Research Portfolio of Netflix, Inc.

           Netflix works in the media industry by providing a platform to its young targeted market to get video entertainment and online streaming. Netflix is not the only company working in this industry. Presence of a number of other competitor companies and substitutes increases the need for effective strategies in Netflix Company. Company's mission is to deliver quality service and ensure a strong valuable relationship with its partners and investors. Currently, the company is gaining continuous success in the market because of its effective and successful strategies. Present work is based on the research portfolio that will address the strategic analysis of Netflix Company.      

Netflix’s External Environment

External environment of Netflix is analyzed through the use of PESTLE analysis. 

PESTEL Analysis of Netflix, Inc.

1.      Political Analysis of Netflix, Inc.

Nowadays, traditional television programs are no more in the favorite list of young viewers. The viewers have drifted away to a new trend that is known as on-demand streaming just like NETFLIX. Moreover, this causes a little bit increase in the usage of internet. The giants of US telecom AT&T are a rising point against excessive internet use to ensure the restriction on the usage of the internet. Somehow, political powers also categorize Netflix as traditional television. Therefore, Netflix also has taxes and 26% Ievy similar to traditional television that causes to reduce profit margin by the increase in expenses. 

2.      Economic Analysis of Netflix, Inc.

Economic factors are supportive of the services of Netflix. Netflix subscription is relatively less costly as compared to traditional television. Exchange rates and VAT are changing in the United States and other targeted markets of Netflix that can bring changes in overall sales and subscriptions. 

3.      Socio-Cultural Analysis of Netflix, Inc.

In the targeted market of the UK, the new generation is watching the online streaming services more than the traditional TV for the entertainment purpose. According to social research, the trend of watching video content on the smart phone is growing rapidly among the customers as compared to watching on the large screens in a traditional way.   

4.      Technological Analysis of Netflix, Inc.

Hermes is the codename of the software developed by the R&D lab of Netflix. The software translates the shows of Netflix. Adoption of such modern technologies supports Netflix to promote its business (businessteacher.org.uk, 2019). 

5.      Environment Analysis of Netflix, Inc.

Pressure on the environment caused by data server access increases problems. According to research, tech companies will pay environmental bills of $11 trillion by 2025. Netflix is required to use renewable energy for its data center. Lack of commitment by Netflix for the offset of carbon footprints may cause a problem for future operations (businessteacher.org.uk, 2019).

6.      Legal Analysis of Netflix, Inc.

At the beginning of 2016, it is stated by the company that the price of subscription maybe rises. But have not disclosed how it will effect on the users. The customers who got angry issued the class-action lawsuit to the company. Law also put restrictions on the content to be published and distributed by Netflix.  

Netflix A Five Forces Analysis

          Porter five factor analysis of Netflix provide insight into Netflix external environment and competitive forces (Kotler, Philip, 2008). Key five forces discussed in this analysis are threats of new entrants, bargaining power of suppliers, bargaining power of buyers, competitive rivalry, and threats of substitute products.

Figure 1 Porter Five forces Analysis

1.      Bargaining Power of Buyer of Netflix, Inc.

Netflix is working in the media industry that provides high level of bargaining power to buyers. Netflix is working in a highly competitive market. Moreover, the cost of switching is low because of which customers can easily cancel the subscription to switch on an alternative service. Considering these factors we can say that the bargaining power of buyers is strong.

2.      Bargaining Power of Supplier of Netflix, Inc.

Suppliers negotiate on prices while obtaining and acquiring a license to distribute the video content on the internet. Somehow, as compared to traditional televisions Netflix has greater flexibility in contracts and agreement regarding broadcasting and distribution. Overall bargaining power is high because of their influence on prices.   

3.      Rivalry of Netflix, Inc.

Competitive rivalry is intense in the media industry. Retailer companies selling DVDs and DVD renting companies are also participating in the competitive market of Netflix. In the presence of alternative forces and options monopoly on prices is not possible for Netflix. 

4.      The threat of New Entrants of Netflix, Inc.

Increase in the total number of new entrants in the targeted market work as a threat to the company. Current market analysis shows that many new companies are going to start their services in the same market. Somehow, considering their low equity we can conclude that the threat of new entrants is moderate for Netflix.

5.      Threats of Substitute of Netflix, Inc.

Substitutes of Netflix services are DVD rental services and online streaming. Traditional television content also falls in the category of substitute (Adamkasi, 2019). Customer of Netflix can switch to these products to fulfill their purpose of entertainment. Low cost switching increases the threat of substitute.

Netflix Business Level Analysis

              A research study conducted on Netflix business strategy and model describes that Netflix has implemented a very simple and realistic business model (Teece, 2010). In 1999, the company had an initial pricing model known as the pay-per-rental model that failed to deliver desired outcomes to the company. Netflix changed its business model and adopted a new business model known as the subscription model. Now, the company has equity of more than 6 million subscribers and 75,000 titles. Pay per rental services and online streaming enable Netflix to earn more than 1 billion dollar revenue in one year duration (Teece, 2010). Research indicates that Netflix strategy is to win the market by focusing on the improvement of its business operations and positive customer experiences. Netflix develops strategies at the corporate level to address business environment related requirements in the appropriate way. Research article also demonstrates that innovative framework and intellectual property system support changes in the business environment.   

Netflix Strategic Intent

            Strategic intent represents the aim, goals, objective and mission of Netflix. Strategic intent can be defined as the philosophical framework of the strategic management process. The strategic intent of Netflix is to lead the entertainment industry by using online streaming to promote their content. Netflix strategy is to meet its expense by getting monthly subscription fees from its subscribers or customers. Netflix mission is to ensure sustained profitable growth, valuable partnership, and best services for customers. Focusing on this strategy, the managerial staff is promoting business and enlarging customer equity in the targeted market.   

         Analyzing the current external environmental and competitive condition of Netflix some recommendations are made for Netflix Company related to the strategic intent of the company. At the first company need to pay more focus on alternative opportunities to earn revenue. Netflix also needs to focus on environmental needs in their strategic planning otherwise action taken by the environmental regulatory departments regarding environmental impact and carbon footprints will not only increase cost but influence positioning of Netflix company in a negative way.

Conclusion on Netflix, Inc.

         The whole discussion concludes that Netflix is successful in managing its business operations in the market. High competitive market, easy availability of substitutes, and low switching cost can increase threats. Considering external environmental analysis and business level analysis Netflix needs to bring some positive changes in their operations to address these threats and competitive situation.