Essay Sample on Netflix Strategic Plan

Introduction

A strategic plan is an essential tool that helps in the preparation of the best methods a company can use to improve its performance in the market. The strategic plan, therefore, helps in identifying the most efficient ways to follow in improving the market performance of an organization. Using Netflix as a case study, the strategic plan to strengthen its market share was prepared. The company history, SWOT analysis, PESTLE and Porter's five forces analysis as well as the financial performance analysis will be analyzed. The strategic plan's goals will be explained, with the opportunities and the measurement of success of the strategic plan outlined at the end.

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Company's History

Netflix, Inc. is an international media-services provider company whose headquarters is in California (Netflix, 2019). Netflix was established in the year 1997. Currently, Netflix's primary business is the provision of subscription-based streaming of OTT services offering online streaming of films and television programs (Netflix, 2019). According to Bloomberg (2019), Netflix had more than one hundred and forty-eight million paid subscribers as by the end of 2018. The number of subscribers in the US alone was more than fifty-eight million, which totaled 140 million if the free trials were also counted (Bloomberg, 2019). Netflix services are available globally except in five (Netflix, 2019). Apart from the main headquarter in the US, Netflix offices are also found in the Netherlands, Brazil, India, Japan, as well as South Korea.

Initially, Netflix operated with a business model which included both the sales and rental of DVD by mail (Netflix, 2019). One year later, Netflix decided to concentrate on the DVD rental business. In 2007, Netflix began offering media streaming services to its customers, hence leading to further expansion of its service portfolio on top of the DVD and Blu-ray rental services (Bloomberg, 2019). The streaming business was expanded to Canada in 2010, marking the first international expansion of the company. The global expansion was immediately followed when Netflix entered the Latin America and Caribbean markets. In 2012, the company expanded and added content-production to its business portfolio with the production of the first series; Lily hammer (Netflix, 2019). Since 2012, the company has undergone both horizontal, vertical and geographical expansion, which included the production and distribution of both film and television series. Currently, Netflix offers its "Netflix Original" content through its online library (Netflix, 2019).

At the moment, Netflix services are available in more than 190 countries (Netflix, 2019). Netflix's superiority was demonstrated in 2016 when it released about 120 original series and films, a number that no other competitor managed to beat. Currently, Netflix operates in three major segments, Domestic streaming (for the US streaming content), International streaming (for outside the US streaming content) and Domestic DVD (DVD rental by mail in the US).

Netflix Mission Statement

Netflix's mission statement is to expand its streaming subscription business both in the domestic and global horizons (Netflix, 2019). The company's mission statement is referred to as its strategy, which aims at continuous improvement of the customer experience (Netflix, 2019). The mission statement dictates the direction of Netflix activities (Bates, 2014). As can be seen, the company has continually expanded in its modes of operations, including content streaming and also the production of its original series. The aim of becoming the best global entertainment distribution service makes the company continue investing in projects that would lead to better satisfaction of its customers. The company continues to produce a variety of content for its customers, aiming to capture and satisfy each customer in its customer-base depending on the different tastes and preferences.

Situational Analysis of Netflix

The video download and distribution industry have few players (Zana, 2013). In this case, the few dominating players in the industry have the power to engage in rivalry price wars. The movie industry, is not so much concentrated, leads to fierce competition. Irrespective of the intense competition, Netflix has been able to dominate in both customer base and geographic locations (Zana, 2013). In the industry, there are lower supplier bargaining powers since suppliers prefer selling their content to the market with high customer-base. Netflix has been able to gather high market base, making suppliers to prefer selling their content through the platform (Netflix, 2019). This makes the company have a competitive advantage over its competitors, hence gaining a dominating position in the market.

Netflix's central threat of substitution is the brick-and-mortar rental stores, which provide similar services to the Netflix services, which offer better selection of movies (Zana, 2013). However, the brick and motor lack the instant gratification which comes with downloading or streaming a movie whenever a customer desires, hence making Netflix be in a more superior position than the brick-and-motor businesses (Netflix, 2019). In the same way, it is more cost effective to stream a movie using Netflix than the other substitutes, making it be the dominant force over its alternatives.

For instance, Netflix gives the customers watching time. This means that if a customer starts streamlining a movie, then thirty minutes into the film finds it boring and decides to change to another movie, he will do so without incurring additional costs. This is not the same case with the available substitutes like traditional renting and purchase per download. The industry is also such that the customer's buyer power is weak. This gives Netflix the edge of becoming successful based on its internal competitive advantages.

