Growth Strategies: Where Do We Want To Go? In this learning activity, we will develop skills related to describing how strategy is developed at the corporate, business unit, and functional levels in an organization. Knowing where the organization is at the present time enables managers to set a direction for the firm and allocate resources to move in that direction. Two techniques to aid in these decisions are the (1) business portfolio analysis and (2) market- product analysis. The Boston Consulting Group's (BCG) business portfolio analysis uses quantified performance measures and growth targets to analyze a firm's business units (called strategic business units or SBUS by BCG) as though they were a collection of separate investments. Read the mini case study below and respond to the questions that follow. If in 1997 a customer had been charged a late fee of $40 for a VHS tape of Apollo 13, what might she or he have done? Maybe just grumble and pay it? In the case of Reed Hastings, he was embarrassed, apparently paid the $40 late fee, and-this is where he's different-got to thinking that there's a big market out there. "So I started to investigate the idea of how to create a movie-rental business by mail," he told a Fortune magazine reviewer. The Original Business Model: "Early on, the first concept we launched was rental by mail, but it wasn't subscription-based so it worked more like Blockbuster," says Hastings, the founder and chief executive officer of Netflix. It wasn't very popular. So in 1999, he relaunched his idea with a new business model-as a subscription service, pretty much the mail business you see today. "We named the company Netflix, not DVDs by Mail, because we knew that eventually we would deliver movies directly over the Internet," Hastings says. Netflix's Changing Business Model: The Netflix DVDs-by-mail model delivered movies on DVD to customers for a fixed monthly fee-and drove Blockbuster to seek bankruptcy protection. But the Netflix business model changed over eight months in 2008: from "Watch Now," enabling subscribers to watch any of 1,000 streaming movies on a PC, to partnering with TiVo, Xbox, and others to enable their systems to let you see one of about 12,000 movies on your television. The movie distribution channel has also expanded with web- ready TVs such as Sony's Bravia, game consoles such as Xbox 360, and tablets such as Apple's iPad. With Netflix breaking a series of technology barriers, its "any movie, any time" business is just around the corner. In mid-2011, Netflix introduced controversial new pricing options: DVD only, streaming only, or both. Then in late-2011, when customer reaction exploded, Reed Hastings cancelled the plan to separate Netflix's DVD-by-mail business from its movie streaming service. Change is a constant in the Netflix business model. Netflix alters its "business model" to respond to changing consumer demand and technologies. Many organizations need to continually improve their businesses in order to stay ahead of the changes that are evident now and predicted for the future. Questions 1. Of the SBUS identified in Netflix's history, which ones are Cash Cows? 2. Of the SBUS identified in Netflix's history, which ones are Stars? 3. Of the SBUS identified in Netflix's history, which ones are Dogs?

Principles Of Marketing
17th Edition
ISBN:9780134492513
Author:Kotler, Philip, Armstrong, Gary (gary M.)
Publisher:Kotler, Philip, Armstrong, Gary (gary M.)
Chapter1: Marketing: Creating Customer Value And Engagement
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Learning Activity - Marketing 2150 Spring 2020
Chapter 15- Bringing It All Together
Growth Strategies: Where Do We Want To Go?
In this learning activity, we will develop skills related to describing how strategy is developed at the
corporate, business unit, and functional levels in an organization. Knowing where the organization is at the
present time enables managers to set a direction for the firm and allocate resources to move in that
direction. Two techniques to aid in these decisions are the (1) business portfolio analysis and (2) market-
product analysis. The Boston Consulting Group's (BCG) business portfolio analysis uses quantified
performance measures and growth targets to analyze a firm's business units (called strategic business units
or SBUS by BCG) as though they were a collection of separate investments.
Read the mini case study below and respond to the questions that follow.
If in 1997 a customer had been charged a late fee of $40 for a VHS tape of Apollo 13, what might she or he
have done? Maybe just grumble and pay it? In the case of Reed Hastings, he was embarrassed, apparently
paid the $40 late fee, and-this is where he's different-got to thinking that there's a big market out there.
"So I started to investigate the idea of how to create a movie-rental business by mail," he told a Fortune
magazine reviewer.
The Original Business Model: "Early on, the first concept we launched was rental by mail, but it wasn't
subscription-based so it worked more like Blockbuster," says Hastings, the founder and chief executive officer
of Netflix. It wasn't very popular. So in 1999, he relaunched his idea with a new business model-as a
subscription service, pretty much the mail business you see today. "We named the company Netflix, not
DVDs by Mail, because we knew that eventually we would deliver movies directly over the Internet," Hastings
says.
Netflix's Changing Business Model: The Netflix DVDs-by-mail model delivered movies on DVD to customers
for a fixed monthly fee-and drove Blockbuster to seek bankruptcy protection. But the Netflix business
model changed over eight months in 2008: from "Watch Now," enabling subscribers to watch any of 1,000
streaming movies on a PC, to partnering with TiVo, Xbox, and others to enable their systems to let you see
one of about 12,000 movies on your television. The movie distribution channel has also expanded with web-
ready TVs such as Sony's Bravia, game consoles such as Xbox 360, and tablets such as Apple's iPad.
