Netflix: A Behind the Scenes Look at Delivering Entertainment

Introduction

Netflix was a pioneer in the market that put the 'old-fashioned' DVD rentals to history and knocked Blockbuster out of business. Using the Five Forces model describe how Netflix changed the entertainment rental industry.

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Netflix changed the entertainment industry in different ways. For instance, the company has been able to provide subscription services which enable its members to stream movies or shows using the internet instantly. However, for the people who prefer a disc, it includes a subscription to the USPS delivery system. The five forces that will be used in describing the way Netflix has made changes in the entertainment rental sector includes competitive rivalry, supplier power, buyer power, the threat of substitution, and the threat of new entry.

Competitive rivalry: It is one of Porter's five forces. The force demonstrates the strength and number of a company's competitors (Parnell, 2014). Netflix company operates a competitive entertainment rental industry. Over the years the company has been able to effectively compete with its rivalries. The introduction of home delivery service made the firm to be ahead of its competitors like Blockbuster. The company has also efficiently established a maintainable differentiation. Capitalizing on the existing distribution system which is US Post Office that does not need the renters to leave home has enabled Netflix to remain as the leader in the entertainment rental industry.

Bargaining power of the supplier power: Supplier power refers to a way in which potential customers can quickly increase the prices of its products and services (Roy, 2009). Netflix offers unique and affordable products and services to the consumers as they only need to subscribe monthly. All the firms in the entertainment rental sector purchase raw materials from different suppliers. The company has dedicated suppliers whose operations depend on the company.

Bargaining power of buyer: This force tends to seek how the buyers can reduce the prices (Parnell, 2014). Netflix customers niche has profoundly grown over the years because of the way it treats employees and customers. It has a good HR strategy that ensures the employees are well motivated. Dealing with a small number of customers makes a company have more power. Netflix tackles the issue of bargaining power of the buyer by creating a broad base of the clients. A large customer niche is essential as it results in increased revenue. However, growing number of clients means they will be more demanding since they need the best products and services at minimum prices. An increase in the company's customers has helped in reducing the buyers' bargaining powers and accord it the opportunity of streamlining its production and sales process. Furthermore, the introduction of new products such as having a flat fee for all rentals without late fees, shipping fees, or due dates in the firm has helped Netflix to reduce the defection of the company's existing consumers.

The threat of substitution: It is the availability of a service or product that a customer can buy instead of the firm's services (Parnell, 2014). It is the likelihood of Netflix's customers getting similar products from another company. Netflix has handled the issue of the threat of a substitute service by being service oriented instead of being product oriented. It ensures that its employees offer the best services to the customers to reduce the threat of a substitute product. The company has also been able to understand the primary needs of the client instead of what a client purchases.

The threat of new entry: New entrants in the entertainment industry brings innovation and puts pressure on a company to lower the price strategy, decrease the costs, and offer the clients' new value propositions (Roy, 2009). Netflix has managed the threat of new entry by building practical barriers to help in safeguarding a competitive edge. It has invested in educating its employees on the way it earns its revenue. Through this, the employees strive to work hard to achieve the best results and make Netflix the ringleaders in the entertainment rental industry.

What is Netflix's Competitive Strategy?

The competitive strategy of Netflix is the HR strategy it is using. The company aimed at establishing an environment with highly motivated staff who fully understand the company's culture and perform well. The company believes that when it selects and hires good employees who value, prioritize, and understand the interests of the company, then it will perform well. The HR strategy was to eliminate formal policies and regulations need since the employees will work towards growing the firm for self-satisfaction. The strategy makes Netflix different from its competitors who employ staff without knowing if they fit the firm's culture. Thus, spend more money and time to enforce HR policies that only targets 3% of the total labor force. The competitive strategy of Netflix creates a working environment in which all the employees can succeed and set excellent opportunities for the company. Netflix also hires individuals who are motivated in assisting the company to achieve its goals and objectives. Other companies usually strive to ensure that a position filled without knowing if the employees will work towards achieving the company's objectives.

What Is the Most Important Step That Netflix Takes in Terms of Sustaining the Company’s Competitive Advantage?

The most important step taken by Netflix as McCord and Hastings note is establishing an environment with fully motivated staff who understand its culture and thus perform well. Motivated employees will always ensure that they work towards achieving the goals of an organization. Furthermore, instead of cheerleading, the staff should be educated on the way the firm earns its revenue and the behaviors driving Netflix's success. Getting employees closer to the operations of the firm makes them feel as if they are part of it and that their input is highly appreciated. By getting explicit messages on the way the employees are supposed to commit and execute their duties, they get informed on the criteria they need to get their bonuses. Additionally, through knowing what to do and the way of executing it, there is the increased motivation that can further result in increased performance as they will have morale in doing their jobs.

How Do the Company’s HR Policies Support the Firm’s Strategy?

The company's HR policies on recruiting new employees, talent management, sending the right message, and performance evaluation support its strategy. Managing the employees entail balancing their aspirations and goals to the company's. A firm's objectives and goals are important in gaining market share, making profits, or gaining world recognition. Making the employees productive ensures that a business is successful. The HR strategy of Netflix is concerned about ensuring that the business is well staffed and hence ensuring the pull of human resource required. It entails designing the structure of the organization and identifying the type of contract which various employee group will work. The correct individuals are then developed and recruited. Evaluating the employees using the 360-degrees review helps in correcting the areas they are not performing well and finding new opportunities for completing their activities.

How Does Netflix Monitor Their Employees’ Performance?

Netflix monitors its employees through informal 360- degree reviews. It implemented this method after realizing that the previous formal review methods were unsuccessful. The informal 360-degree session gives the employees the chance of providing honest opinions about their colleagues and themselves. The method of evaluation also enables them to provide their opinion regarding the company's policies and if they should change, start, stop, or continue using them. The company considered these conversations as important part of their job, and they have demonstrated to increase performance rather than depending on the bureaucratic measures. I would prefer to be evaluated using the 360-degree feedback used by Netflix since it gives me the chance of getting a broader perspective on the way my colleagues perceive me. Furthermore, the review offers an all rounded opinion of all the employee's performance including the supervisors. Therefore, if I am a supervisor, I will get an honest opinion from my juniors and know the areas in which I should improve to ensure that the company is successful in its operations. I also prefer this method as it creates relevance and awareness of competencies to even the senior management through knowing their areas of expertise (Anderson, 2010). The method will give me the chance of identifying development opportunities as it uncovers the areas I which a person should improve.

Link Between Customers and the Way Employees Perform in Netflix

In ensuring that incentives are equally and evenly distributed at Netflix, I would create a good relationship between customers and the way employees perform. It also entails creating a system that ensures the customers get quality services. I would create a standard way of dealing with different clients at Netflix. This strategy will ensure that the employees work towards the set standards, thus, distributing incentives evenly as all the employees have managed to achieve the established standards.

References

Anderson, D. L. (2010). Organization development: The process of leading organizational change. Los Angeles: Sage.

Parnell, J. A. (2014). Strategic management: Theory and practice. Los Angeles: SAGE.

Roy, D. (2009). Strategic foresight and Porter's five forces: Towards a synthesis. Munchen: GRIN.