...Company Analysis: Netflix 04/28/2011 Executive Summary Netflix Inc is a by mail DVD rental company and online streaming video webpage service exclusive to its paying subscribers. There are currently 2,180 full-time employees that manage a company with more than 20 million clients (mergentonline.com). Netflix is known for its innovative and sustainable business model based on unlimited service for a flat fee subscription. It distributes DVDs and controls inventory efficiently, to a point where costumers are completely satisfied with the service received (Freed). Throughout the years, Netflix has been operating by providing DVDs by mail to costumer’s households from its strategically located shipping warehouses. Additionally, Netflix started to offer online video streaming in 2008 to expand their services and appeal to a younger audience. This shows how Netflix adjusts in changes in the industry. The video rental industry was slowly loosing its appeal, in which companies like Blockbuster Inc. and others had a hard time making a profit using the usual classic video rental method at physical stores. But Netflix did not suffer from the industry losing its appeal. Netflix’s source of revenue comes from the monthly fee its millions of subscribers pay. Even when the economic environment was not at its peak the last few years, Netflix managed to sustain growth. Its unlimited service plans has kept demand buoyant, and it is one of the few movie rental companies that profits go...
Words: 7650 - Pages: 31
...Planning Netflix has become a very popular Internet-based choice for consumers who watch movies and television shows. Since the company started more than fifteen years ago, it identified and capitalized on the way television consumers prefer to watch movies and television. Netflix recognized that preference was quite simple, which is to watch television programs and movies without interruption from advertisements that you cannot escape when watching regular television. Since 1998, Netflix has set goals, implemented plans and strategies to become the leader of television network on the Internet and to maintain that industry position. This paper will examine the company’s strengths, weakness, opportunities, and threats analysis (SWOT) as well as recommend a strategic and operational plan to ensure Netflix remain the leader in Internet television networking. SWOT ANALYSIS A SWOT, which is strengths, weaknesses, opportunities, and threats analysis is a snapshot assessment of the current state of the company. It can highlight what the company does well or better than others as well as present the things the organization does poorly and areas in which improvements are necessary. Such analysis can also determine the various opportunities that a company can capitalize on. Just as important as the previous reasons, the analysis can provide information regarding the current threats that may potentially injure the organization. Below is a SWOT analysis of Netflix conducted...
Words: 1602 - Pages: 7
...Accounting Netflix, Inc.: A Financial Analysis Andrew Gaines This paper was written for Professor Bearden!s Financial Statement Analysis course. Netflix, Inc. is the leading provider of online movie rentals in the United States. Out of an approximate 12,000,000 online movie subscribers in 2008, subscribers to Netflix constituted about 9,400,000. The company has strong profitability ratios as revenues increased 13.2% from 2007 to 2008 and net income increased 24.6%. Netflix has higher costs of revenues than its competitor, Blockbuster Inc., but it has outperformed that company. Blockbuster experienced net losses in 2007 and 2008. Netflix!s current liabilities have increased to match revenue growth, while long-term liabilities have increased to recognize an increase in lease obligations. Equity decreased from 2007 to 2008 by 19.2% due to an increase in treasury stock. This financial statement analysis of Netflix, Inc. encompasses the years ending December 31 of 2006, 2007, and 2008. Financial data was gathered from the 2006, 2007, and 2008 10-K filings with the Securities and Exchange Commission (SEC) and the company!s 2009 Q-1 filing for its first quarter of 2009. Additional data was also taken from the company!s website: http://www. netflix.com. For comparative purposes, data was gathered from one of Netflix!s competitors, Blockbuster, Inc. Data for Blockbuster was gathered on it company website, http://www.blockbuster.com and its 2007 and 2008 10-K filings with the SEC. Industry data...
Words: 6240 - Pages: 25
...influence their own televi-sion program. Most TVs have the ability to install applications, like Netflix. Older screens can be updated by a small hardware player to get this capability. Usually living room video entertainment is done by traditional companies like the RTL group. The customer can switch the channels, but is not able to choose his program by a remote click. Netflix is the pioneer and market leader in the US in streaming and offers shows and movies by video on demand. New streaming companies will mix up the tradi-tional market. A kind of quantum leap infects the television screen. The conver-gence of technologies combines an internet stream on the classic television. Traditional companies, like RTL, should consider following a different another strategic management course than for example Netflix. This assignment analyzes the streaming market, the forces, threats and opportu-nities as a Macro Environment Analysis. It’s a fast growing business and has a huge potential. The company Netflix is screened by a Micro Environment Analysis to show their portfolio and key figures. In the targeting and positioning part, a possible way of a strategic corporate management is developed, by references on the analysis of Porter’s three generic strategies, Ansoff and Mintzberg. For the final conclusion the current strategy will be investigated and opportunities are shown. Netflix has still some unexploited possibilities to maximize the profit and demonstrate also their market...