With Netflix breaking a series of technology barriers, its "any movie, any time" business is just around the
corner. In mid-2011, Netflix introduced controversial new pricing options: DVD only, streaming only, or both.
Then in late-2011, when customer reaction exploded, Reed Hastings cancelled the plan to separate Netflix's
DVD-by-mail business from its movie streaming service. Change is a constant in the Netflix business model.
Netflix alters its "business model" to respond to changing consumer demand and technologies. Many
organizations need to continually improve their businesses in order to stay ahead of the changes that are
evident now and predicted for the future.
Questions
1. Of the SBUS identified in Netflix's history, which ones are Cash Cows?
2. Of the SBUS identified in Netflix's history, which ones are Stars?
3. Of the SBUs identified in Netflix's history, which ones are Dogs?
4. Of the SBUs identified in Netflix's history, which ones are Question Marks?
Learning Activity - Marketing 2150 Spring 2020
Chapter 15- Bringing It All Together
5. How would you advise Netflix as they move into a shifting future? What should they build, hold, harvest
or divest?
6. Netflix's leadership was able to foresee the change from watching movies on DVD to watching movies over
the Internet. How does this success validate the final words from Mike Jackson in this chapter's opening
vignette?
7. What media do you access to get your news and entertainment? How can Netflix reach consumers like
you?
Transcribed Image Text:Learning Activity - Marketing 2150 Spring 2020 Chapter 15- Bringing It All Together Growth Strategies: Where Do We Want To Go? In this learning activity, we will develop skills related to describing how strategy is developed at the corporate, business unit, and functional levels in an organization. Knowing where the organization is at the present time enables managers to set a direction for the firm and allocate resources to move in that direction. Two techniques to aid in these decisions are the (1) business portfolio analysis and (2) market- product analysis. The Boston Consulting Group's (BCG) business portfolio analysis uses quantified performance measures and growth targets to analyze a firm's business units (called strategic business units or SBUS by BCG) as though they were a collection of separate investments. Read the mini case study below and respond to the questions that follow. If in 1997 a customer had been charged a late fee of $40 for a VHS tape of Apollo 13, what might she or he have done? Maybe just grumble and pay it? In the case of Reed Hastings, he was embarrassed, apparently paid the $40 late fee, and-this is where he's different-got to thinking that there's a big market out there. "So I started to investigate the idea of how to create a movie-rental business by mail," he told a Fortune magazine reviewer. The Original Business Model: "Early on, the first concept we launched was rental by mail, but it wasn't subscription-based so it worked more like Blockbuster," says Hastings, the founder and chief executive officer of Netflix. It wasn't very popular. So in 1999, he relaunched his idea with a new business model-as a subscription service, pretty much the mail business you see today. "We named the company Netflix, not DVDs by Mail, because we knew that eventually we would deliver movies directly over the Internet," Hastings says. Netflix's Changing Business Model: The Netflix DVDs-by-mail model delivered movies on DVD to customers for a fixed monthly fee-and drove Blockbuster to seek bankruptcy protection. But the Netflix business model changed over eight months in 2008: from "Watch Now," enabling subscribers to watch any of 1,000 streaming movies on a PC, to partnering with TiVo, Xbox, and others to enable their systems to let you see one of about 12,000 movies on your television. The movie distribution channel has also expanded with web- ready TVs such as Sony's Bravia, game consoles such as Xbox 360, and tablets such as Apple's iPad. With Netflix breaking a series of technology barriers, its "any movie, any time" business is just around the corner. In mid-2011, Netflix introduced controversial new pricing options: DVD only, streaming only, or both. Then in late-2011, when customer reaction exploded, Reed Hastings cancelled the plan to separate Netflix's DVD-by-mail business from its movie streaming service. Change is a constant in the Netflix business model. Netflix alters its "business model" to respond to changing consumer demand and technologies. Many organizations need to continually improve their businesses in order to stay ahead of the changes that are evident now and predicted for the future. Questions 1. Of the SBUS identified in Netflix's history, which ones are Cash Cows? 2. Of the SBUS identified in Netflix's history, which ones are Stars? 3. Of the SBUs identified in Netflix's history, which ones are Dogs? 4. Of the SBUs identified in Netflix's history, which ones are Question Marks? Learning Activity - Marketing 2150 Spring 2020 Chapter 15- Bringing It All Together 5. How would you advise Netflix as they move into a shifting future? What should they build, hold, harvest or divest? 6. Netflix's leadership was able to foresee the change from watching movies on DVD to watching movies over the Internet. How does this success validate the final words from Mike Jackson in this chapter's opening vignette? 7. What media do you access to get your news and entertainment? How can Netflix reach consumers like you?
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