered to be creating huge implementation issues in the strategic options for the brand effectively.

strategic-management-assignment-c

Figure3: Slower revenue growth of Netflix

(Source: Amat et al. 2018)

Conclusion
This report is considered to be extremely successful in developing a comprehensive strategic management analysis of the organisation Netflix in terms of focusing on the key development’s insights for both the inside and outside of the company in this context effectively. In this context, the model of PESTLE analysis, SWOT analysis, and VRIO analysis was used in order to address the external environment and internal environment, including changes in organisational resources, competencies, capabilities, leadership, culture and other internal aspects termed to be company's strategic position analysis over the period. This report also highlighted how the organisation responds to the external and internal challenges over the period concerned. From this, it can be concluded that Netflix adopted an unlimited subscription-based business model, which is considered the revenue model for unlimited online service access. Product development and diversification are the most appropriate strategic options for the brand.

Reference List
Amat, F., Chandrashekar, A., Jebara, T. and Basilico, J., (2018), September. Artwork personalization at Netflix. In Proceedings of the 12th ACM conference on recommender systems (pp. 487-488).https://dl.acm.org/doi/pdf/10.1145/3240323.3241729

Aversa, P., Hervas-Drane, A. and Evenou, M., (2019). Business model responses to digital piracy. California Management Review, 61(2), pp.30-58.https://openaccess.city.ac.uk/id/eprint/20712/1/

Burroughs, B., (2019). House of Netflix: Streaming media and digital lore. Popular Communication, 17(1), pp.1-17.https://www.academia.edu/download/55970459/House_of_Netflix_Streaming_media
_and_digital_lore.pdf

Dias, M. and Navarro, R., (2018). Is Netflix Dominating Brazil. International Journal of Business and Management Review, 6(1), pp.19-32.https://www.researchgate.net/profile/Rodrigo-Navarro-5/publication/328414987_IS_NETFLIX_DOMINATING_BRAZIL/links/5bd35582928
51c6b2791f58b/IS-NETFLIX-DOMINATING-BRAZIL.pdf

González, C., Membiela-Pollán, M. and Cuns, M., (2020). Relationship marketing and brand community: the case of Netflix. Redmarka. Revista de Marketing Aplicado, 24(2), pp.251-274.https://ruc.udc.es/dspace/bitstream/handle/2183/27891/7157-Texto%20del%20art%C3%ADculo-24402-3-10-20201228.pdf?sequence=1

Jones, J.P., Thomas?Walters, L., Rust, N.A. and Veríssimo, D., (2019). Nature documentaries and saving nature: Reflections on the new Netflix series Our Planet. People and Nature, 1(4), pp.420-425.https://besjournals.onlinelibrary.wiley.com/doi/pdf/10.1002/pan3.10052

Lotz, A.D., (2021). In between the global and the local: Mapping the geographies of Netflix as a multinational service. Strategic management assignment International Journal of Cultural Studies, 24(2), pp.195-215.https://eprints.qut.edu.au/205208/13/68999526.pdf

Pérez, E.P., (2020), May. NEXT EPISODE, NEXT MARKET: SOCIAL MEDIA MARKETING FOR SVOD: THE CASE OF NETFLIX. In GLOBAL (Vol. 4, p. 8).https://onresearch.ch/wp-content/uploads/2020/05/ON-RESEARCH-journal-edition-4.pdf#page=8

Pilipets, E., (2019). From Netflix streaming to Netflix and chill: The (dis) connected body of serial binge-viewer. Social Media+ Society, 5(4), p.2056305119883426.https://journals.sagepub.com/doi/pdf/10.1177/2056305119883426

Shtal, T.V., Buriak, M., Ukubassova, G., Amirbekuly, Y., Toiboldinova, Z. and Tlegen, T., (2018). Methods of analysis of the external environment of business activities.http://repository.hneu.edu.ua/jspui/bitstream/123456789/19872/1/Methods%20
of%20analysis%20of%20the%20external%20environment%20of%20business%20activities.pdf

Tajeddini, K., Wittmer, A. and Merkel, T., (2021). Can the Netflix business model actually work in commercial aviation in central Europe? It is complicated!. Journal of Hospitality & Tourism Cases, 9(2).http://shura.shu.ac.uk/25854/12/Tajeddini_CanTheNetflix(AM).pdf

Wayne, M.L., (2020). Global portals in national markets: Branding Netflix in Israel. JCMS: Journal of Cinema and Media Studies, 59(3), pp.149-153.https://www.researchgate.net/profile/Michael-Wayne/publication/340937731_Global_Portals_in_National_Markets_Branding_Netflix_in
_Israel/links/5eaa7fed299bf18b9587e0b8/Global-Portals-in-National-Markets-Branding-Netflix-in-Israel.pdf

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