Words: 7929 - Pages: 32
...rental industry, the company Blockbuster took an early foot hold as the industry leader. In 1997, Marc Randolph and Reed Hastings discovered the growing market space within the DVD market and formed the company Netflix in Scotts Valley, California with $2.5 million in startup cash. The company was formed with the idea that customers could utilize the company’s web site to rent DVDs and have them delivered to their home. The inspiration for the company came from Reed Hastings after he acquired $40 of overdue fees on an Apollo 13 movie rental from Blockbuster (A brief history of Netflix - CNN.com, n.d.). The business model for Netflix was created upon the methodology that customers will receive the movies of their choice in the mail while never incurring late fees. (Abraham, 2012 p. 1.8). Netflix added customer value and convenience by using processes already in place such as the US Postal Systems to capitalize on the delivery of their product. In this paper, I will outline a SWOT analysis of Netflix as well as prepare a strategic plan to grow the business over the next three years. Using SWOT analysis and strategic planning an organization performs organizational forecasting similar to advice given to a US hockey player once made concerning hockey, “skate where the puck is going to be, not where it has been.” (Schwartz, n.d.) Strategic planning is a systematic way of planning for the organizational future but upon the data based decisions from the SWOT analysis. The distinctive...
Words: 2550 - Pages: 11
...Corporate Financial Analysis and Security Research of Netflix, Inc. [pic] . Finance 307, Professor Peter Lou GGU, Summer 2013 Table of Contents Business Description……………………………………………………………………….. 3 Industry Position and Business Model…………………………………………………… 4 Industry Analysis……………………………………………………………………………. 4 Historic Financial Analysis……………………………………………………………….. 5 Weighted Average Cost of Capital……………………………………………………….. 6 Financial Statement Analysis……………………………………………………………… 7 Bond Valuation I……………………………………………………………………………. 10 Bond Valuation II…………………………………………………………………………… 11 Stock Analysis……………………………………………………………………………….. 11 Off-balance Sheet Items……………………………………………………………………. 12 Revenue and Earnings Growth Analysis…………………………………………………. 12 Conclusion……………………………………………………………………………………. 13 Exhibit I……………………………………………………………………………………….. 14 References…………………………………………………………………………………….. 15 Business Description Below are some fast facts regarding Netflix and a quick history snapshot. |Fast Facts | |Founded |1997 | |Location |Los Gatos, CA | |Industry Sector |Internet Television...
Words: 3851 - Pages: 16
...todays’ market it is important for a company like Netflix to stay up to date with growing trends and to continue to make improvements on how to do things to keep the bottom line intact. In order to keep up with competitors a successful company must take a look at both internal and external factors and how they impact or operations to measure the company’s longevity. In every business environment there are four management functions found which are planning, organizing, leading, and controlling and each of these are used by everyone in a company from upper level management to the entry level employee. When thinking about internal and external factors we must look at globalization, technology, innovation, diversity and ethics which all affect these business functions. According to Bateman and Snell (2011, p. 4), “Companies that want to grow often need to tap international markets, where incomes are rising and demand is increasing.” Internal factors include production, customer service, and marketing strategies. For example, company branding can affect a company’s image. One can associate with the quality of products and services with a company’s brand and is often the first thing that people see when interacting with a company. External factors include new market environments to which a company must be accustomed, consumer analysis, and market analysis. A new product introduced into a new market depends upon consumer reactions. A company must analyze trends by segmenting markets...
