Bsm week 4- group assignment

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Feb 20, 2024

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Sep 28, 2021 Bsm week 4- group assignment Maheen Arshad Curtis Coleman Cameron Christmas Caitlyn Dantas Answer each of the three questions (watch for multiple parts) in no more than 150 words. 1. The Canadian economy has stronger socialist elements than that of the US. (a) Consider how this would impact Netflix's operations in the two countries. Include elements such as labour laws, level of disposable income, and investor motivation. The value of the Canadian dollar being less compared to the U.S. dollar would affect investor motivation inside the two countries because investors in Canada will be forced to pay higher tax rates leaving them with a lower level of take home pay even after making a great investment. In theory, the socialized system might be better for Netflix’s business because there are more people to subscribe, but in actuality, the poor people who benefit from the socialist elements probably would probably spend their money on basic necessities. This just leaves Canadians with less disposable income to spend, meaning it’s probably more important and worthwhile to market Netflix in the USA. In Canada, unlike the USA, there are labour laws that make it difficult to receive overtime pay for work. This can result in lower income,with therefore less financial freedom to do much beyond buying basic necessities. (b) How does the distribution of the population (i.e. rural vs urban, where it is concentrated) in the two countries differ and does this impact Netflix's potential for success in each country? The distribution of population in Canada and USA is actually quite similar, with 19% rural population in USA and 18% rural population and Canada. The higher rural population and percentage of rural population in the USA, so it might be easier to market there because people in urban areas are more likely to have a local video store that people can pick up movies from. People in rural areas are probably more likely to want to order their movies online in order to avoid the commute to the city.

2. (a)Use the economy theory of supply and demand to explain how the price Netflix was able to charge fell with increased competition. According to the theory of demand, buyers demand more goods and services, as price decreases. With increased competition, in order to appeal to more customers, Netflix decided to lower their prices. With the decline in prices, customers tend to lean towards netflix even more, adding enough profit into netflix’ business for them to supply customers with more and better services. (b) How was Netflix able to cope with falling prices and still be a viable business? Despite the falling prices Netflix remained a viable business due to its revamped business model, and the difference in customer value subscribing to Netflix rather than its competitors. Netflix was very ahead of the movie rental industry since they offered mass convenience and selection. As well as overnight, fast, efficient and safe deliveries. (c) Why was it easy for Amazon to enter into the competitive landscape for mail order DVD's? Amazon saw a grand opportunity to enter the online DVD rental market because they planned to offer low and sustainable prices while covering the entire United Kingdom to then expand into the United States. Amazon also had tons of customer traffic because of their retail site, bringing customer acquisition costs to a minimum. 3. (a) What technological changes made Netflix's business model (as described in the case) possible? Mention as many as possible. Netflix designed a software that managed the logistics of receiving and shipping the DVD’s, allowing them to receive their movies within one business day. It improved the companies efficiency by automating the process of finding, tracking, sorting and shipping the product from each of the companies centers. As the company grew, this greatly helped with speed, accuracy and efficiency. Netflix also made sure to maintain the largest online library of movies of any company within the market.

Netflix added a ‘recommendation’ feature, in order for customers to get inspired by what other customers watch, and end up renting out those recommended movies/tv shows as well. This was based upon collected customer data and user ratings. (b) Could Netflix take advantage of global markets? Netflix could certainly take advantage of global markets, primarily thanks to its website’s technological advancements. In theory, with this modernized website that’s top notch, people around the world would be able to access it. With profits gained, they’ll be able to invest into constructing warehouses worldwide and be able to ship more easily to different continents. If they decide to invest in building new warehouses in different continents, they will be able to efficiently expand their business to a new global scale.

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