Question

1. What are the internal strengths and weaknesses of Netflix? Include in your analysis considerations of corporate structure, corporate culture, marketing, finance (including ratio analysis for 12/31/10 and 12/31/11), research & development, operations & logistics, and human resources management.

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Answer 1

Internal strengths and weaknesses of Netflix:

Strengths:

• Everyone is aware of the company’s name and also has a positive association.
• Netflix’s delivery system is considered to be best which keeps the customers loyal. The search engine of Amazon will return the results including the videos to be purchased.
• The content of Netflix will soon be replaced by Disney’s content which includes George Lucas’ beloved “star wars”. Also it has sponsored exclusive window on some good news including its hit production “house of cards”.
• Paying lesser prices will facilitate watching streamline videos which are considered to be less than going out for a movie. With ready internet connections, Netflix becomes even more appetizing.
• The Netflix has strength of forward thinking management. It is because of Reed Hastings, Netflix has a streaming environment. He has also brokered some sweetheart deals from content providers.

Weaknesses:

• It may be difficult to justify the purchase of Netflix stock.
• The Netflix had the difficulty to raise the stock prices because it didn’t sit well with the consumers.
• It lost the DVD base. Netflix lost close to 475,000 DVD subscribers. This made Netflix to expect that DVD subscriptions will continue to fall down still further until they are zero.

Financing and licensing can be considered as immediate threats for Netflix to operate. The management can introduce a conditional price increase that can supplement some of the costs by enforcing limited advertising between the programming.

The in house content of the company is a note worthy investment that benefitted the company by implementing a word of mouth campaign and can prove that the company can be a award winning content producer.

The success of Netflix is because of its organizational strategies. Netflix is able to provide a unique customer experience from its inception as a convenient and cost effective service in the on demand internet streaming market. The company has been successful in its marketing strategies because of market penetration and online market development.

The competitive strategies of Netflix are lower cost, flexibility in its operations and differentiation in content offerings. All these factors can contribute to the strengths of Netflix because of its organization structure and culture.