One More Episode An Industry and Competitive Analysis for Netfl.docx

One More Episode: An Industry and Competitive Analysis for
Netflix
David Bazile
Abstract
This study is to provide a thorough analysis of Netflix as a
corporation. Netflix shows their competences such as their
brand image and their leadership in the streaming industry as
well how they take consumer opinion into what goes on their
website. The following paper will demonstrate an overview of
Netflix and the video streaming service industry. This paper
will then focus on the external and internal analysis of the
company using matrices such as Porter’s Five Forces, External
Forces Evaluation (EFE), Internal Forces Evaluation (IFE), and
the SPACE tool. These matrices has been analyzed but
strengths, weaknesses, opportunities and threats have been
identified used in the TOWS matrix. Focusing on different
alternative business strategies, the paper shows possible
solutions for different identified problems of Netflix. Some of
the Problems that Netflix will be facing is the saturation of the
Industry but through the use of Market Penetration and
Development Netflix can make it out okay. The paper will then
be concluded with how the implementations of the proposed
solutions can strengthen Netflix’s position in the streaming
industry.
_____________________________________________________
_________________________
1. Introduction
Netflix was co-founded by both Reed Hastings and Marc
Randolph in 1997. The goal was to offer online movie rentals in
Scotts Valley, California. Hastings wanted to be able to rent
movies on the internet. There was also an old discredited story
that claims that “Hastings had the idea after Blockbuster
charged him a $40 late fee for ‘Apollo 13.’” In 1999, Netflix

begins to use the subscription service that allows consumers to
rent unlimited movies for one low subscription. In the year
2000, Netflix launches the personalized movie recommendation
system that uses member’s ratings to predict choices for
Netflix’s customers as well as recommend newer content to the
same customers. In May of 2002 Netflix announces its IPO
offering 5,500,000 at the price of $15.00 per share under the
name NFLX. In 2005 Netflix reaches 4.2 million people. Netflix
first introduces streaming which allows members to instantly
watch television shows and movies from their computer in 2007
making them a pioneer in this industry. A year later Netflix
partners with consumer electronic companies to stream on
Xbox, Blu-ray disc players and TV set up boxes. PS3, internet
controlled televisions and other internet connected devices came
a year later in 2009. In 2010 it is available on Apple devices,
the Nintendo Wii and they launched in Canada. The next year,
in 2011, Netflix launched in Latin America and the Caribbean.
In 2012, Netflix launches in Europe and they won their first
Primetime Emmy Engineering Award. The year after Netflix
expands to the Netherlands and Netflix also received 31 Emmy
and wins 3 of them for its original content. Finally, last year,
Netflix has over 50 million members globally. Today Netflix
employs 2,190 people and together they help bring in
$5,504,656,000 in the year 2014. The current CEO of Netflix is
still Reed Hastings. Netflix’s Vision Statement and Core Values
are listed below.
Vision Statement:
Netflix’s View: Internet TV is replacing linear TV
Core Values:
Netflix’s core values are Judgement, Communication, Impact,
Curiosity, Innovation, Courage, Passion, Honesty and
Selflessness.
Contact Information:
100 Winchester Cir
Los Gatos, CA 95032
Telephone: (408) 540-3700

Website: http://www.netflix.com/
Netflix is part of the internet streaming industry. They started
as a DVD shipping business and developed more into the
internet where everything is accessible from your computer.
There are intense competition coming from other companies.
The streaming industry consists of being able to watch movies
and television shows on the internet at any time. To maintain
margins in this industry, Netflix needs to manage their pricing
so that it can compete with other companies and still match the
consumers’ willingness to pay. With the over saturation of the
industry as well as their lack in product diversity, this analysis
will explain what are the best solutions to this problem.
NAICS Codes:
781200 – Motion Pictures and Video Production allows the
company to be able to make and produce their own video
content such as movies, shows documentaries, etc.
781200 – Video production allows the company to be able to
make and produce video contents.
78220201 – Film rental services allows the company to acquire
licenses for movies and rent them out to consumers. They will
have to be returned to be able to provide them to others. These
rental services would also be made sure to not be easily copied.
SIC codes:
7841—Videotape rentals this means that Netflix is allowed to
rent out different videos.
2. External Analysis
A. Porter’s Five Forces
Michael E. Porter is a pioneer in the topic of the forces that
drives and industry for profit. Porter explains that there are
different factors that can affect a business internally such
something as small as a review on the internet. The main factors
that he talks about are the threat of new entrants in the industry,
the power of both the buyers and the suppliers, the threats of
different substitutes as well as the rivalry that current
companies in the industry bring to the table. He believes that
there are underlying forces that indicate how a company should

and will react to competition. These five forces are not industry
specific and can be used for any company (Porter 2008).
Figure 1A – Barriers to Entry Opportunity
The barriers to entry is presented as an opportunity for Netflix
due to the fact that Netflix relies on getting licenses from
different companies to be allowed to stream their services. This
requires a great deal of capital since it is expensive to get the
rights to a program. Since Netflix does not require physical
buildings and many people to work at the company that is one
way that they can save money. Lately, there is also a demand
for online streaming. Coming from a consumer standpoint,
people like efficiency and they go to Netflix because everything
that they are looking for is in one sight on their computers.
Another barrier that newer companies will have to overcome is
the distribution channel that is already in place. Amazon has
their consumer’s loyalty and their website that already gains
traffic from shoppers and would be easy to redirect them to
their streaming. Also Netflix, on most of the smart TV’s, has a
button that is designed to open up Netflix. Another main point
is brand identification. Netflix has defined the streaming
industry and everyone knows who they are and what they do.
Newer companies will not have the resources to compete with
that which is why the barriers of entry is an opportunity for
Netflix.
Figure 1B – Power of Buyers -- Threat
The power of buyers in this industry poses a threat to Netflix
for a number of reasons. Starting off, there are a large number
of buyers in this industry. Normally that would be viewed as an
advantage but if you combine it with the availability of
substitutions, there are many options that they can go to that
they can go to another company if something happens or they
can go to another company without going anywhere near
Netflix. Also due to the amount of research that can be done on
the internet, consumers can do their own research and determine

who to go to before first hand trying that product. This means
that they can go to whoever sounds like the most popular right
off the bat. In addition to the number of buyers and the
availability of substitutes, the switching costs between the
companies are not that high. All of the services are around the
$8/month mark. Since they all cost around the same for a
subscription, consumers can easily move from one service to
another. Lastly, since our rivals are all potential substitutes that
makes it more of a threat because we would be losing people
while our competition gains what we lost.
Figure 1C – Power of Suppliers -- Opportunity
Netflix has a large array of suppliers. Most of Netflix’s
suppliers are there to provide licenses to allow the specific
show or movie to be played on Netflix. The other suppliers are
there to provide copies of DVDs that are used in the Domestic
DVD division. Looking at the number of suppliers, there are a
vast amount and they get their revenue from companies
streaming their content online. They all provide to more than
one company that poses a bit of a threat to us. The switching
cost is an opportunity since there is a lack of places to go to get
these licenses. The suppliers rely on the industry to be able to
make a profit on the content that they give us (with an
exception of Disney who owns Marvel). If they do not have any
other licenses then they make their capital so they can keep
producing. There are 3 main places that the suppliers can go and
that are streaming services, television and movie theaters. Using
Marvel in this scenario, they are one of the biggest suppliers in
superhero movies. After the movie is finished, they send the
rights to theaters for a limited time to show the movie. Once
that time is up they release the movie on DVD. Since the DVD
section of the movie industry is at a decline since you can
always find it online whether by legally buying it or illegally
downloading it, they would not be making the maximize amount
of profit in this section. They not turn to online streaming and

television to give them licenses so they can play it on their site.
Using this method the movie can continue to earn Marvel money
based on the amount of time that it has been on the site and how
often that it was viewed. This shows how the power of suppliers
section is an opportunity for Netflix. The suppliers need
companies like Netflix in order to maximize their profits.
Figure 1D – Availability of Substitutes – Threat
In the online video streaming industry, there are a large amount
of substitutes. The substitutes to Netflix are HULU, Amazon,
different channel based subscriptions (HBO, Showtime) and
cable. There are many things that you can choose from besides
Netflix and they are usually priced well for their value. Hulu
costs $8.00 a month and you can get a large variety of television
shows as they are releasing on television. This way you can
keep up with new television shows as they come out. Due to the
amount of capital that Hulu needs to keep its site running with
the newest content, they need to show ads to be able to show the
newest show since most of their income is coming from ad
revenue. Netflix shows no ads but at the cost of the
subscription, Netflix can bring in new content every month but
also have to release their right to many other shows and movies
also. This industry shows that you get what you pay for. Since
the other substitutes are Netflix’s direct competition, this poses
more of a threat to Netflix because they are similar substitutes
so both companies are competing with each other for the same
people. It goes more in depth with the competition from rivals
because they all specialize in another category of streaming.
Netflix specializes in movies but they have television shows as
well (season by season release). Hulu specializes in television
shows that release right after they premiere on television and
they are now starting to get into movies. Depending on what the
consumer is looking for, they have many choices to choose from
which makes the availability of substitutes a threat for Netflix
in this industry.
Figure 1E – Rivalry among Competitors – Threat

