Question

An analysis of the entry modes Netflix uses in its global markets. This analysis should focus on the rationale of entry mode choice.

Answer 1

Netflix followed a three-stage aggressive expansion strategy for venturing into the international markets. In the first stage, it at first analyzed the foreign markets and the perceived differences between markets before entering them. Netflix undertook the direct exporting method for distributing its products directly into the international market. This entry mode refers to the selling of goods and services of a company either directly to the customer or through intermediaries such as distributors, representatives and foreign retailers. Direct exporting in the initial stage of expansion helped Netflix to grab a considerable share of the market. Thus, it was consistent with the traditional method expansion in the first stage.

In the second stage, Netflix formulated a faster and more-extensive strategy for international expansion. It targeted markets by identifying them from their degree of attractiveness. It entered into partnerships with local shareholders, which in turn helped Netflix to introduce web series and shows in regional languages. Thus, the partnering mode of entry led to the expansion in more-distant markets with knowledge about the tastes and preferences of the customers. Netflix was able to invest in various technologies like analytics and big data through this entry mode.

In the third stage of expansion, Netflix has successfully captured the global market with its presence in more than 190 countries. It was able to produce more regional or domestic series and implemented exclusive licensing of its content and developed its content for streaming. It entered into a licensing agreement with various countries for enabling foreign content to be demonstrated in its platform.