Question

Although the recent economic conditions have taken its toll on many companies, Netflix has succeeded. Visit www.netflix.com and review the company's offerings and then complete an analysis of the external environment (situation analysis) using the elements described in the text. Which elements have helped propel Netflixto success over the past 5 years?

Answer 1

Following elements have helped propel Netflix to success over past 5 years:

1) Netflix know exactly what kind of business they are into. They initially thought about broadcasing live events, but later analyzed that there are new channels, you tube who are already doing that. Hence they focused on what customers want, which is as a personalization and user choice company, not as a streaming company. That has helped the company focus on what the user wants, not just pushing out features because it’s possible.

2) When Netflix started their business in 2000, it was impossible to stream videos at 56kbps speed, so they started with DVD renting business, but in 2005, when net speeds improved, they timed their opportunity and then youtube and netflix never looked back.

3) They chose the right content for subscription. By providing movies and last season’s TV shows, it puts Netflix in the market for pay TV and syndication, a big enough market to grow in but not so ambitious as to incite war against existing incumbents.

4) Netflix have maintained healthy relationship with suppliers and content providers and it has helped a lot in boosting the business. Therefore they were able to scale back their DVD renting business and make available same content on streaming media.  

5) Netflix do lot of testing on user groups of say 10000 to understand thier views on new contents etc. This helps them to exactly understand what mob requirements are and they can fine tune the products acccording to their requirements. This is exactly opposite to some mobile companies with one man mission focus.

6) Netflix focused on competitive pricing. Netflix could have met a different reception if it was a lot more expensive. But Netflix focused on the user experience including making sure the service was an easy buy for consumers.

7) Netflix promoted open work culture within the company. They stopped tracking personal leaves of empolyees, encouraged their creativity etc. This helped in boosting moral of employees and overall increase in creativity and productivity.