To Netflix, rivalry among competitors is a threat. Looking at
the first factor, the number of rivals. Netflix has Hulu, Amazon
and the rest of the internet as its rivals. The biggest things that
are taking away from Netflix’s success is the fact that
everything can be found on sites that pirate movies or television
shows. People will always pay the lowest price for something
and if that lowest price is free then that is where the consumers
will be heading. The streaming industry is also growing at a
rapid pace. Not only do people stream movies and television
shows, sporting events are just starting to make their way on the
internet live. This shows an excellent opportunity for Netflix to
get involved in that but Hulu and Amazon has established
themselves in this field as well. A good outlook that Netflix has
is their Market Share. They are the “go to” streaming site for
anything movie and show related. Everyone knows of Netflix
and they have made themselves known. Consumers tend to
prefer Netflix die to the fact that they all know people with a
Netflix account and Netflix users are usually satisfied. Looking
at people who go to Hulu, a problem that always comes up with
Hulu is the fact that you are “paying to watch ads.” This is a
staple issue that people who use Hulu have. Most times when
you join something with ads, you pay for the service to get rid
of them. With Hulu, you pay to get access to more episodes and
more shows and you are also paying for less ads. You will still
be getting ads but not at the rate of a non-paying customer. The
price Differention between Netflix and its competition is not
that high. As it was stated earlier, you are getting what you pay
for. Sure they are similar prices but the companies are no way
close to the same thing but they do come close. Putting all of
this information together, one can see how the rivalry between
competitors is a threat.
Figure 1F – PFF Summary
The difference between the present and the future values of
Porter’s is .04. This means that the external environment is

posing as a threat but not as much as a threat that Netflix should
be overly worried. Looking at the values these can only be a
small hindrance to Netflix but they can easily bounce back from
them. Netflix does not have to worry about new entries into the
streaming industry. Netflix has already established itself as the
number one streaming service and they are also the company
that set the bar high for most companies that plan on following
their footsteps. You need many resources including capital and
high brand recognition to be on a scale with Netflix. Without it,
companies will not give trust you with a license to show their
content and also expect a return on their investments in
companies just entering this market. That is why the barriers to
entry is an opportunity to Netflix in this industry. The power of
buyers, availability of substitutes as well as rivalries all go
hand in hand. All of the substitutes are rivals of Netflix and due
to the high amount of buyers, consumers can pick and choose
who to go to for their streaming needs. Looking at these factors
together, you can infer that the external factors poses as a threat
to Netflix. They have established their dominance but the
companies that are rising can overtake Netflix as the top
contender in this industry.
2. External Factor Evaluation
An External Factor Evaluation Matrix (EFE) allows strategists
to summarize and evaluate economic, social, cultural,
demographic, environmental, political, governmental, legal,
technological, and competitive information (David, 2013). In
the EFE matrix, Netflix’s top 10 biggest opportunities and
threats were evaluated, and given a ranking based on the
importance and how they relate to their 3 divisions, Domestic
Streaming, International Streaming as well as Domestic DVD.
The top two opportunities were to develop the Brand image and
the demand for streaming. Netflix is known by many people and
people know that Netflix is a big company in the streaming
industry. Next is to develop a demand for streaming. Currently
the only things being streamed are movies and shows. They can

move more into the live streaming services and partner with
companies to bring sporting events to peoples’ computers
anywhere they want. They will never have to miss an event due
to location issues. Netflix’s main competitor, Hulu, is not as big
of a scale as Netflix but there are things that Hulu does better
then Netflix. Since they focus more on television shows and are
updated on a daily basis, whereas Netflix is on a monthly basis.
Included in the EFE are threats that are not stated in Porters
Five Forces. For example cost of shipping for its Domestic
DVD division is a huge factor because they still ship DVD for
people who pay for that service. To the Domestic Streaming
division the cost of shipping does not matter which is why it
received such low weight as well as rating because it is
insignificant. Piracy is also a huge factor that is not stated in
Porter’s Five Forces. In this industry piracy will take away from
sales from streaming companies but the consumer is getting the
content for free even if it is not legal. This makes up a large
factor of loss of Revenue that is not stated in any financial
statement.
The factors that are included in the opportunities include their
developed brand image and how they created a domestic
streaming service demand. Starting with their developed brand
image, Netflix is well known as the go to streaming services.
Everyone knows what Netflix is and how they provide their
services. Some of the top shows in years are Netflix original
content. In addition to that “Netflix and Chill” has been a trend
for months. When a company is well known to the point to
where your name is associated with “hooking up,” you know
that your company is a well-known icon. They also developed a
demand for streaming services because everyone believes that if
they want to watch something, it should be online and easy to
find online. Since Netflix developed the need to be able to
stream everything, companies like Hulu and Amazon followed.
Television providers have also been stepping into this industry
with their On Demand Services to be able to access shows
directly on their TV. Netflix set the bar for streaming and many

companies are following suit.
C. Competitive Profile Matrix
Figure 3 – CPM Matrix
A Competitive Profile Matrix (CPM) identifies a firm’s major
competitors and its strengths and weaknesses in comparison to a
sample firm’s strategic position (David, 2013). This compared
Netflix with its top two competitors Hulu and Amazon Prime.
The highest weighted factors that was used to compare these
three companies were the product quality, product line,
distribution channel advertising as well as their online presence.
Starting with the Product Quality, Netflix, Hulu and Amazon all
offer their services at 1080p definition. That is the highest
quality visual wise that most devices can handle at this time (4k
resolution is a higher quality but most computers and handheld
devices do not have the processing power to display that
without crashing). The way that it was distributed for the
rankings were based on loading times. When Netflix loads a
video, they “pre-buffer” it up to about 5 minutes and continue
to load it as it is playing. That is the reason that Netflix videos
start up very quickly. Amazon must wait for the entire video to
load before starting it to play. This is very efficient but with
low internet speeds this will take time to load. Hulu can only be
played with a steady internet connection and once you
disconnect for a second, the video cannot be played. This
proves to be very inefficient which is why Netflix receives the
highest score for this.
The second factor that we look at is product line. Netflix
received a three for this category. The have the most options
with Streaming and their DVD lines. In both of these they have
both movies and seasons of different shows on its website. For
Hulu and Amazon this is only available online. Hulu has a
multitude of shows under its belt and Amazon has many movies
but Hulu has the edge over Amazon due to the fact that it has
established itself in television shows and Netflix with movies.

Amazon is sitting right at the end with a 1. This is also due to
the fact that Amazon is still new to the industry and they are
still developing and making contracts with different companies
to acquire more contents for its site. Netflix is the most
successful in the product line.
Third you look at the distribution channel. It should go without
say that Netflix has the best distribution service of the 3.
Netflix started off as a DVD rental company that lets you rent
DVDs and get them mailed to your home. This is the start of
how vast their distribution system is. Later on when they added
an online streaming section, their distribution went from a
mailing service to being in the homes of many people through
their computers. If you had access to the internet, you can
receive content from Netflix. Now all of the companies has
access to streaming but Netflix has developed passed
distribution on a computer. Today, nearly all smart televisions
has a Netflix button that allows you to access Netflix straight
on your television. Hulu has made its self also known on smart
TVs, but it does not have a designated button. Amazon is
recently starting to appear as an app after Netflix has been on
for years. Using this, Netflix, Hulu and Amazon were given a
score of four, three, two respectively. This also has a large part
to do with the brand awareness of the three companies.
Moving on to advertising. Netflix received the lowest rating for
this. People are well aware of who Netflix is and what they do
and Netflix does not need to advertise much for it. This does not
mean that they do not advertise. Netflix does not as much as
Hulu and Amazon but they do exist on certain networks. You
see most of their ads on Facebook based on search histories.
You see advertisements for Amazon’s fire stick which is used to
stream on Amazon Prime almost everywhere and they get the
highest rating for advertising. Hulu also has more advertising
for both themselves and other companies to produce ad revenue
which is what makes them the second highest with a score of
three. Netflix is at the bottom because they do not advertise as
much but they also have the largest amount of subscribers.

Lastly, looking at the online presence of the three companies,
Netflix is sitting at the top. They have one of the biggest trends
of 2015 with “Netflix and Chill.” Some may look as it more of a
problem but since this trend started, Netflix has been making
more revenue due to people signing up for Netflix. This has
been a big movement for them as a company to get their name
out there. They sit above the other two companies with a rating
of 4. Hulu was given a score of 3 due to the fact that they are
known on the internet as the go to place if you are only
interested in television show. They still do not have the biggest
market share which means not as many people are talking about
them. Amazon received a score of 1 due to the fact Amazon is
still known for a place to go to shop. They are not yet
established and they are still fairly new to the industry.
B. Internal Factor Evaluation Matrix
Figure 5 – IFE Matrix
An Internal Factor Evaluation Matrix (IFE) allows strategists to
summarize and evaluate the strengths and weaknesses in the
functional areas of the business, and also provides a basis for
identifying and evaluating relationships among those areas
(David, 2013). This matrix was developed with 10 of Netflix’s
strengths and 9 of their weakness across their three divisions.
Netflix’s three divisions are Domestic Streaming, International
Streaming and Domestic DVD. We use the IFE to rank Netflix’s
divisions according to values that they have internally. Netflix’s
greatest strengths are the distribution network, large market
share as well as the strong brand name value. Their biggest
weaknesses include their price elasticity of their services, range
of products as well as their reaction to competitor’s expansion.
Looking at Netflix’s strengths, they first have a large
distribution network. This distribution network runs farther then
being on a computer. If your device runs on the internet, it is
capable of running Netflix. Most, if not all, smart TVs that are
released has a pre-installed Netflix button on the remote so
consumers can watch Netflix on their television at home. Their

competitors also has a large network but they are not as large to
have a designated button.
Netflix’s second internal strength is the large market share that
they have acquired throughout the year. Not only do they have a
majority of the market in this industry, the large amount of
people is protecting Netflix since if some people leave they still
have a majority of people to soften the loss that they may have
incurred. Another strength that Netflix has is its name value.
The name “Netflix” is an asset in its own. Everyone knows of
Netflix and the way that the company was built made it this
way. Netflix has developed from a streaming service to an icon
from different trends to being a social icon with people talking
about things that they have seen on Netflix.
Looking into the weakness of Netflix, though small, are still
significant to Netflix overall. First is the price elasticity of
Netflix. One of Netflix’s unappealing qualities is the tendency
to increase their prices. Consumer’s will only pay more if they
believe the offering provides an important benefit that the
consumers are convinced is worth the extra cost. (Pieters 2008).
Consumers went crazy when Netflix announced that their prices
were increasing but it quickly died down. This shows that it is a
weakness since people are willing to leave if prices get too
high. The second weakness lies in Netflix’s range in products.
Netflix has streaming and DVDs. Unfortunately for them, DVDs
are dying which leaves to the streaming of just the television
shows and movies. All of Netflix’s competitors have something
that they specialize in and soon they will be at a standstill in
what they do. Netflix needs to take this weakness and expand
into something else to further distinguish them from the pact.
Netflix also is advancing slowly by adding more quality
television shows that people would be interested in seeing. Hulu
has many shows from special channels that are exclusive to that
channel and Netflix is now starting to compete with that by
working with DreamWorks animation (Welch 2014).
4. Problem and Issue Diagnosis
Netflix’s has problems that can be divided into two tiers that

