Capstone assignment – Netflix case study

Netflix should implement the Prospector Strategy given the nature of business, whose success in growth and expansion has attracted and will continue attracting competitors who want a share of this success.  The firm has previous assumed that its rival in the market – Blockbuster – would not launch competitive efforts which caught it off guard. The market is changing in the way customers are buying movies, how and where they are obtaining them. While going to an actual movie theatre is still preferred among many people, watching movies at home is becoming common buoyed by technological improvement. This shows a changing market environment in terms of customer preferences and increasing competition from many providers for the same products.  With changing environment come new opportunities that Netflix can use to serve the customers. Prospector strategy will ready the firm to adapt to changes in the market and compete favorably with new and existing rivals. The strategy allows an organization to be constantly innovating by looking into emerging market opportunities in form of trends and situations that require aligning products to meet demand in a dynamic environment Coulter, (Coulter, 2013).  The innovation may include using technology to enhance movie streaming by customers and enhancing the process through customers can review movies and pay for them. The prospector strategy will enable Netflix to always remain ahead of its rivals for both online streaming and DVD sales.

Netflix uses its resources to establish an online platform, including an online site for DVD subscription and delivery that can be visited by customers using their computers. Being the first to launch such a platform, the growth of the subscriber base was rapid enough to reach 24.4 million subscribers.  This enabled the firm to offer the most expansive DVDs selection. Organizational capabilities refer to various process and routines that enable a firm to transform resources into product or services (Coulter, 2013). Netflix capabilities are hedged on innovation, by using technology to provide online delivery and subscription services to the customers.  Innovation of the firm enabled the building of best internet movie services, grow annual subscriptions and improve on earnings per share. Core competences refer to capabilities of an organization that enables it to create value that is essential for its business operations. The capabilities of an organization act as the source of core competences. In addition, the competences help in the improvement of organizational capabilities (Coulter, 2013). The ability to build online platform for customer subscription acts as the source of Netflix competences and core competences. This has enabled the firm to grow rapidly over the years and trounce rival firms like Blockbuster, in terms of DVD sales and streaming business.

Functional concerns including product, people and support process are normally addressed in line with goals of an organization (Coulter, 2013). Product designing, production and marketing are major concerns that are addressed with the customer in mind.  The design of the Netflix products – provision and delivery of movies – is done on the basis of innovative technology. This refers to packaging of the services through an online platform or a site where customers can easily access the various movies they need. The designing of the product is done through invention of an online delivery and subscription site that enables the product – movies – to “come to the customers”. This makes it possible for the product to reach a large number of customers around the world who are keen to easily obtain a certain movie. The design is also addressed through online streaming, where the product – streaming services – can reach the customer at their specific destination.  People are the most important asset of a firm and respecting their ideas and differences sustains organizational growth in the long-run (Coulter, 2013). In Netflix the concern for people is addressed through setting of ambitious goals for the firm by Reed Hastings the CEO. The people share in the organizational goal. Support process includes various strategies aimed at assisting an organization to carry out its operations effectively and efficiently and hence, create a competitive edge (Coulter, 2013). The concern is addressed in Netflix through development of profitable partnerships between the firm and content providers, placing the cost incurred by customer during streaming under control and licensing original series for the firm.

Netflix competitive advantage can be traced to its innovation in service provision to the customers. Competitive advantage refers to aspects in an organization that sets it apart from others in the market (Coulter, 2013). This involves doings things in a way that others cannot or doing such in a distinctive and better way. The value chain for Netflix is based on competitive strengths that consists of large customer subscription on its website that is increasingly year after year. The focus on customer and the readiness to face off any challenge in the market competition gives the firm a competitive advantage over its rivals in the industry. The ability to focus on online movie streaming while at the same time not hurting or neglecting DVD sales has set apart the operations of the firm and improved its competitive edge in the market. The creation of partnership with providers of content places the firm at a better position in the market than its existing rivals like HBO and Amazon and any potential new entrant. This enables the firm to remain focused on the streaming services where the future of the business lies.

References

Coulter, M. K. (2012). Strategic management in action. Upper Saddle River, N.J: Prentice Hall.