Words: 744 - Pages: 3
...Model and Strategy in Renting Movies and TV Episodes (case 6 in text) 1. How strong are the competitive forces in the movie rental marketplace? Do complete five-force analysis to support your answer. The five force model of competition contains 5 sections of competitive forces which include: suppliers, buyers, potential new entrants, firms in the industry offering substitute products and rivalry among competing sellers. * Suppliers- my analysis shows that this is the strongest force in the industry. They are the one that set market prices and control the distribution of their product. The amount of movies produced all depends on them. If suppliers decide to vertically integrate forward, businesses like Netflix and blockbuster will definitely be wiped out of business. * Buyers- these are the people that accept the market prices. They have no say although the market works to satisfying their needs. They have limited choice in terms of finding other entertainment sources except visual entertainment and therefore accept whatever restrictions the market sets for them. This is not a strong force in this industry. * Potential new entrants- considering that competition is high in this industry and many businesses have set up their market status it is hard for new businesses to enter this market. Netflix is a dominant business in the market and has almost managed to wipe put blockbuster and movie gallery into bankruptcy. Therefore this force is also weak as potential...
Words: 2704 - Pages: 11
...Introduction Netflix is the world’s largest online television service provider, which controls the market globally generating over 50 million subscribers. The company has consolidated its position as an online television industry. It provides its users with a fast Internet delivery service of television shows and movies directly on computers, television, and mobile devices worldwide. The video streaming and broadband connection help users around the globe download and watch large video files from the comfort of their homes. With the advantage of this technology, Netflix has launched a video steaming website in 2009 where subscribers can watch the most recent television shows and movies. For today’s audience, it’s all about immediacy and mobility. The content of the users is looking for convenience, product selection, community of users, and customer services to fit their needs. Netflix, however, has given users the ability to watch a movie or an episode of their favorite TV show while traveling or being away remotely from the comfort of their homes. With the understanding of the impact of video streaming and the entertainment industry, there are many competitors that have similar avenues relating to Netflix. Company Overview Reed Hastings and Marc Randolph founded Netflix (NFLX) in 1997 in Scotts Valley, California. Netflix is a consumer technology company and industry leader for on-demand video streaming of copyrighted content on a monthly subscription. The monthly subscription...
Words: 1595 - Pages: 7
...Problem SWOT Marketing Plan Using netflix as the organization with products Eco Friendly Disks (EFD). This service will be the basis for your Marketing Plan Paper. Marketing Plan Outline for the general framework of the Marketing Plan. A SWOTT (Strengths, Weaknesses, Opportunities, Threats, and Trends) analysis on the service. 500 word with references Founded in 1997 by Reed Hastings and Marc Randolph, Netflix began offering daily DVD rentals to customers via the mail. Seeking to differentiate itself from its competition, Netflix created partnerships with companies selling a complementary good (i.e.) a DVD player (Chiu, Doroudi, Haussler, Khosla and Maltingly, 2007). Netflix therefore offered free rentals with every DVD player purchased. Presently, Netflix is the world’s largest online movie rental service with more than 20 million members (http://ir.netflix.com/). The company provides not only online movie rental service but subscription service streaming movies and unlimited TV episodes via the internet. The company also offers free in home delivery with no due dates, late fees or return charges. This winning strategy and user friendly service has made Netflix extremely successful over the years. SWOTT Analysis Strengths Market Entry Netflix entered the market for DVD rentals with minimal competition which allowed the company to establish its brand whilst providing a large variety of DVDs to customers at their convenience. Thus customers are able to rent...
Words: 818 - Pages: 4
...Since founded in 1999, Netflix has grown to become the world’s largest online movie rental service. In the beginning of 2007, Netflix surpassed 6.3 million subscribers. With a catalog that includes more than 100,000 titles, Netflix is leading the movie rental market. Netflix’s subscription-based business model was a disruptive innovation in the movie rental business. By using the internet, Netflix focused on providing convenient and affordable prices for an entertainment industry that was already highly popular. Based on a product that consumers already loved, Netflix’s business model was profitable because it improved the consumer’s rental experience. The company aimed to become the best cost provider. As part of its competitive advantages, Netflix has an intuitive website (easy to use), personalized movie recommendations, and excellent customer service. Netflix has been rated No. 1 in online retail customer satisfaction by Neilsen Online for the past 3 years and for nine consecutive periods by Forsee/FGI Research (Netflix, 2009). Netflix’s strategy for success has included providing a comprehensive selection of movies; an easy way to choose movies, fast delivery, a no late fees policy and a convenient drop it in the mail return system. These strategies ensured a competitive advantage to Netflix and threatened to make the traditional video store obsolete. A combination of its business model and strategic approach carry out the mission of the company. Diagnosis of Strategic...