Based on consumer satisfaction and product varieties, Netflix is the number one subscription-based movie provider in the US (ASCI, 2018). The company has a large capital base, which enables it to raise high sums in debt to fund its projects. Consequently, Netflix has been able to outperform its major rivals, Hulu and Amazon. However, the fierce competition is made more stringent by other indirect competitors like the CBS and Fox. However, Netflix's rapidly growing revenue streams has enabled it to beat its competitors and remain the reckoning force in the content-streaming and DVD rentals industry.

SWOT Analysis

The SWOT analysis is essential as it helps in outlining the threats and opportunities surrounding Netflix based on its strengths and weaknesses (Sarsby, 2016).

Strengths

Perfect Entry Time

One of the main powers, which has enabled Netflix to succeed in the market was its timing. The company entered the DVD rentals market in 2007 when the level of competition was low due to the small players in the industry. This allowed Netflix to establish a strong brand name and image, which enabled it to gather popularity for its unique services. Besides, Netflix was the first to offer DVD by mail. Together with an efficient business model, Netflix's early entry and perfect timing to its projects have enabled it to maintain a highly sustainable customer base.

High Customer Satisfaction

Netflix has managed to tap into one of the most crucial success factors in the movie industry; satisfaction. When Netflix entered the market, several customers were suffering from late fees. In this case, customers were irritated continuously with the late fees that they had to pay if they failed to return the DVDs to the rental stores. The company altered the norm of business by allowing the customer to keep the DVD until when he/she wishes to see the next movie. This made several customers to make abrupt changes in their DVD suppliers' and start purchasing form Netflix, gaining the competitive advantage. As the other companies followed the footsteps of Netflix, the company further ventured into content streaming, which further enabled it to offer more satisfaction to its customers. Customer satisfaction is the driving force of Netflix's mission statement and its vision (Netflix, 2019). In this regard, Netflix has spent a lot in the research and design as well as customer relationship management (CRM). The company's customers are experiencing high rates of satisfaction and convenience, contributing to Netflix's competitive advantage.

Sophisticated Network With Many Partners and Potential Competitors

When Netflix entered the industry, it understood the importance of partnership with the entire movie industry stakeholders. Netflix began creating awareness of its brand using promotions with complementary products (Netflix, 2019). For instance, Reed Hastings ability to turn Walmart from a fierce competitor to an ambassador of Netflix, whereby Walmart began encouraging people to turn to Netflix services (Netflix, 2019). The company has maintained smooth networking with its suppliers and partners, in turn making it cooperative and competitive at the same time.

User-Friendly Website

Netflix's website is designed in a manner that offers both class and pride. The site is user-friendly, enabling many customers to get all the services they need from the listed product portfolio. There are many features on the website. Netflix's outstanding feature is its recommendation algorithm, which has the highest degree of accuracy in recommending to its subscribers the movies they are likely to enjoy watching (Netflix, 2019). In this case, customers' satisfaction further increases since the algorithm saves them a lot of time searching for the movies and get them to start enjoying their favorite movies immediately. Since the company has a broader subscription base, the subscribers help movie producers gain popularity and sales since the more the subscribers, the more the movie reviews and ratings, which aid in determining the quality of the movies. This makes Netflix be a critical asset to content producers.

A Unique and Wide Variety of Products

Netflix ventured into the movie industry. Currently, the company has a large variety of movies for customers to choose from. This wide variety is essential as it helps them in meeting the different tastes and preferences of the customers.

Weaknesses

Even though Netflix has its original contents, the company incurs high costs, which continue to grow yearly. This is a weakness for the organization. Secondly, Netflix has limited copyright, which usually expires after one year. After expiry, the contents typically appear on other sites. Netflix has poor management of its debt as seen by the increase in annual debt, totaling 34 billion by the end of the business year 2018 (Netflix, 2018). Netflix has not come up with any renewable energy business model, which can be seen as its weaknesses.

Opportunities

Netflix has the prospects of expanding its customer base by venturing into the other countries it does not currently operate in like North Korea and Syria. Besides, Netflix can expand its content licensing through the increase of contracts with the other movie distributors, making it gain more rights. Moreover, increasing partnership and M&A would serve as an opportunity to expand its content delivery. Netflix can utilize its niche marketing to produce region-specific contents to the locals, in turn earning it high competitive advantages.

Threats

Currently, Netflix has three main risks. The first is the competition from large companies like Hulu and Amazon. Secondly, several governments have strict rules to be followed by service providers like Netflix. Third, the company suffers from piracy, which is becoming a global issue for companies like Netflix.

Essential Areas

Increasing Operation Base

The operation base of Netflix is a crucial area in the strategic p...