are based on the severity of the issues that Netflix faces. The
first tier issues are the important issue that the company will
need to fix first in order to yield more success. Second tier
problems are not as pressing to the overall success of the
company and fixing those issues can be set aside for the time
being.
The first tier includes Netflix’s Product Diversification.
Looking at the PFF, Netflix is in a standstill when it comes to
the services that they provide. The main thing that is holding
Netflix together is their Domestic streaming services. Netflix
already has its name out there and since they also hold the first
mover’s advantage in this industry they are already ahead of
people. They should keep on trying to experiment with different
services so Netflix can stand out then more of a place to watch
shows and movies.
There are many things that Netflix can do in this industry. For
example, the gaming industry is booming and a streaming
service that exists in the gaming industry is known as Twitch.
They are focused on videogame streaming. Twitch’s mission
statement states that they, “connect gamers around the world by
allowing them to broadcast, watch, and chat from everywhere
they play” (Life Course 2014). This is one way streaming can be
used with things that are not television shows and movies.
Twitch’s goal is to bring people together as a community while
watching other people play games live.
Gaming is not the only extent that Netflix can take to resolve
their Tier 1 Problem. Netflix can also go into the sports
streaming market. They can partner with ESPN to provide live
content during the course of a game. Many problems that sports
lovers face is that sometimes there can be a certain game on that
the company would like to see but may not be available in their
area. If Netflix adopts the live streaming of sports they will
have many sports lovers subscribing to be able to see any game
that is on. If Netflix was able to add something like this to their
RBV, it would satisfy all of the items that would make it a
sustained competitive advantage. Netflix needs to find a way to

expand on their current situation and find a way to provide
other services to keep people interested as well as bring in new
people.
Another Tier one issue that Netflix has is that Netflix has
saturated the streaming industry. It will prove very difficult to
be able to find new customers without expanding in a different
market that will make the non-subscribers subscribe. Netflix is
one of the recognized company that everyone recognizes and the
people that are interested in Netflix already subscribes to it.
The only way to get more people to subscribe is to bring
something new to the table that others are not doing.
The second tier problem includes the decline of their Domestic
DVD division. Netflix was founded on DVD rentals but as time
moved on, everything was being placed on the internet. The
internet was the go to place to watch shows that you may have
missed on television. Moving further down in time, laptops are
being made without DVD drives and any software that you need
to buy for a computer is available for download online. DVDs
are in a state of where they are not being used anymore so
Netflix is keeping something that isn’t earning them as much
revenue. The resources that they are using to keep the Domestic
DVD going can very well be used to advance into a new market
or partner with companies to provide more content to stream.
This division is holding Netflix back.
Netflix has another tier two problem that they should consider.
Netflix on a mobile device feels like it is cluttered. This is on a
phone so naturally the app feels cluttered. The app should be
redesigned to make it easier to find videos and it should also
double as a “Netflix Remote.” YouTube has developed this idea
first but Netflix can use it to find content on Netflix apps
easily. The way that it works on YouTube, you can sync your
phone and laptop to your television or game console’s YouTube
app. You will then be able to select a video and have it project
on that device and set up a queue of the videos that you would
like to watch. Netflix will have an efficient app that will let it
control another app as a remote.

5. Alternate Strategies Identification
A. Threats, Opportunities, Weaknesses, Strengths (TOWS)
Matrix
Looking at one strategy that would solve Netflix’s Tier I
problem of not having that much of a product diversity was to
expand into different forms of streaming. By using the amount
of capital Netflix has at its disposal, they can use this to further
develop their vast amount of content that they have. They would
be able to partner with television networks to get their Netflix
original content on their channels while they can get their
content on Netflix. This will help both companies earn revenue
even if something is viewed without having a subscription to
the other company’s services. For example if Netflix were to
partner with USA, USA can show some of their original shows
such as Mr. Robot on Netflix without the need to subscribe to
USA. In addition to that USA can show shows like Orange is
the New Black and House of Cards on their network. This way
if you have a subscription to one of these providers, you can
still enjoy content from both of them.
When looking at the other tier 1 problem, over saturation of an
industry can prove to be a dead end for most companies.
Because Netflix has reached has saturated this market, they
need to do more to attract other consumers. Everyone has heard
of Netflix and those that were interested in it already own it.
Netflix should look into finding a way to partner with other
television networks to bring new content. This can range from
movies on Life Time to streaming the sporting events live.
These will bring in different types of people and will cause
Netflix to grow.
The first of the second tier problem is that the Domestic DVD
Division is at a decline for Netflix. It is still bringing in
revenue to Netflix but it also costs a lot to maintain. Netflix
should use the capital that they gained to expand on the
Domestic DVD Division and rebuild it from the ground up. One
thing that they can do is acquire Redbox. They can use the kiosk

that Redbox has access to add movies that Netflix currently has
into the kiosk to allow people to borrow it that way. Netflix can
also take advantage of the resources that Redbox has and utilize
their broad range of newer movies. Netflix can also acquire
Gamefly to still use the distribution services that Gamefly has
to be able to send games out in addition to movies. The gaming
industry is rapidly growing and the only company that does a
gaming rental service is Gamefly. Unfortunately Gamefly is a
dying company and Netflix does have the resources to revive it
and make it a top notch gaming services division. This will also
let Netflix continue the domestic DVD division because the
gaming section of it will be able to keep the revenue going to
support it.
The last tier two problem that has been mentioned was the
status of the mobile app. The only issue is that to some people it
feels cluttered. The best fix for this would just use their
advance technology to reorganize it and give it a little touch up
to make it look better. An idea that would also be great for the
Netflix app is to have it double as a “Netflix” remote. The
ability to be able to control Netflix through your phone just like
you can control YouTube from your phone to your television.
YouTube has been the first company to do this and Netflix
would be smart to incorporate this. Consumers love convenience
and they are less likely to lose their phones while watching
Netflix then the remote or controller.
Figure 7- SPACE Matrix
The main implication is that Netflix is in the aggressive
quadrant for both the Domestic and International Streaming
Divisions and the Domestic DVD section is in the defensive
quadrant. Since both the streaming divisions fall under the
aggressive quadrant, they are in a great position to use their
internal strengths to take advantage of opportunities happening
outside the firm, overcome weaknesses and avoid external
threats (David 2013). They need to be able to take advantage of

the opportunities so they can continue to grow. Since the
industry is already saturated, Netflix needs to find things that
make it stand out to gain more subscribers.
Because the Domestic DVD is in the Defensive Quadrant, it is
suggested that Netflix digest this Division. It is barely holding
on and as technology advances the more obsolete that DVDs
become. They can digest this division or partner with another
company that is more known for DVD or videogames that uses
discs. If Netflix wants to keep this division they need to invest
into a way that they can keep it and not have it waste capital
while simultaneously earning Netflix more brand awareness.
The possible recommendation for Netflix is to focus on
expanding their streaming services while slowly divesting or
reinventing their Domestic DVD division by trying to enter the
gaming industry. That way you can use your shipment services
for DVDs for videogames in a field that will be using discs for a
long time. The Domestic DVD needs to change so it is not
holding Netflix back from its fullest potential. While the
Domestic DVD division is going through a change, the
streaming services need to develop farther beyond just
television shows and movies. This way you are providing a
service that can satisfy the needs of everyone.
Figure 8. BCG Matrix and Table
Moving on we have the BCG matrix which has many benefits
including illustrating the cash flow of a company. This matrix
shows the revenue and profits of the three divisions. The size of
the circle shows how much of the market share that the
company has. Looking at the BCG matrix, you can see how the
Domestic and the International streaming divisions are on the
top left. That quadrant is known as the Stars quadrant. They are
further up on the matrix which means that the industry growth
rate is high. In addition to being in a high industry growth rate,
they are farther to the left which means that they have a higher
relative market share position. Being in the Stars quadrant says

that they represent the organization’s best long-run
opportunities for growth and profitability. They should also
receive high investment to maintain or strengthen their
dominant positions. (David 2013). The Domestic DVD division
is at the lower right which states that they have a low relative
market share position and compete in a slow or no market
growth industry. The best things to do in this quadrant is to
divest the division or liquidate assets.
The Internal-External (IE) Matrix positions an organization’s
various divisions in a nine cell display (David 2013). Looking
at the matrix, if you look at the nine blocks you can count out
the numbers from left to right. Boxes 1, 2 and 4 is the “grow
and build” section. Looking at the before and after, the
Domestic Streaming Division is in the “grow and build” section.
They should be focused on Market Development. Matrices 3, 5
and 7 are the hold and maintain quadrant. This is where the
international streaming falls into place. They need to focus on
Product Development as well as Market Penetration. Lastly the
Domestic DVD Division falls in the last three matrices 6, 8 and
9. This is the harvest and divest corner. They should be focused
on Retrenchment or Divestiture. The IE uses the IFE and EFE to
determine how the internal factors, external factors as well as
the amount that the division is making to determine what
direction they should head in.
Figure 10 – Grand Matrix and Table
Netflix falls into quadrant 1 of the grand matrix. Netflix is an
aggressive companies that makes many smart moves before its
competitors. It has the highest market share of its competitors
and it makes the most revenue. The market in this industry is
near saturated mostly by Netflix and Netflix has to use its
position at quadrant 1 to develop a market which will bring in
more users. They also can penetrate into a new market such as
the sports industry as well as the gaming industry. There are

many ways that Netflix can improve and move up even farther.
Because of this Netflix falls into quadrant 1 and should
integrate some type of Market Penetration strategy. The
Domestic DVD division falls under quadrant 3 due to the fact
that it is slow growing and barely hanging on. It is best to
divest or try to retrench this division.
6. Strategic Evaluation and Selection
Figure 12 – QSPM Matrix
Netflix’s top strategy consists of partnering with different
television networks to gain the ability to be able to stream new
content on Netflix as well as get Netflix original content on that
channel. Brand image and Distribution channels are rated the
highest on the QSPM because it is one of the biggest strengths
that Netflix has. Netflix wants its content to reach as many
consumers as possible and some people may not have the means
of getting a subscription. What if Netflix can get its content on
cable television? Many advantages can come from this such as
being able to collect ad revenue as well as being able to
backward integrate by being the supplier to these networks.
When thinking about this, we noticed that Hulu had blocked off
the ability for free users to watch certain shows i.e. Mr. Robot
on USA. You are unable to view this show unless you have a
subscription to either Hulu or USA. What Netflix should do by
partnering with these companies is allow these network
exclusive shows to be allowed to play on Netflix and Netflix
can give the rights to a show to be shown on television.
Incorporating this strategy will make sure that Netflix will
receive more of a brand awareness by having their content on
television. In addition to that, their distribution channel would
be increased since now they have another location where Netflix
content can be streamed.
The second possible strategy is to acquire Gamefly. Gamefly is
the largest distributor of video game rentals in the country.

