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Writing a Textbook Business Case Analysis Netflix Synopsis of the Case Marc Randolph and Reed Hastings founded Netflix Inc. as a pay-per-rental movie rental service. Customers used to order movies from the company, which would deliver DVDs to customer's doorstep. Netflix later expanded its business model by providing customers with an easier way of choosing the movies they want and receiving the DVDs through mail service. Further, due to the development of technology and the advent of the internet, Netflix shifted to online streaming, where members could subscribe to watch content at a fixed rate. However, many players, such as Amazon Prime Video, Disney+, Hulu, and HBO, entered the streaming market. The increased competition made Reed Hastings, the CEO of Netflix, think of new strategies to counter the increasing competition. His goals included building the best internet service for entertainment content worldwide, improving Netflix's content offerings and services over rival companies, attracting more subscribers, and improving the company's long-term sales per share. Although Netflix has recorded enormous financial achievements in the streaming industry, new entrants and competitors have posed severe challenges to the company. Relevant Factual Information about the Problem or Decision the Organization Faced: Based on the case study, Netflix is experiencing stiff competition, especially from movie streaming giants such as Amazon Prime Video, Disney+, HBO Max, The Walt Disney Company, Hulu, Apple+ and others. Initially, Netflix embraced a subscription-based model where users would choose subscription plans. The plan entailed sending DVDs by mail, and the monthly prices depended on the number of titles. High-speed internet allowed Netflix to change its business model and enable users unlimited streaming to ensure that, in the long term, users

would switch to instantly streamed content instead of using DVDs. In 2010, Netflix expanded its services to international markets, and in 2016, it became a global company (Thompson et al., 2022) . However, Netflix could not surmount the barriers to entering some countries, such as China. Also, Netflix's business strategy provided low barriers to the entry of rivals into the subscription-based film streaming industry. As a result, the executives realized the company was at risk of experiencing significant competition. Therefore, they preferred using Netflix's titles to attract new members to Netflix's originally-streamed services. Explanation of Relevant Concepts, Theories, and Applications Derived from Course Materials: There are many rivals in the film industry, and each rival has its offers, which they use to attract clients from all walks of life. Therefore, companies should have competitive strategies to survive in this highly competitive market. Mainly, Netflix has competitive strategies, especially delivering DVDs by mail to users who order online. However, since the demand for rental DVDs is rapidly declining, Netflix has to change its model and shift to movie streaming, which is made easier by the emergence of high-speed internet. Thompson et al. (2022) state that diversification is necessary when a company's limited growth opportunities and buyer demand are declining. Diversification involves changing industry conditions by adopting new technologies to shift buyer preferences towards the company's interests quickly. Therefore, Netflix's move to diversify into streaming was beneficial as it increased the company's competitive advantage. In addition, Netflix had a significant market position where customers did not have to move an inch to get the movies. This strategy gave Netflix an advantage over its rivals. Also, Netflix embraces cost leadership as its generic strategy. According to Yılmaz & Ecemiş (2022), cost leadership gives companies a competitive advantage by reducing costs. Although Netflix is not

the best cost provider in the online entertainment industry, it uses the cost leadership strategy to provide movies at affordable subscriptions. As a result, the company attracts more subscribers than rival companies whose marketing strategies focus on particular market segments. However, the transition from DVD rentals to streaming services had inevitable setbacks for Netflix—for instance, the transition caused a deviation from the original cost-leadership and differentiation strategy. The additional cost incurred in the transition is associated with the extra expenditures for acquiring and producing content. Furthermore, Netflix initially allowed customers unlimited time to rent a disc. However, the company should have included this ideology in its new business model, where customers could access digital content. Therefore, there was more escalation in the company's content expenditure. The profitability of Netflix was reduced due to the high costs of acquiring digital content. This caused a further drift from the cost-leadership strategy. Netflix has a successful brand identity and a loyal customer base. However, the company did not oversee the risks of rebranding the DVD services. Mainly, Netflix should have considered customer's views regarding the new model. Surveys and focus groups would have been of great help in getting customer's views. Recommendations The film streaming industry is very competitive, and in order to survive, companies should adopt competencies that can give them a competitive advantage over their rivals. One recommendation for Netflix and companies experiencing a similar problem is to invest in technological expertise. The industry is fast-paced, so companies should always ensure they are at par with the latest technological advancements (Yılmaz & Ecemiş, 2022). Also, technology can help companies

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develop other competencies, such as efficient and fast networks for customers to stream movies. Also, the network should be highly accessible, taking advantage of online DVD rentals and internet streaming. Another recommendation is prioritizing customer satisfaction. This can be achieved by providing user-friendliness of the platforms, streamlined customer support, and quick response to clients' questions. Alternative Recommendation Overall costs are among companies' leading concerns, and differentiation is an excellent strategy for struggling businesses. Netflix should focus more on differentiation. For instance, having "shorts" for engaging young people and kids can keep the app active and encourage more subscriptions. Kids, teens, and young adults made TikTok boom; therefore, they can significantly help Netflix. Other recommendations include diversifying to video game streaming. Diversification is a significant booster for organizational sales (Yılmaz & Ecemiş, 2022). Other movie streaming companies have not ventured into video games. Therefore, Netflix can introduce the new service to the market, thus increasing sales. Conclusion Netflix has often proved its ability to adjust its business model and respond to the ever-changing consumer needs and preferences. With a solid customer base in the international market, Netflix is well-positioned to maintain its position in the highly competitive movie-streaming industry. If Netflix, led by CEO Reed Hastings, implements the recommendations mentioned above, the company will have consistent growth and stability in the market. References

Thompson, A. A., Strickland III, A. J., Gamble, J. E., & Peteraf, M. A. (2022). Crafting & Executing Strategy: Concepts and Cases (23rd Ed). McGraw-Hill. Yılmaz, E. S. & Ecemiş, O. (2022). Investigation Factors Affecting Competitive Advantage in Streaming Industry with Multi-Criteria Decision Making Methods. JOEEP: Journal of Emerging Economies and Policy, 7 (1), 239-252. Retrieved from https://dergipark.org.tr/en/pub/joeep/issue/66260/1104044

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