Netflix value chain analysis 2017

Final Case Assignment Review MGMT 4489 Strategic Management Strategy Analysis Tools • External to the Firm – General Environment-PEST – Competitive Environment - 5 Forces • Internal to the Firm – Value Chain – Resource-Based View – Core Competencies The Components of a Company’s Macro-Environment 3–3 PESTEL Analysis uFocuses on principal components of strategic significance in the macroenvironment: ØPolitical factors ØEconomic conditions (local to worldwide) ØSociocultural forces ØTechnological factors ØEnvironmental factors (the natural environment) ØLegal/regulatory conditions The Five-Forces Model of Competition: A Key Analytical Tool 3–5 The Most Common Drivers of Industry Change (KIPs) • • • • • • • • • • • • The Changes in the long-term industry growth rate Increasing globalization Emerging new Internet capabilities and applications Changes in who buys the product and how they use it Technological change and manufacturing process innovation Product and marketing innovation Entry or exit of major firms Diffusion of technical know-how across firms and countries Changes in cost and efficiency Reductions in uncertainty and business risk Regulatory influences and government policy changes Changing societal concerns, attitudes, and lifestyles Example: Strategic Group Map of Selected Automobile Manufacturers 3-7 The Value Chain General administration Human resource management Technology development Procurement Inbound logistics Operations Outbound logistics Marketing and sales Adapted from Exhibit 3.1 The Value Chain: Primary and Support Activities Source: Adapted with permission of The Free Press, a division of Simon & Schuster, Inc., from Competitive Advantage: Creating and Sustaining Superior Performance by Michael E. Porter. Service Common Types of Industry Key Success Factors 3-9 Resource Based Analysis • Tangible Resources – Financial / Performance Analysis – Technological • Organizational Capabilities – Competencies / skills – Core Competencies Key Financial Ratios: How to Calculate Them and What They Mean 4-11 Key Financial Ratios: How to Calculate Them and What They Mean (con’t) 4-12 Core Competencies Analysis • Source of Differentiation • Identify > Cultivate > Exploit • Characteristics – Provide potential access to variety of markets – Make significant contribution to perceived customer benefits of end product – Difficult for competitors to emulate • V Valuable • R Rare • I hard to Imitate • N NonSubstitutable Criteria for Sustainable Competitive Advantage and Strategic Implications Valuable Rare (V) (R) Is a resource or capability… Difficult to NonImplications Imitate (I) Substitutable (N) for Competitiveness No No No No Competitive disadvantage Yes No No No Competitive parity Yes Yes No No Temporary competitive advantage Yes Yes Yes Yes Sustainable competitive advantage Exhibit 3.7 Criteria for Sustainable Competitive Advantage and Strategic Implications Source; Adapted from J. Barney, “Firm Resources a Sustained Competitive Advantage, ‘ Journal of Management 17 (1991), pp. 99-120. Examples: Core Competencies • Expertise in integrating multiple technologies to create families of new products • Know-how in cost efficient supply chain management • Speeding new/next-generation products to market • Better after-sale service capability • Skills in manufacturing a high quality product • Capability to fill customer orders accurately and swiftly The Five Generic Competitive Strategies Distinguishing Features of the Five Generic Competitive Strategies Three Approaches for Competing Internationally Entry Modes of International Expansion Wholly Owned Subsidiary Extent of Investment Risk High Joint Venture Strategic Alliance Franchising Licensing Exporting Low Low Degree of Ownership and Control Adapted from Exhibit 7.