Netflix strategy case study

AoL Assignments for BUS 498 (Undergraduate Strategy Capstone course) As a stepping stone helping you to be better prepared for the teamwork on the case competition project, each student is required to complete a short individual written preparatory assignment as the follows. An electronic copy of this assignment should be submitted at the course website (in “Course Content” folder) by March 22. Failure to submit on time will lead to zero point for the whole case presentation/competition project. Please prepare a report (500-1000 words) on the case assigned for the case competition by addressing the following: 1. Identify the main problem that needs to be addressed by the management team. Make use of relevant theoretical concepts and frameworks from the course in defining the problem. 2. Recommend a strategy that best addresses the problem. Use an outline form and specify strategic objectives followed by relevant tactics. (Note that your recommended strategy may include changes in corporate, business, and functional strategies as deemed necessary) 3. Discuss the reasons why you believe your recommended strategy will solve the problem identified. Make use of relevant theoretical concepts and frameworks from the course to support of your position. 4. Describe any ethical issues that are addressed in this case. How could this impact strategy chosen? As you prepare your write up, please visit Mason’s library resources (http://infoguides.gmu.edu/business) and identify at least three reference sources that would be helpful for examining the main problem and its likely solution. Please note that this is an individual assignment. The report should not exceed 1000 words. For the exclusive use of T. Tran, 2018. MH0043 1 2 59927628 R EV: February , 2017 FRANK T. ROT H A E RME L AUST IN GU E N T H E R Netflix, Inc. It’s not Netflix that’s making the changes. It’s the Internet. - Reed Hastings, Netflix CEO1 At the 2017 Golden Globe awards, Netflix CEO Reed Hastings applauded from his front row seat as he watched screenwriter Peter Morgan approach the podium. Netflix content executives Ted Sarandos and Cindy Holland were seated beside Hastings. Peter Morgan’s Netflix-produced original series “The Crown” had just won the award for best television drama. The biographical series about Queen Elizabeth II prevailed over formidable competitors including HBO’s “Westworld” and “Game of Thrones.” With a budget of 100 million British pounds, “The Crown” was also one of the most expensive dramas ever made.2 This fact was not lost on Hastings. Standing behind the microphone, Morgan looked out into the audience for the Netflix executives. “Ted, Reed, Cindy–Thank you,” he began the acceptance speech.3 After returning to his hotel that evening, Hastings reflected on the career that had taken him, a former vacuum cleaner salesman, onto the red carpet. His thoughts quickly wandered back to Netflix’s business matters. The annual report would be released in two weeks. With Netflix’s stock trading at record highs, investors were looking for numbers to justify Netflix’s $55 billion market capitalization. Winning Golden Globes is noteworthy, but Netflix lived as much on Wall Street as it did in Hollywood and Silicon Valley. Netflix had a negative free cash flow of $1.7 billion in 2016.4 How could Netflix ensure that it was spending money on the right content? Netflix was now operating its streaming service in 190 countries worldwide and needed to cater its licensed and original content to a much more diverse audience than ever before. Also on Hastings’ mind was Netflix’s sometimes contentious relationship with internet service providers (ISPs). Netflix relied on ISPs to deliver its high-bandwidth content to subscribers. How could Netflix ensure that the ISPs would provide the high-speed connections required to deliver streaming content to its subscribers? Finally, Netflix was facing tougher competitors. Amazon, HBO, and Hulu were investing heavily in streaming content too. As Netflix approached its twentieth year, how could Netflix keep subscribers loyal and acquire new ones? Professor Frank T. Rothaermel and Research Associate Austin Guenther prepared this case from public sources. Research assistance by Hassan El-Majidi is gratefully acknowledged. This case is developed for the purpose of class discussion. This case is not intended to be used for any kind of endorsement, source of data, or depiction of efficient or inefficient management.