They are also a dying company. If Netflix acquires Gamefly, it
will also bring up an opportunity to revive the Domestic DVD
division. The distribution set up that Gamefly has is based on
efficiency and Netflix can use that to further develop their
Domestic DVD division. They can use this strategy to re-invent
this division into a more gaming focused center that is based on
renting and streaming videogames. The gaming industry is
always growing and Netflix can get first mover’s advantage into
this industry since no other company rents out videos games
like Gamefly does.
The final strategy would be to acquire Redbox and have the
movies that Netflix owns in the Redbox kiosk along with the
movies that Redbox has. This will give the kiosk more of a
variety of movies and it will give Netflix a new source of
revenue since Redbox kiosk operate on a daily payment scale
based on how long you have the movie. Using this strategy,
Netflix can change their DVD division drastically and make it
in a way where it makes revenue in a different fashion. The only
issue with this is that it will go against the reason that Netflix
started.
7. Recommended
Solution
and Implementation
Short Term Timeline
Time in Months
Task
0-2
Contact network providers about partnering with Netflix.
2-4

Meet with providers about the terms of Partnerships
4-8
Gather contracts, licenses and figure out what shows will be
played.
8-10
Gather time slots and prepare for Netflix update with new shows
10-12
Launch New Programs
Long Term Timeline
Time in Years
Task
1-2
Gather Consumer reviews about new partnership.
2-3
Decide whether to keep partnerships.
3-5
Look into more partnerships with other network providers and
step into sports streaming.
Projected Income Statement
Expected Response by Competitors
With the partnerships acquired by Netflix, the competitors are
expected to have little reaction. Hulu already has contracts with
television networks but these networks do not show programs

that are Hulu exclusive. Amazon already sells season copies of
most television shows and movies already. This will be an
unexpected and difficult to react to since more people are able
to see Netflix original content on television without the need of
a subscription. This can sway consumers to purchase a Netflix
subscription for themselves. It is expected that after that starts
happening, Hulu will attempt to implement the same strategy.
8. Conclusion
After conducting this analysis, Netflix’s best strategy is to
partner with different television network and have a two way
partnership where both parties are using each other’s content to
further brand awareness. Because Netflix would be on
television, they would be able to benefit from ad revenue as
well as gain another form of distribution to add to their many
channels. Hulu will continue to act in its normal state providing
episodes daily and getting licenses to high quality shows and it
is believed that Amazon will stay the same focusing on the state
of the Amazon Fire Stick. Partnering with television networks
will allow more people to see what Netflix has to offer and will
serve as a little test run for Netflix (without seeing the user
interface). This strategy is to promote Netflix and its partners
and encourage the use of Netflix to get these quality shows.

References:
(n.d.). Retrieved November 15, 2015, from
http://www.thestreet.com/files/r/ratings/equities/NFLX_weiss.p
df
AMZN-2014.12.31-10K. (n.d.). Retrieved November 15, 2015,
from
https://www.sec.gov/Archives/edgar/data/1018724/00010187241
5000006/amzn-
20141231x10k.htm#sD65C62576DE666D1C68252F1E841568F
Consumer Behavior. (n.d.). Retrieved November 17, 2015, from
https://books.google.com/books?id=RQYLAAAAQBAJ&pg=PA
255&lpg=PA255&dq=consumers will always pay the lowest
price&source=bl&ots=F7JRUTuy2b&sig=INOYos2QOyywr9KN
j6J_ojDqMEg&hl=en&sa=X&ved=0CDQQ6AEwBGoVChMIqfX
6tcOYyQIVBu0eCh3h5wgQ#v=onepage&q=consumers will%
Core Competency and the Netflix Decision - Christopher S.
Penn Blog. (2011, September 20). Retrieved November 13,
2015, from http://www.christopherspenn.com/2011/09/core-
competency-and-the-netflix-decision/
David, F. (2013). The External Assessment. In Strategic
Management A Comparative Advantage Approach (14th ed., p.
80). Upper Saddle River, New Jersey: Prentice Hall.
Death To Core Competency: Lessons From Nike, Apple,

Netflix. (2013, February 14). Retrieved November 13, 2015,
from http://www.fastcompany.com/3005850/core-competency-
dead-lessons-nike-apple-netflix
Defining the Core Competencies. (n.d.). Retrieved November
17, 2015, from
http://hrweb.berkeley.edu/files/attachments/Core-Competencies-
2012.pdf
How Netflix Is Shaking Up Its Marketing Strategy. (n.d.).
Retrieved November 13, 2015, from
http://blogs.wsj.com/cmo/2015/04/16/netflix-marketing-
strategy/
How Netflix Really Creates Value -- The Motley Fool. (n.d.).
http://www.fool.com/investing/general/2015/09/30/how-netflix-
inc-really-creates-value.aspx
How Netflix Really Creates Value -- The Motley Fool. (n.d.).
http://www.fool.com/investing/general/2015/09/30/how-netflix-
inc-really-creates-value.aspx
Hulu Reveals Marketing Plans at SXSW | TVWeek. (n.d.).
Retrieved November 13, 2015, from http://www.tvweek.com/in-
depth/2009/03/hulu-reveals-marketing-plans-a/
It Has 40 Million Subscribers. Now Amazon Prime Is Eyeing
The Competition. (2015, July 9). Retrieved November 13, 2015,
from http://www.fastcompany.com/3048366/it-has-40-million-

subscribers-now-amazon-prime-is-eyeing-the-competition
Machkovech, S. (n.d.). Netflix internal analysis reveals when
viewers get hooked on series. Retrieved November 14, 2015,
from http://arstechnica.com/the-multiverse/2015/09/netflix-
internal-analysis-reveals-when-viewers-get-hooked-on-series/
Netflix. (n.d.). Retrieved November 16, 2015, from
https://pr.netflix.com/WebClient/loginPageSalesNetWorksActio
n.do?contentGroupId=10477
Netflix Announces Initial Public Offering. (2002, May 22).
http://ir.netflix.com/releasedetail.cfm?ReleaseID=81335
Netflix Headquarters | Corporate Office, Company Info. (2013,
November 22). Retrieved November 17, 2015, from
http://www.headquartersinfo.com/netflix-headquarters-
information/
Netflix Inc Number of Employees | NFLX Nasdaq. (n.d.).
https://www.macroaxis.com/invest/ratio/NFLX--Number-of-
Employees
Netflix Soars to 65.6 Million Subscribers as New Shows Shine.
(n.d.). Retrieved November 13, 2015, from
http://www.bloomberg.com/news/articles/2015-07-15/netflix-
global-audience-soars-as-new-markets-shows-draw-viewers
Netflix is rebooting 'Magic School Bus' as a computer-animated
show. (2014, June 11). Retrieved November 17, 2015, from

http://www.theverge.com/2014/6/11/5799928/netflix-rebooting-
magic-school-bus-in-2016
Netflix vs. Hulu Plus vs. Amazon Prime: Which Streaming
Service Is The Best For You? (2015, March 23). Retrieved
November 13, 2015, from
http://www.techtimes.com/articles/41601/20150323/netflix-vs-
hulu-plus-vs-amazon-prime.htm
Netflix's View: Internet TV is replacing linear TV. (n.d.).
Retrieved November 17, 2015, from http://ir.netflix.com/long-
term-view.cfm
Netflix, Inc. Segments. (n.d.). Retrieved November 15, 2015,
from http://csimarket.com/stocks/segments.php?code=NFLX
Netflix: Business professors discuss the lessons of the Netflix
debacle. (2011, November 3). Retrieved November 14, 2015,
from http://articles.baltimoresun.com/2011-11-03/news/bs-ed-
netflix-20111103_1_dvd-by-mail-business-netflix-creative-
destruction
Programmatic Advertising on Hulu: 101. (n.d.). Retrieved
http://www.hulu.com/advertising/category/advertising/
Scott, M., & Peltier, E. (2015, October 18). Netflix Faces
Challengers in Its Push to Expand Globally. Retrieved
http://www.nytimes.com/2015/10/19/technology/netflix-faces-
challengers-in-its-push-to-expand-globally.html?_r=0

Search SIC Codes by Industry. (n.d.). Retrieved November 17,
2015, from http://www.naics.com/sic-codes-industry-drilldown/
T-Mobile offers free unlimited video streaming, including
Netflix and HBO. (n.d.). Retrieved November 14, 2015, from
http://mashable.com/2015/11/10/t-mobile-binge-
on/#XQ3P3a26vqq3
The Switch. (n.d.). Retrieved November 14, 2015, from
https://makeit.netflix.com/the-switch#overview
Domestic Streaming 1.50.20000000000000107International
Streaming0.200000000000000180.5Domestic DVD-
0.49999999999999956-2.5500000000000007
IE Matrix After
Domestic
Streaming2.753.45000000000000060.62380000000000002Intern
ational
Streaming1.91000000000000063.130.27650000000000002Dome
stic DVDs1.56000000000000032.029.9699999999999997E-2
IFE Scores

EFE Scores
13
Fig 1d. Porter's Five Forces
Analysis- Availability of
Substitutes
Weight
Highly UnattractiveMildly Unattractive
Neutral
Mildly AttractiveHighly Attractive
Present Rating
Future Rating
Current12345
Future (3-5 Years)
AOS1 - Availability of close substitutes0.230.23
0.46
AOS2 - Substitute Price/ Value0.250.50
0.5
AOS3 - Switching Costs0.210.21
0.21
AOS4 - Competition from substitutes0.310.93

0.62
Total Weighted Score:1.001.871.79
Fig 1e. Porter's Five Forces
Analysis- Rivalry
Weight
Neutral
Present Rating
Future Rating
Current12345
Future (3-5 Years)
R1 - Number of Rivals0.240.72
0.48
R2 - Industry Growth0.180.54
0.36
R3 - Market Share0.200.8
0.6
R4 - Consumer Preferences0.260.26
0.52
R5 - Price Differention0.120.36
0.36
Fig 1f. Porter's Five Forces: Summary
PresentFutureOpportunity or ThreatAssessment

