Case study: netflix - Essay Example

He got an idea that if he could also send DVDs by mail to avoid late fines. So he bought a bunch of DVDs and send it to himself to see if it gets destroyed or not. When the DVDs arrived, he found them in good shape. As a result, he started renting movies and delivering them by mail with no late fees. This man is Reed Hastings who is the founder of Netflix Company. Netflix became a well- known company and is making billions of revenue. Netflix company background: Netflix has become one of the leading companies in renting and selling movies online.

Reed Hastings founded the company in August 1997 and it became a public company in 2002, with a book value of $15 per share. Netflix is also regarded as the first company to initiate movie renting and selling business. The company offers two types of service: a) streaming online movies and TVs shows and, b) selling and delivering DVDs by mail. Presently, Netflix has more than 27 million subscribers and 2,348 fulltime employees. Movies can be viewed in Netflix through computer, TV, ipad, smart phones, video games equipment and other internet connecting devices.

Netflix started its business in USA, but now it provides online streaming in other countries too, for example Canada, Latin America, Caribbean, the UK and Ireland. Netflix has seen phenomenal growth in the recent years, so it expects to increase its customer base in future. Hastings projected that the future demands would be more for digital content, so the company started focusing on online streaming more than just renting DVDs. “Hastings hopes that as more people gain smart phones and broadband connections they will become Netflix subscribers” (Parr, 2011).

Case objective: This case study discusses the decisions and action plans of the top level management. It also includes the effect of such decisions on the customers and the strategies of the company to achieve its vision, missions and objectives. Apart from this, the external and internal environments of the firm have also been evaluated in the study. The key strategic challenges that Netflix is facing has also been discussed and certain solutions have been recommended for the same. Company strategic profile: The unique selling proposition (USP) of Netflix was that it did not use post office to deliver its DVDs, and it did not charge late fines on DVDs.

It introduced a new business model, which was influenced by the Resource-based Model. This new model has several components, but the important ones are resources and capabilities. 1- Resources: the founder identified the weaknesses of the competitors and started a new way of selling and renting movies. 2- Capability: the firm had an advantage of doing better than its competitors. Any customer could order from home rather than go and buy from the store. They also launched online streaming of movies.

Netflix has the ability to get an edge over its competitors because it utilized the online and mailing resources very well to establish its business. Netflix Vision and mission: According to the annual report of the company, their vision is defined as: “Our core strategy is to grow our streaming subscription business domestically and globally.” So according to their stated vision, they are expanding globally. The company is also taking initiatives to enhance the customer service and focus on value creation. By