Words: 2234 - Pages: 9
...A SWOT analysis is an essential evaluation that every company should consider utilizing. It reviews phases and elements of a company with the purpose of showing what aspects are working well and which ones need to be improved. By applying the SWOT analysis to Netflix, I have concluded that their strengths are, the easy stream and the accessibility that the service offers to its customers. Subscribers can enjoy their favorite shows and movies in the comfort of their home, on the go, during their lunch break and even on their mobile devices or computers. Another strength that Netflix has is their affordable monthly subscription that ranges between $7.99 and $11.99 per month which includes unlimited movies and TV shows. The additional benefits of a membership depend upon how much you want to pay each month. With the improved development of internet speed, more customers are preferring to watch their movies and TV shows online thus decreasing the usage of DVDs. This is considered a weakness of Netflix, because the company decided to separate their services into two categories: the streaming Netflix and DVD.com, a Netflix company which offers physical DVDs that are delivered by mail. The DVD by mail operations have decreased considerably in recent years and the decline of memberships is expected to continue in the future. On the other hand, a big advantage Netflix has compared to other similar services, is the growth of International markets. Netflix is present in more than 200 countries...
Words: 936 - Pages: 4
...EXECUTIVE SUMMARY Netflix began in 1997 as a revolutionary idea by CEO Reed Hastings and software executive March Randolph. Before long, in 1999 Netflix launched its major line of business, the online subscription service, which radically changed the way consumers viewed movies and television. For a young company in an innovative and growing industry, Netflix has set itself up for a tremendous journey. The company has had much success due to its adaption of a modern business model and strength in operations management. Its continued reliance on and improvements of operation management principles is necessary to continue growing and bringing in profits. The following analysis focuses on operation management principles attributable to the online video streaming sector of Netflix, as well as its DVD-by-mail rental service. Today, Netflix streams on demand videos from nearly any web-enabled device to over 30 million members world-wide. In order to do so, Netflix utilizes all of the key elements of Operations Management. This analysis evaluates those key elements currently in place and offers areas for improvements. INTRODUCTION What makes a company successful? This broad, open-ended question is one that analysts and strategists devote their life to answering. The answer lies in a deep analysis of the operation management principles of a company. Netflix’s long, fundamental strain of standards regards operations and productivity, operations strategy, project management...
Words: 4276 - Pages: 18
...Case Analysis Blockbuster vs. Netflix 1. Mission/External Analysis 2. Industrial Analysis 3. Internal Analysis 4. Financial Analysis 5. Assumptions/Challenge/Objectives 6. Alternative Analysis 7. Resolution For years Blockbuster dominated the movie rental scene crushing the local competition with its wide selection, huge inventories and longer rental periods. Over the years though, Blockbuster has lost it strangle hold over the competition and filed for Chapter 11 bankruptcy protection in September 2010. Blockbuster competition won because they evolved to meet the demands of the current customer. The biggest rival that Blockbuster competed with was Netflix, which was started in 1997 and established its subscription service in 1999. The competitive forces in the movie rental marketplace expanded in the early 90’s with the creation of the DVD movies. Like pervious attempts to move away from VHS tapes, DVDs players were very costly at first. As time went on, DVD’s players became cheaper to produce and many of them where incorporated with home theater systems due to the demand of people who wanted to watch movies on their own big screen. With this boom in DVDs’ it created a demand in the movie rental marketplace. Since Blockbuster was apart of Viacom, which was a multimedia conglomerate, they were able to provide them with supplier power and buyer power. Blockbuster was able to outspend the competition, which in...
Words: 1620 - Pages: 7
...competitive advantage (Hitt & Robert, 2011, p.10). Value chain analysis is a model that was developed by Michael Porter to help an organization develop a strategy for its organization. Michael porter suggested that organization activities can be grouped into two major categories which include the following; primary and support activities. Primary activities are those activities that are geared towards the creation and delivering of a product. Examples of primary activities include component assembly (Schmitz, 2005, p.20). Support activities on the other hand are not directly related to the production of a product or service. Such activities are those activities that can increase the efficiency or effectiveness within a business. For example, human resource management is an example of support activities. This essay is going to evaluate the process of value chain analysis and its application in the following two companies; Netflix and Redbox companies. 2.0 Background information. Netflix is an online movie streaming and email DVD Company. The company offers consumers a chance to stream live various movies over the internet. In order to use Netflix, consumers are required to register on the company’s website. The registration will involve paying a monthly subscription fee. Consumers are able to stream movies and watch live televisions show to their personal computers or even television sets. Netflix is only...
Words: 1651 - Pages: 7