Factors Summary:
Barriers to Entry4.294.49OPPORTUNITY
The barriers to entry are high in this industry thus making it an
opportunity. It is not likely that Netflix will lose this position
and
new emerging companies will be able to compete with
preexisting
companies.
Power of Buyers3.884.26THREAT
The buyers have a lot of power in this industry. There are many
buyers and many substitutes with the subscriber cost averaging
$8.74. If pricing and the content is what the consumer really
cares
about then they will be more inclined to going with our
competitor
since Netflix is the most expensive option.
Power of Suppliers3.243.14OPPORTUNITY
The power of suppliers is an opportunity in this case. There are
many
substitutes to Netflix but the suppliers are dependent on Netflix
to
make their revenue.
Availability of Substitutes1.871.79THREAT
The availability of substitutes poses as a threat to Netflix due to
the

fact that there are many close substitutes to Netflix and those
companies are our close competitors that provide great value for
their services.
Rivalry2.682.32THREAT
Due to the number of companies in this industry as well as
industry
growth and consumer preference, there is a large demand for
our
services. This is deemed as a threat for us and is something that
we
need to look into.
Totals15.9616THREAT
Difference 0.04
Fig 2. External Factor Evaluation
Key External Factors
WeightRating
Weighted
Score
WeightRating
Weighted
Score
WeightRating
Weighted
Score
Opportunities

1) Develop Brand Image - BTE50.1140.440.140.40.0830.24
2) Develop a Demand for Streaming Service -
BTE10.140.40.130.30.0510.05
3) Diverse Product Offering - BTE70.0740.280.0540.20.0810.08
4) Use of Advertising - BTE50.0320.060.0320.060.0310.03
5) Listen to consumer preferences -
R40.0740.280.0530.150.0630.18
6) Market Share - R30.0530.150.0530.150.0110.01
7) Market Penetration0.0530.150.0740.280.110.1
8) Obtain Licenses to play newer films/TV
shows0.0420.080.0620.120.0420.08
9) Adaptability with technology0.0640.240.0640.240.0610.06
10) Economic impact0.0330.090.0320.060.0310.03
Threats
1) Number of Rivals R10.0740.280.0520.100.0420.08
2) Product Differention - POB40.0520.100.0320.060.0410.04
3) Pricing Pressure - POB30.0540.200.0520.100.0610.06
4) Availability of Substitutes -
POB20.0630.180.0640.240.0740.28
5) Cost of shipping0.0110.010.0110.010.0330.09
6) Price of Substitutes0.0430.120.0430.120.0620.12
7) Movie Piracy taking away from
business0.0330.090.0540.200.0730.21
8) Timing of entering International
Market0.0320.060.0630.180.0510.05

9) Licensing0.0320.060.0220.040.0210.02
10) Partners to make service available on their
platform0.0220.040.0320.060.0210.02
Total13.2713.0111.81
Domestic StreamingInternational StreamingDomestic DVD
Fig 3. Competitive Profile Matrix
Critical Success
FactorsWeightRatingScoreRatingScoreRatingScore
CPM1- Advertising0.1320.2630.3940.52
CPM2- Product Quality0.1640.6420.3230.48
CPM3- Product Line0.1530.4520.310.15
CPM4- Market Share0.1040.430.320.2
CPM5- Brand Image0.1140.4430.3320.22
CPM6- Customer Retention0.0240.0830.0620.04
CPM7- Strong online Presence0.1240.4830.3610.12
CPM8- Distribution Channels 0.1540.630.4520.3
CPM9- Global Expansion0.0630.1820.1240.24
Totals13.532.632.27
NetflixHuluAmazon Prime
Fig 5. Internal Factor Evaluation
WeightRating
Weighted
Score
WeightRating
Weighted

Score
WeightRating
Weighted
Score
Strengths
1) Distribution Network - CPM80.1140.440.1030.30.1030.3
2) Market Share - CPM40.0930.270.1020.20.0810.08
3) Strong Brand name Value - CPM5,
CPM70.0830.240.0820.160.0810.08
4) Partnerships with television
companies0.0830.240.0620.120.0410.04
5) Advancement in Technology0.0720.140.0720.140.0710.07
6) Customer Service -CPM60.0720.140.0610.060.0510.05
7) Capital Raised0.1020.20.0710.070.0710.07
8) Research and Development0.0630.180.0420.080.0310.03
9) Company Involvement in
growth0.0320.060.0220.040.0210.02
10) Affordable Pricing 0.0820.160.0640.240.0820.16
Weaknesses
1) Limited Range of Products0.0430.120.0620.120.0710.07
2) Licensing Restrictions0.0120.020.0320.060.0420.08
3) Decline in DVD use0.0110.010.0110.010.120.2
4) Stock Market Stall0.0520.10.0510.050.0210.02
5) Price Elasticity0.0530.150.0620.120.0320.06
6) Data chargers on mobile

networks0.0220.040.0210.020.0110.01
7) Shipping Costs0.0210.020.0210.020.0820.16
8) Competition Expansion0.0230.060.0520.10.0220.04
9) Loss of Subscribers0.0110.010.0410.040.0120.02
Total12.611.951.001.56
Domestic StreamingInternational StreamingDomestic DVD
Fig 6. SWOT MatrixStrengthsWeaknesses
1) Distribution Network - CPM81) Limited Range of Products
2) Market Share - CPM42) Licensing Restrictions
3) Strong Brand name Value - CPM5, CPM73) Decline in DVD
use
4) Partnerships with television companies4) Stock Market Stall
5) Advancement in Technology5) Price Elasticity
6) Customer Service -CPM66) Data chargers on mobile
networks
7) Capital Raised7) Shipping Costs
8) Research and Development8) Competition Expansion
9) Company Involvement in growth9) Loss of Subscribers
10) Affordable Pricing
OpportunitiesSO StrategiesWO Strategies
1) Develop Brand Image - BTE5
1) Using the capital that Netflix has raised,
they should acquire Gamefly to develop into
the gaming industry to rent games and also
download and stream them online. (S7, O7)

1) Partner with mobile networks to provide
free streaming. (W6, O9)
2) Develop a Demand for Streaming Service -
BTE1
3) Diverse Product Offering - BTE7
4) Use of Advertising - BTE5
2) Partner with television Networks to get
Netflix original content on television and
vise versa. (S4, O8)
2) Use superior market share to gain
licenses to newer movies and shows to use
on their website. (W2, O6)
5) Listen to consumer preferences - R4
6) Market Share - R3
7) Market Penetration
8) Obtain Licenses to play newer films/TV
shows
3) Use research gained from consumer watch
history to create "channels" with different
genres to simulate channel surfing. (O5, S8)
3) Acquire twitch.tv and partner with ESPN
to provide live streaming of games and
sports. (W1, O2)
9) Adaptability with technology
10) Economic impact

ThreatsST StrategiesWT Strategies
1) Number of Rivals R1
1) Provide better video quality to make
Movie Piracy unappealing (S5, T7)
1) Eliminate the Domestic DVD section and
add the movies that were DVD only to the
Domestic Streaming section. (W3, T9)
2) Product Differention - POB4
3) Pricing Pressure - POB3
4) Availability of Substitutes - POB2
2) Use strong brand value to promote
companies to use Netflix as their primary
video related streaming tool. (S3, T10)
2) Creating a partnership with ESPN and
other television networks to create a live
television streaming service. (W1, T9)
5) Cost of shipping
6) Price of Substitutes
7) Movie Piracy taking away from business
8) Timing of entering International Market
3) Acquire Redbox to lower the cost of
shipping and have movies available at nearby
locations (S7, T5)
3. Take advantage of the piracy laws and
get a license to heavily pirated movies that

can be streamed online. (W2, T7)
9) Licensing
10) Partners to make service available on their
platform
Fig 7. SPACE - Domestic Streaming
Internal AnalysisExternal Analysis
Financial Position (FP)WeightsRatingWeighted RatingStability
Position (SP) WeightsRatingWeighted Rating
Earnings per share0.3041.20Barriers to entry0.25-4-1.00
Cash flow0.2551.25Rising costs of factors of production0.2-5-1
Working capital 0.2541Competitive pressure 0.20-3-0.60
Inventory turnover0.2030.6Risk involved in business0.15-3-0.45
Demand variability0.20-4-0.80
FP Total1.004.05SP Total1.00-3.85
Competitive Position (CP)Industry Position (IP)
Market share0.35-2-0.70Ease of entry into market0.2541.00
Control over suppliers0.20-2-0.40Profit potential0.2551.25
Product Quality0.15-3-0.45Growth potential 0.240.8
Technological know-how0.15-3-0.45Capacity
utilization0.1530.45
Capacity utilization0.15-2-0.3Financial stability 0.1520.30
CP Total1.00-2.3IP Total1.003.8
y-axis 0.20
x-axis1.50
coordinate(1.5,0.2)

Fig 7. SPACE - International Streaming
Cash flow0.2530.75Rising costs of factors of production0.2-1-
0.2
Working capital 0.2541Competitive pressure 0.20-4-0.80
Control over suppliers0.20-4-0.80Profit potential0.2541
Product Quality0.15-4-0.60Growth potential 0.251
y-axis0.50
x-axis0.20
coordinate(0.2,0.5)
Fig 7. SPACE - Domestic DVD

Cash flow0.2510.25Rising costs of factors of production0.2-5-1
Working capital 0.2520.5Competitive pressure 0.20-1-0.20
Control over suppliers0.20-3-0.60Profit potential0.2530.75
Product Quality0.15-3-0.45Growth potential 0.210.2
Fig 8. BCG
Divisions
Revenues (In
thousands)
Percent
RevenuesMarket Share
Market Share of
Largest CompetitorRelative Market Share
Industry
Growth RateProfits (In thousands)

Percent
Profits
Domestic Streaming3,433,804.41$
62%32%30%106.67%10.21%1,092,832.72$ 62%
International Streaming1,522,037.38$
28%29%30%96.67%15.60%484,399.24$ 28%
Domestic DVD548,814.20$ 10%15%51%29.41%-
12.60%174,664.03$ 10%
Total$5,504,6561.00$ 1,751,896.00$ 100%
Fig 9. IE
Divisions
Revenues (In
thousands)
Percent
RevenuesEFE Scores IFE Scores
Profits (In
thousands)
Percent
Profits
Domestic Streaming3,433,804.41$ 62%3.272.61,092,832.72$
62%
28%3.011.95484,399.24$ 28%
Domestic DVDs548,814.20$ 10%1.811.56174,664.03$
10%

