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11/16/16
1. SWOT Analysis
Strengths
Exclusive content
Optimized distribution
Innovative/future oriented
Promotions
No late fees
Weaknesses
Marketing Strategy
Cost of content
Privacy Issues
Customer Relations
DVD rentals
Physical presence
Excessive debt
Opportunities
Advertising
Online Demand
Public Relations
Gaming
Partnerships
Service
Threats
Other Services
Lawsuits
Studio Delays
Key success factors: According to the case-study and my research, Netflixs main key success
factor is distribution. In the past, they optimized the process with distributing their DVDs.
Netflix made the distribution process convenient, cost-efficient, and customizable (you dont
have to return DVD until you are done). They guarded their distribution strategy through
camouflaging their warehouses. This aided in protecting trade secrets, but it also helped in
preventing disruption to their operations due to customers showing up to their warehouses and
expecting to be able to drop off their DVDs. They also are successful in the field of technology.
Netflix has proved its ability to improve production processes and innovative technology. They
were also one of the first companies to switch to DVDs when VHS was the main platform. They
have now adopting streaming as the market is switching from DVDs to online streaming.
of attributes that allows it to outperform its competitors. In the early market, Netflixs
competitive advantage was that it didnt charge late fees and their distribution network.
However, now that the market has changed so drastically in transitioning to streaming,
their competitive advantage lies within their ability to produce original content that other
2. Key Issues
The main issue in this case was Netflixs public relations management issues when they
divided Qwikster and Netflix. Netflix handled that situation miserably. I even remember when
this happened. My parents were thinking about buying Netflix but because of the price split
between streaming and DVDs, they decided not to. I remember how they talked to their friends
who were extremely angry about it too. We decided to keep using Redbox. Netflix could have
researched more into customer response to this action but they didnt. Unfortunately, this cost
them gravely.
I would give Netflix a current rating of a level 4. Theyve spent a significant amount of
their budget on research and development which has taken them to the next turbulence level.
They have remained strong in their ability to innovate and respond to where the environment is
competitive edge by having a company/product/service that clearly sets itself apart from rivals in
a way that creates high value for their products. Done successfully, it allows a firm to set
premium prices, increase unit sales, and gain buyer loyalty. This is definitely the case for Netflix
as it has set itself apart from Blockbuster in the past, and is working on maintaining this with
modern competitors.
have developed their product from DVDs to streaming and by marketing original product.
People: shareholders, stakeholders, CEO, anyone who watches movies/tv (most people)
7. Financial Ratios
Unfortunately, I was unable to calculate Netflixs inventory turnover ratio because it does not
have traditional inventory. Streaming is Netflixs main product as DVDs are becoming obsolete.
Netflixs gross profit margins and current ratios are pretty good. They could focus more on
increasing their gross profit rather than maintaining it. However, their debt to equity ratios are
terrible. Anything more than 1 is very bad. Netflix not only is above 1 but they increased their
The main organizational issue with Netflix is their lack of marketing research. If they had
properly researched the ramifications in the splitting of Qwikster and Netflix, they would have
reconsidered it, or at least reconsidered their delivery. This hits on their public relations. The
case gave a great example on how Redbox communicated their price increase. They made it
seem like it was a necessary evil in order to make up for a recent tax increase, however they
increased the price more than what was required to break even. Now, this runs into a couple
ethical issues. Im not suggesting that Netflix make up a tax, or manipulate numbers. However, if
they had focussed more on their delivery, maybe there would not have been as much of a
From a Christian perspective, Netflix seems to be operating ethically. The one thing I
would address would be that some of their content is extremely explicit. I have seen many of
their Netflix Original shows and while they are incredible, they include a lot more explicit
content then is required to get the point across. Some of the scenes are so graphic that it seems
more like pornography than a tv show. I understand that sex sells, however I think the storylines
and character development are already enough to carry the shows they are making into success.
10. Recommendation
The main thing that I would recommend Netflix to do is find ways to decrease their debt.
They should higher financial advisors and find ways to cut back on their spending and which
categories to cut back in. If their debt to equity ratio does not start decreasing in the future than
the future of the company is at stake. In addition, they should develop better public relations