Swot analysis table in apa format

Running head: SWOT ANALYSIS OF PUBLICLY HELD COMPANY: NETFLIX 1

SWOT ANALYSIS OF PUBLICLY HELD COMPANY: NETFLIX 2

SWOT Analysis of Publicly Held Company: Netflix

Abstract

Netflix is a company that is credited with disrupting the market for video rentals, cable television and now television and film production with it streaming services. Customers were tired of the high prices of cable television and video rental late fees. They found the streamlined and efficient approach, which allows for unlimited viewing of movies and shows in its inventory for one low price, extremely attractive. The company was founded in 1997, and it became a publicly traded company in 2002. In that time it ha become a global presence and market leader. The strategic focus of Netflix was to break down a business model for entertainment that was bloated, expensive and did not result in unlimited options. The company today is no longer the disruptor, but the one that needs to be concerned with innovators, copycat competitions and the next new business model. This paper provides an analysis of the strengths, weaknesses, opportunities and threats facing the company.

SWOT Analysis of Publicly Held Company: Netflix

Netflix is a company that is credited with disrupting the market for video rentals, cable television and now television and film production with it streaming services. Customers were tired of the high prices of cable television and video rental late fees. They found the streamlined and efficient approach, which allows for unlimited viewing of movies and shows in its inventory for one low price, extremely attractive. The company was founded in 1997, and it became a publicly traded company in 2002 (Burroughs, 2018). In that time it ha become a global presence and market leader.

Strengths

Netflix has so many strengths, and these were displayed when the company took down the entire video rental industry, including the enormous Blockbuster Video chain, with its simple use of technology to make watching content more convenient. Specifically the strengths of Netflix have been horizontal growth, vertical growth, innovation and cultural relevance. The strength of Netflix is its horizontal expansion, resulting in wide distribution which includes nearly 200 countries, almost 100 million subscribers and revenues of $7 billion per year (Dias & Navarro, 2018). Vertical growth, by getting deeper into content production, is a defining feature of the brand, and it was initially wildly successful. Netflix is also considered a leader in a cutting edge and innovative area of data science, which is used in its recommender systems (Walker, Jeffery, So, Sriram, Nathanson, Ferreira, & Merkley, 2017). Netflix use became iconic in Western culture, particularly because it facilities binge watching of an entire season or series at once, and this has become a cultural reference point (Jenner, 2018).

Weaknesses

The weaknesses internal to Netflix include the outcomes from its success in expansion both horizontally and vertically. There are allegations that the global presence and production leaves the company spread too thin (Singer, 2018). Recently there have been criticisms of new Netflix productions, including consensus that Netflix is failing to achieve the same level of quality (Singer, 2018). This is an internal and controllable factor. While Netflix has been very focused on the efficiency of the technical aspects of operations, it has not always managed to recognize how to achieve the same level of performance in producing content.

Another weakness is the transparency of the model and its innovations. The success of Netflix has often been attributed to its advanced approach to data and algorithms, but with each hard won innovation had come the ability for other companies to simply mimic the advantage. (Walker et al., 2017). Netflix has to worry about established companies with the resources needed to invest in strategically overtaking the market position, as well as young and emerging startups that might do to Netflix what Netflix did to Blockbuster. Netflix will have to be agile enough to reinvent themselves in light of new trends and technologies, are be relegated to the same history as the companies that were overtaken with its operations.

Opportunities

Opportunities are defined as external realities that are outside of corporate control. There are at least ten opportunities that Netflix can pursue:

· Continued expansion into new markets through expansion of subscriber base;

· Continued customization of interface, content and promotion to different regions, especially in emerging economies such as India;

· Reduction of costs through continual improvement of efficiency in process;

· Promoting productions and partnered opportunities related to merchandizing, as well as subscriptions to the service;

· Build on strengths in data science and algorithmic models to form a new company which serves other internet based companies (Walker et al., 2017);

· Leverage more local resourcing in the outsourcing of content production, but with a greater focus on quality, including cross cultural aspects such as the quality of dubbed versions or those with subtitles;

· Acquiring startups that might compete with Netflix when they appear to get market traction as a means of reducing competition and supporting horizontal expansion;

· Expansion into user created content, and the ability to compete with the internet giant YouTube;

· Investment in quality of content with the same focus that has been given to technical aspects; and

· Making an even greater investment in the implementing and promoting services in emerging economies, particularly Africa, Southeast Asia, China and South America.

Threats

There are ten threats to Netflix, which include:

· The ease with which the business model could be copied creates a great threat;

· There is increased new entrants because of this problem;

· This results in increased competitive forces as the market becomes more crowded;

· There is more pressure on efficiency if price becomes a competitive point;

· Many new markets where Netflix does not have a strong presence will already be penetrated by competitors, such as markets in Southeast Asia and China;

· Netflix faces serious substitution competition from YouTube, Vevo and similar sites which distribute user produced content;

· The reputation of Netflix could rapidly impair the value of the company if quality of original content keeps dropping;

· Established entertainment companies with vast resources to invest, such as Disney, intend to compete directly for Netflix’s market position;

· Much of the value of Netflix has been in the form of continued investments in expansion of production, distribution and promotion, and a failure to capitalize on these investments risks everything; and

· Netflix operates out of one of the most expensive places in Silicon Valley, and this is not efficient or cost-effective.

Conclusion

The strategic focus of Netflix was to break down a business model for entertainment that was bloated, expensive and did not result in unlimited options. The company today is no longer the disruptor, but the one that needs to be concerned with innovators, copycat competitions and the next new business model.

References

Burroughs, B. (2018). House of Netflix: Streaming media and digital lore. Popular Communication, 1-17.

Dias, M., & Navarro, R. (2018). Is Netflix Dominating Brazil. International Journal of Business and Management Review, 6(1), 19-32.

Jenner, M. (2018). ‘Quality’, ‘Popular ‘and the Netflix Brand: Negotiating Taste. In Netflix and the Re-invention of Television(pp. 139-160). Palgrave Macmillan, Cham.

Singer, M. (2018) Netflix is creating a future of film that looks a lot like its past. Screen Crush. Retrieved from: http://screencrush.com/netflix-movies-are-like-1950s-television/

Walker, R., Jeffery, M., So, L., Sriram, S., Nathanson, J., Ferreira, J., ... & Merkley, G. (2017). Netflix leading with data: The emergence of data-driven video. Kellogg School of Management Cases, 1-19.