Total5,504,656.00$ 100%1,751,896.00$ 100%
After Changes
Domestic Streaming4,384,624.85$ 62%3.452.751,593,554.26$
62%
28%3.131.91706,344.59$ 28%
Domestic DVDs700,780.86$ 10%2.021.56254,692.79$
10%
Total7,028,895.25$ 100%2,554,591.64$ 100%
Rapid Market Growth
1. Market development1. Market development
2. Market penetration2. Market penetration
3. Product development3. Product development
4. Horizontal integration4. Forward integration
5. Divestiture5. Backward integration
6. Liquidation6. Horizontal integration
7. Related diversification
1. Retrenchment1. Related Diversification
2. Related diversification2. Unrelated Diversification
3. Unrelated diversification3. Joint Ventures
4. Divestiture
5. Liquidation
Strong
Competitive
Position

Quadrant I
Quadrant II
Slow Market Growth
Quadrant IVQuadrant III
Weak
Competitive
Position
Fig 11. Plain Vanilla Summary
Domestic StreamingInternational Streaming
MatrixRecommended StrategyMatrixRecommended Strategy
Backward, Forward, Horizantal IntegrationBackward, Forward,
Horizantal Integration
Market PenetrationMarket Penetration
Market DevelopmentMarket Development
Product DevelopmentProduct Development
DiversificationDiversification
Backward, Forward, Horizantal IntegrationBackward, Forward,
Horizantal Integration
Market PenetrationMarket Penetration
Market DevelopmentMarket Development
Product DevelopmentProduct Development
Backward, Forward, Horizantal IntegrationMarket Penetration
Market PenetrationProduct Development
Market Development
Product Development

1. Market development1. Market development
2. Market penetration2. Market penetration
3. Product development3. Product development
4. Forward integration4. Forward integration
5. Backward integration5. Backward integration
6. Horizontal integration6. Horizontal integration
7. Related diversification7. Related diversification
SPACE
BCG
IE
Grand
Most Recommended Strategy: Market Development, Market
Penetration
Grand
BCG
SPACE
IE
Most Recommended Strategy: Market Development, Market
Penetration
Domestic DVD
MatrixRecommended Strategy
Retrenchment
Divestiture
Liquidation
Retrenchment

Divestiture
Liquidation
Retrenchment
Divestiture
1. Retrenchment
2. Related diversification
3. Unrelated diversification
4. Divestiture
5. Liquidation
SPACE
BCG
IE
Grand
Most Recommended Strategy: Retrenchment, Divestiture,
Liquidation
SPACEBCGIEGrandTotal
Backward IntegrationXXXX4
Forward IntegrationXXXX4
Horizontal IntegrationXXXX4
Market PenetrationXXXX4
Market DevelopmentXXXX4
Product DevelopmentXXXX4
Related DiversificationXX2
Unrelated DiversificationXX2
RetrenchmentXXXX4

DivestitureXXXX4
LiquidationXX2
Plain Vanilla Summary
Most Recommended Strategy: Market Penetration, Market
Development,
Product Development
Fig 12. QSPM
Key FactorsWeightASTASASTASASTAS
Opportunities
1) Develop Brand Image - BTE50.1130.33----
2) Develop a Demand for Streaming Service - BTE10.1--30.3--
3) Diverse Product Offering - BTE70.0720.1440.2830.21
4) Use of Advertising - BTE50.04------
5) Listen to consumer preferences - R40.0510.05----
6) Market Share - R30.06------
7) Market Penetration0.08--40.32--
8) Obtain Licenses to play newer films/TV shows0.0340.12--
10.03
9) Adaptability with technology0.0620.1240.24--
10) Economic impact0.04------
Threats
1) Number of Rivals R10.0720.1430.2120.14
2) Product Differention - POB40.0530.1540.220.1
3) Pricing Pressure - POB30.0520.1----
4) Availability of Substitutes - POB20.0420.0830.1220.08

5) Cost of shipping0.01--30.0330.03
6) Price of Substitutes0.04--30.1210.04
7) Movie Piracy taking away from business0.0310.03--20.06
8) Timing of entering International Market0.03--40.1230.09
9) Licensing0.0320.0640.1210.03
Total0.99
Strengths
1) Distribution Network - CPM80.1120.2240.4410.11
2) Market Share - CPM40.09------
3) Strong Brand name Value - CPM5, CPM70.0830.24----
4) Partnerships with television companies0.0840.32----
5) Advancement in Technology0.0730.2140.2820.14
6) Customer Service -CPM60.0710.07----
7) Capital Raised0.140.4--30.3
8) Research and Development0.06--20.12--
9) Company Involvement in growth0.03------
10) Affordable Pricing 0.0820.16--10.08
Weaknesses
1) Limited Range of Products0.0420.08--10.04
2) Licensing Restrictions0.0110.01--20.02
3) Decline in DVD use0.01----10.01
4) Stock Market Stall0.05------
5) Price Elasticity0.05----10.05
6) Data chargers on mobile networks0.02------
7) Shipping Costs0.02--10.0220.04

8) Competition Expansion0.02------
9) Loss of Subscribers0.01------
Total13.032.921.6
Strategic Alternatives
1) Using the capital
that Netflix has
raised, they should
acquire Gamefly to
develop into the
gaming industry to
rent games and also
download and
stream them
online. (S7, O7)
2) Partner with
television Networks
to get Netflix original
content on television
and vise versa. (S4,
O8)
3) Acquire Redbox
to lower the cost
of shipping and
have movies
available at nearby

locations (S7, T5)
Historical and Projected Income Statement
Fiscal Years 2010-2019
Year Ending January 1st
Figures in thousands of (CURRENCY)
<==>
ProjectedActual
2019201820172016
201520142013201220112010
Revenue
10,141,971.86 8,975,196.34 7,942,651.63 7,028,895.25
6,220,261.28 5,504,656.00 4,374,562.00
3,609,282.00 3,204,577.00 2,162,625.00
Cost of Goods Sold
6,455,959.26 5,713,238.28 5,055,963.08 4,474,303.61
3,959,560.72
3,752,760.00 3,117,203.00 2,625,866.00 2,039,901.00
1,357,355.00
Gross Profit
3,686,012.61 3,261,958.06 2,886,688.55 2,554,591.64
2,260,700.56 1,751,896.00 1,257,359.00 983,416.00
1,164,676.00 805,270.00
Gross Profit Margin
0.36 0.36 0.36 0.36 0.36
0.32 0.29 0.27 0.36 0.37

SG&A Expense
373,251.68 330,311.22 292,310.81 258,682.13
228,922.24 261,741.00 180,301.00 119,687.00
117,937.00 64,461.00
Depreciation & Amortization
138,452.23 122,524.10 108,428.41 95,954.34
84,915.35 54,028.00 48,374.00 45,469.00 43,747.00
38,099.00
Operating Income
3,174,308.70 2,809,122.74 2,485,949.33 2,199,955.16
1,946,862.97 1,436,127.00 1,028,684.00 818,260.00
1,002,992.00 702,710.00
Operating Margin
0.31 0.31 0.31 0.31 0.31
0.26 0.24 0.23 0.31 0.32
Nonoperating Income
- - - - - -
- - - -
Nonoperating Expenses
- - - - - -
- - - -
Income Before Taxes
3,174,308.70 2,809,122.74 2,485,949.33 2,199,955.16
1,946,862.97 349,369.00 171,074.00 30,480.00
359,522.00 267,696.00

Income Taxes
1,047,521.87 927,010.50 820,363.28 725,985.20
642,464.78
82,570.00
58,671.00
13,328.00 133,396.00 106,843.00
Net Income After Taxes
2,126,786.83 1,882,112.24 1,665,586.05 1,473,969.96
1,304,398.19 266,799.00 112,403.00 17,152.00
226,126.00 160,853.00
Dividends per Share
- - - - - -
- - - -
Fig 1a. Porter's Five Forces
Analysis- Barriers to Entry
Weight
Neutral
Present Rating
Future Rating
Current12345
Future (3-5 Years)
BTE1- Demand side0.20.8
1

BTE2- Capital Requirements0.150.60
0.75
BTE3- Distribution Channels0.271.35
1.08
BTE4- Government policy0.060.18
0.18
BTE5- Brand identification0.150.75
0.75
BTE6- Access to the latest technology0.050.25
0.25
BTE7- Product Differention 0.120.36
0.48
Fig 1b. Porter's Five Forces
Analysis- Power of Buyers
Weight
Neutral
Present Rating
Future Rating
Current12345
Future (3-5 Years)
POB1- Number of Buyers (Subscribers)0.251.25
1.25

POB2- Availability of Substitutes0.210.84
1.05
POB3 - Switching Costs0.230.69
0.69
POB4 - Product Different0.140.42
0.42
POB5 - Rivalry0.170.68
0.85
Fig 1c. Porter's Five Forces
Analysis- Power of Suppliers
Weight
Neutral
Present Rating
Future Rating
Current12345
Future (3-5 Years)
POS1 - Number of Suppliers0.31.2
0.9
POS2 - Substitutes 0.341.36
1.36
POS3 - Switching Costs0.160.48
0.48

POS4 - Supplier Reliance on Industry0.200.2
0.4
Running head: Sampling strategy and sampling size
Sampling strategy and sampling size 5
Sampling strategy and sampling size
Name:
Institution:
Course:
Date:

Introduction
It is very difficult for researchers to make direct observations to
everyone in the population in which they are studying. Due to
this fact, they collect data about the population from a sample,
which is a subset of individuals. A sample is a group of people
who participate in a study or an investigation. Sampling is the
process of choosing those who a researcher needs to engage
from a population. The population is the group of individuals
from where a sample is to be obtained. Generalizability is how
we can implement the inferences and interpretations of research
to the population of study. They then use these observations to
construct inferences concerning the overall population. The
agenda of the sample and the sampling strategy is to enhance
generalizability of the study. The most crucial feature of any
research is its capability to be generalized to the overall
population. This gives the research a more scientific value.
However, if the interpretations and inferences gathered from a
sample are not inferred, we say that the research has a trivial
scientific value. If a sample gives a detailed information about
the targeted population, then the inferences obtained from the
sample can be implemented.
Population
This study involves adults of ages between 15 and 45 years of
both genders diagnosed with Schizophrenics and are taking
Complementary Medicine for Schizophrenics. The participants I

studied have been taking the dosage for eight months or less.
Most of them participated in a face-to-face or a web-based
disease-specific support for six months and ten months. Most of
them are not in the remission and relapse stage that is life gets
back to normal. There is no overall consensus of the population
diagnosed with Schizophrenics. However, according to NIMH,
the number of people who suffer from Schizophrenics in the
USA is about 2.2 million individuals (Nachmias & Frankfort-
Nachmias, 2008).
Type of sampling
In this study, I employed the quasi-experimental design. This
design enabled me to utilize both the face-to-face support and
the web-based disease-specific support between six and ten
months. The agenda of this strategy is to gather a probability
sample that ensures that each in the involved population has an
equal opportunity to be part of the sample. This sample is
collected in a random manner. This lowers the instances of the
non-representative sample. The next aim is to remove those not
diagnosed with Schizophrenics or are taking a dosage for at
least eight months and also those in remission and relapse stage.
I will then employ the systematic sampling. This method
chooses the subjects in a logical or orderly manner. I will list
all the participants in a specified interval. I will then divide the
number of individuals by the number of people I need to the
sample and get a value n. If now you consider each nth name,

you will obtain a systematic sample of the appropriate or
correct size. For instance if I get 300 responses and I need 37
participants, I would take 300 as the number of people in the
population then I divide by 37 which is the number of people I
need to the sample. This is 300/37 which equals to 8.12 or 13.
We say it is a 1-in-8 systematic sample (Marques, 2011).
How the sample will be drawn
To gather participation in face-to-face support, I will pay a visit
to various medical centers that deal with Schizophrenics. I will
also make an advertisement in various mental disorder support
groups. For those who participate in the web-based disease-
specific support, I will request them through calling for
participation in some forums. The responses to these adverts
will be chosen through systematic sampling. (Somekh & Lewin,
2005)
Sample size
Take into consideration that we do not know the exact
individuals suffering from Schizophrenics. This study involves
a few participants. For this case, I used the Cohen’s d test for
two samples. The sample size should accommodate 37
participants in each interval. From the inversion formula from
(Nachmias & Frankfort-Nachmias, 2008) which is SE-s/sqrt n,
n=s2/SE2, I gathered 37 participants per group. From our two
methods, making use of 37 participants per group is an

appropriate size. The reason as to why I selected this sample
size is because I wanted to maximize the cases of uncovering a
particular mean difference. Using larger samples increases the
possibilities of obtaining a significant difference. This is so
because they reliably show or reflect the population mean or the
systematic sample. However, they will cost you more.
References
Marques, S. &. (2011). Living in gray areas: Industrial and
psychological health. New York: Journal of Environmental
Psychology, 31(4), 314-322. doi:10.1016/j.jenvp.2010.12.002.
Nachmias, D., & Frankfort-Nachmias, C. (2008). Research
methods in the social sciences. New York: St. Martin's Press.
Somekh, B., & Lewin, C. (2005). Research methods in the
social sciences. London: SAGE Publications.

Fig 1a.PFF-1Fig 1a. Porter's Five Forces Analysis- Barriers to
EntryWeightHighly UnattractiveMildly UnattractiveNeutral
Mildly AttractiveHighly AttractivePresent RatingFuture
RatingCurrent12345Future (3-5 Years)BTE1- Demand
side0.20.81BTE2- Capital Requirements0.150.600.75BTE3-
Distribution Channels0.271.351.08BTE4- Government
policy0.060.180.18BTE5- Brand
identification0.150.750.75BTE6- Access to the latest
technology0.050.250.25BTE7- Product Differention
0.120.360.48Total Weighted Score:1.004.294.49Repeat
instruction in the other PFF Tables
Fig 1b.PFF-2Fig 1b. Porter's Five Forces Analysis- Power of
BuyersWeightHighly UnattractiveMildly UnattractiveNeutral
RatingCurrent12345Future (3-5 Years)POB1- Number of Buyers
(Subscribers)0.251.251.25POB2- Availability of
Substitutes0.210.841.05POB3 - Switching
Costs0.230.690.69POB4 - Product Different0.140.420.42POB5 -
Rivalry0.170.680.85Total Weighted Score:1.003.884.26
Fig 1c.PFF-3Fig 1c. Porter's Five Forces Analysis- Power of
SuppliersWeightHighly UnattractiveMildly UnattractiveNeutral
RatingCurrent12345Future (3-5 Years)POS1 - Number of

Suppliers0.31.20.9POS2 - Substitutes 0.341.361.36POS3 -
Switching Costs0.160.480.48POS4 - Supplier Reliance on
Industry0.200.20.4Total Weighted Score:1.003.243.14
Fig 1d.PFF-4Fig 1d. Porter's Five Forces Analysis- Availability
of SubstitutesWeightHighly UnattractiveMildly
UnattractiveNeutral Mildly AttractiveHighly AttractivePresent
RatingFuture RatingCurrent12345Future (3-5 Years)AOS1 -
Availability of close substitutes0.230.230.46AOS2 - Substitute
Price/ Value0.250.500.5AOS3 - Switching
Costs0.210.210.21AOS4 - Competition from
substitutes0.310.930.62Total Weighted Score:1.001.871.79
Fig 1e.PFF-5Fig 1e. Porter's Five Forces Analysis-
RivalryWeightHighly UnattractiveMildly UnattractiveNeutral
RatingCurrent12345Future (3-5 Years)R1 - Number of
Rivals0.240.720.48R2 - Industry Growth0.180.540.36R3 -
Market Share0.200.80.6R4 - Consumer
Preferences0.260.260.52R5 - Price
Differention0.120.360.36Total Weighted Score:1.002.682.32
Fig 1f.PFF SummaryFig 1f. Porter's Five Forces:
SummaryPresentFutureOpportunity or ThreatAssessmentFactors
Summary:Barriers to Entry4.294.49OPPORTUNITYThe barriers
to entry are high in this industry thus making it an opportunity.
It is not likely that Netflix will lose this position and new
emerging companies will be able to compete with preexisting

companies. Power of Buyers3.884.26THREATThe buyers have a
lot of power in this industry. There are many buyers and many
substitutes with the subscriber cost averaging $8.74. If pricing
and the content is what the consumer really cares about then
they will be more inclined to going with our competitor since
Netflix is the most expensive option. Power of
Suppliers3.243.14OPPORTUNITYThe power of suppliers is an
opportunity in this case. There are many substitutes to Netflix
but the suppliers are dependent on Netflix to make their
revenue. Availability of Substitutes1.871.79THREATThe
availability of substitutes poses as a threat to Netflix due to the
fact that there are many close substitutes to Netflix and those
companies are our close competitors that provide great value for
their services.Rivalry2.682.32THREATDue to the number of
companies in this industry as well as industry growth and
consumer preference, there is a large demand for our services.
This is deemed as a threat for us and is something that we need
to look into.Totals15.9616THREATDifference 0.04Use
information from each of the PFF tables to fill out this table.
Then provide an assessment report in Column E.
Fig 2.EFEFig 2. External Factor EvaluationKey External
FactorsDomestic StreamingInternational StreamingDomestic
DVDWeightRatingWeighted ScoreWeightRatingWeighted
ScoreWeightRatingWeighted ScoreOpportunities1) Develop
Brand Image - BTE50.1140.440.140.40.0830.242) Develop a

Demand for Streaming Service -
BTE10.140.40.130.30.0510.053) Diverse Product Offering -
BTE70.0740.280.0540.20.0810.084) Use of Advertising -
BTE50.0320.060.0320.060.0310.035) Listen to consumer
preferences - R40.0740.280.0530.150.0630.186) Market Share -
R30.0530.150.0530.150.0110.017) Market
Penetration0.0530.150.0740.280.110.18) Obtain Licenses to
play newer films/TV shows0.0420.080.0620.120.0420.089)
Adaptability with technology0.0640.240.0640.240.0610.0610)
Economic impact0.0330.090.0320.060.0310.03flourished during
economic downturnThreats1) Number of Rivals
R10.0740.280.0520.100.0420.082) Product Differention -
POB40.0520.100.0320.060.0410.043) Pricing Pressure -
POB30.0540.200.0520.100.0610.064) Availability of
Substitutes - POB20.0630.180.0640.240.0740.285) Cost of
shipping0.0110.010.0110.010.0330.096) Price of
Substitutes0.0430.120.0430.120.0620.127) Movie Piracy taking
away from business0.0330.090.0540.200.0730.218) Timing of
entering International Market0.0320.060.0630.180.0510.059)
Licensing0.0320.060.0220.040.0210.0210) Partners to make
service available on their
platform0.0220.040.0320.060.0210.02Total13.2713.0111.81
Fig 2b.EFE AfterKey External FactorsDomestic
StreamingInternational StreamingDomestic

ScoreWeightRatingWeighted ScoreOpportunities1) Develop
Brand Image - BTE50.1140.440.1240.480.1130.332) Develop a
Demand for Streaming Service -
BTE10.140.40.130.30.0510.053) Diverse Product Offering -
BTE70.0740.280.0640.240.0410.044) Use of Advertising -
BTE50.0420.080.0420.080.0410.045) Listen to consumer
preferences - R40.0540.20.0530.150.0530.156) Market Share -
R30.0630.180.0530.150.0310.037) Market
Penetration0.0840.320.0840.320.0740.288) Obtain Licenses to
play newer films/TV shows0.0320.060.0320.060.0420.089)
Adaptability with technology0.0640.240.0640.240.0610.0610)
Economic impact0.0430.120.0420.080.0110.01Threats1)
Number of Rivals R10.0740.280.0520.10.0420.082) Product
Differention - POB40.0530.150.0320.060.0410.043) Pricing
Pressure - POB30.0540.20.0420.080.0610.064) Availability of
Substitutes - POB20.0420.080.0640.240.0740.285) Cost of
shipping0.0130.030.0110.010.0330.096) Price of
Substitutes0.0430.120.0530.150.0620.127) Movie Piracy taking
away from business0.0320.060.0540.20.0730.218) Timing of
entering International Market0.0340.120.0530.150.0510.059)
Licensing0.0330.090.0220.040.0210.0210) Partners to make
service available on their
platform0.0230.060.0320.060.0210.02Total0.993.450.993.130.9
42.02
Fig 3. CPMFig 3. Competitive Profile

MatrixNetflixHuluAmazon PrimeCritical Success
FactorsWeightRatingScoreRatingScoreRatingScoreCPM1-
Advertising0.1320.2630.3940.52CPM2- Product
Quality0.1640.6420.3230.48CPM3- Product
Line0.1530.4520.310.15CPM4- Market
Share0.1040.430.320.2CPM5- Brand
Image0.1140.4430.3320.22CPM6- Customer
Retention0.0240.0830.0620.04CPM7- Strong online
Presence0.1240.4830.3610.12CPM8- Distribution Channels
0.1540.630.4520.3CPM9- Global
Expansion0.0630.1820.1240.24Totals13.532.632.27
Fig 4. RBVFig 4. Core Competencies/RBVEmpirical
IndicatorsCore Competencies WeightRare Hard to ImitateNot
Easily SubstitutableValuableSustained Competitive
AdvantageTotal WeightPercent TotalDelivery of
Content0.24x0.240.09Original
Content0.22xxxx0.880.31Leadership in
Industry0.16xx0.480.17Brand
Awareness0.18xxxx0.720.26Superior
Information0.10xxxx0.400.14Massive
Scale0.10x0.100.0412.82100%
Core Competencies/RBV
Delivery of ContentOriginal ContentLeadership in
IndustryBrand AwarenessSuperior InformationMassive

Scale8.5106382978723388E-
20.312056737588652430.170212765957446780.2553191489361
70190.141843971631205663.5460992907801414E-2
Fig 5. IFEFig 5. Internal Factor EvaluationDomestic
ScoreWeightRatingWeighted ScoreStrengths1) Distribution
Network - CPM80.1140.440.1030.30.1030.32) Market Share -
CPM40.0930.270.1020.20.0810.083) Strong Brand name Value -
CPM5, CPM70.0830.240.0820.160.0810.084) Partnerships with
television companies0.0830.240.0620.120.0410.045)
Advancement in Technology0.0720.140.0720.140.0710.076)
Customer Service -CPM60.0720.140.0610.060.0510.057)
Capital Raised0.1020.20.0710.070.0710.078) Research and
Development0.0630.180.0420.080.0310.039) Company
Involvement in growth0.0320.060.0220.040.0210.0210)
Affordable Pricing 0.0820.160.0640.240.0820.16Weaknesses1)
Limited Range of Products0.0430.120.0620.120.0710.072)
Licensing Restrictions0.0120.020.0320.060.0420.083) Decline
in DVD use0.0110.010.0110.010.120.24) Stock Market
Stall0.0520.10.0510.050.0210.025) Price
Elasticity0.0530.150.0620.120.0320.066) Data chargers on
mobile networks0.0220.040.0210.020.0110.017) Shipping

Costs0.0210.020.0210.020.0820.168) Competition
Expansion0.0230.060.0520.10.0220.049) Loss of
Subscribers0.0110.010.0410.040.0120.02Total12.611.951.001.5
6Most of the information used in this section has to come from
the RBV analysis, complemented by additional research.
Fig 5b. IFE AfterKey Internal FactorsDomestic
ScoreWeightRatingWeighted ScoreStrengths1) Distribution
Network - CPM80.1540.60.130.30.130.32) Market Share -
CPM40.130.30.120.20.0810.083) Strong Brand name Value -
CPM5, CPM70.0840.320.0820.160.0810.084) Partnerships with
television companies0.0830.240.0620.120.0410.045)
Advancement in Technology0.0720.140.0720.140.0710.076)
Customer Service -CPM60.0520.10.0610.060.0510.057) Capital
Raised0.120.20.0710.070.0710.078) Research and
Development0.0630.180.0420.080.0310.039) Company
Involvement in growth0.0320.060.0220.040.0210.0210)
Affordable Pricing 0.0720.140.0640.240.0820.16Weaknesses1)
Limited Range of Products0.0230.060.0620.120.0710.072)
Licensing Restrictions0.0320.060.0320.060.0420.083) Decline
in DVD use0.0110.010.0110.010.120.24) Stock Market
Stall0.0220.040.0510.050.0210.025) Price
Elasticity0.0530.150.0620.120.0320.066) Data chargers on
mobile networks0.0220.040.0210.020.0110.017) Shipping

Costs0.0210.020.0210.020.0820.168) Competition
Expansion0.0330.090.0520.10.0220.049) Loss of
Subscribers0.0110.010.0410.040.0120.02Total12.750.961.9111.
56
Fig 6. SWOTFig 6. SWOT MatrixStrengthsWeaknesses1)
Distribution Network - CPM81) Limited Range of Products2)
Market Share - CPM42) Licensing Restrictions3) Strong Brand
name Value - CPM5, CPM73) Decline in DVD use4)
Partnerships with television companies4) Stock Market Stall5)
Advancement in Technology5) Price Elasticity6) Customer
Service -CPM66) Data chargers on mobile networks7) Capital
Raised7) Shipping Costs8) Research and Development8)
Competition Expansion9) Company Involvement in growth9)
Loss of Subscribers10) Affordable Pricing OpportunitiesSO
StrategiesWO Strategies 1) Develop Brand Image - BTE51)
Using the capital that Netflix has raised, they should acquire
Gamefly to develop into the gaming industry to rent games and
also download and stream them online. (S7, O7)1) Partner with
mobile networks to provide free streaming. (W6, O9)2) Develop
a Demand for Streaming Service - BTE13) Diverse Product
Offering - BTE74) Use of Advertising - BTE52) Partner with
television Networks to get Netflix original content on television
and vise versa. (S4, O8)2) Use superior market share to gain
licenses to newer movies and shows to use on their website.
(W2, O6)5) Listen to consumer preferences - R46) Market Share

- R37) Market Penetration8) Obtain Licenses to play newer
films/TV shows3) Use research gained from consumer watch
history to create "channels" with different genres to simulate
channel surfing. (O5, S8)3) Acquire twitch.tv and partner with
ESPN to provide live streaming of games and sports. (W1,
O2)9) Adaptability with technology10) Economic
impactThreatsST StrategiesWT Strategies1) Number of Rivals
R11) Provide better video quality to make Movie Piracy
unappealing (S5, T7)1) Eliminate the Domestic DVD section
and add the movies that were DVD only to the Domestic
Streaming section. (W3, T9)2) Product Differention - POB43)
Pricing Pressure - POB34) Availability of Substitutes - POB22)
Use strong brand value to promote companies to use Netflix as
their primary video related streaming tool. (S3, T10)2) Creating
a partnership with ESPN and other television networks to create
a live television streaming service. (W1, T9)5) Cost of
shipping6) Price of Substitutes7) Movie Piracy taking away
from business8) Timing of entering International Market3)
Acquire Redbox to lower the cost of shipping and have movies
available at nearby locations (S7, T5)3. Take advantage of the
piracy laws and get a license to heavily pirated movies that can
be streamed online. (W2, T7)9) Licensing10) Partners to make
service available on their platform
Fig 7. SPACEFig 7. SPACE - Domestic StreamingInternal
AnalysisExternal AnalysisFinancial Position

(FP)WeightsRatingWeighted RatingStability Position (SP)
WeightsRatingWeighted RatingEarnings per
share0.3041.20Barriers to entry0.25-4-1.00Cash
flow0.2551.25Rising costs of factors of production0.2-5-
1Working capital 0.2541Competitive pressure 0.20-3-
0.60Inventory turnover0.2030.6Risk involved in business0.15-3-
0.45Demand variability0.20-4-0.80FP Total1.004.05SP
Total1.00-3.85Competitive Position (CP)Industry Position
(IP)Market share0.35-2-0.70Ease of entry into
market0.2541.00Control over suppliers0.20-2-0.40Profit
potential0.2551.25Product Quality0.15-3-0.45Growth potential
0.240.8Technological know-how0.15-3-0.45Capacity
utilization0.1530.45Capacity utilization0.15-2-0.3Financial
stability 0.1520.30CP Total1.00-2.3IP Total1.003.8y-axis
0.20x-axis1.50coordinate(1.5,0.2)Fig 7. SPACE - International
Streaming Internal AnalysisExternal AnalysisFinancial Position
0.2Working capital 0.2541Competitive pressure 0.20-4-

potential0.2541Product Quality0.15-4-0.60Growth potential
0.251Technological know-how0.15-4-0.60Capacity
stability 0.1530.45CP Total1.00-3.45IP Total1.003.65y-
axis0.50x-axis0.20coordinate(0.2,0.5)Fig 7. SPACE - Domestic
DVDInternal AnalysisExternal AnalysisFinancial Position
1Working capital 0.2520.5Competitive pressure 0.20-1-
potential0.2530.75Product Quality0.15-3-0.45Growth potential
0.210.2Technological know-how0.15-1-0.15Capacity
stability 0.1520.30CP Total1.00-2.55IP Total1.002.05y-axis-
2.55x-axis-0.5Coordinate(-0.5,-2.55)Domestic Streaming y-
axis0.20x-axis1.50Coordinate(1.5,0.2)International Streamingy-
axis0.50x-axis0.20Coordinate(0.2,0.5)Domestic DVDy-axis-
2.55x-axis-0.50Coordinate(-0.5,-2.55)

Domestic Streaming 1.50.20000000000000107International
Streaming0.200000000000000180.5Domestic DVD-
0.49999999999999956-2.5500000000000007
Fig 8. BCGFig 8. BCGDivisionsRevenues (In thousands)Percent
RevenuesMarket ShareMarket Share of Largest
CompetitorRelative Market ShareIndustry Growth RateProfits
(In thousands)Percent ProfitsDomestic Streaming$
3,433,804.4162%32%30%106.67%10.21%$
1,092,832.7262%International Streaming$
1,522,037.3828%29%30%96.67%15.60%$
484,399.2428%Domestic DVD$
548,814.2010%15%51%29.41%-12.60%$
174,664.0310%Total$5,504,656$ 1.00$
1,751,896.00100%HuluAmazonRedBoxDomestic
Streaming$1,234,556International Streaming1028487Domestic
DVD1089000
BCG Matrix
Domestic
Streaming1.06666666666666670.10210.62380000000000002Int
ernational

Streaming0.966666666666666670.1560.27650000000000002Do
mestic DVD0.29411764705882354-
0.1269.9699999999999997E-2
Market Share
Growth Rate
Fig 9. IEFig 9. IEDivisionsRevenues (In thousands)Percent
RevenuesEFE Scores IFE Scores Profits (In thousands)Percent
ProfitsDomestic Streaming$ 3,433,804.4162%3.272.6$
1,522,037.3828%3.011.95$ 484,399.2428%Domestic DVDs$
548,814.2010%1.811.56$ 174,664.0310%Total$
5,504,656.00100%$ 1,751,896.00100%After Changes
Domestic Streaming$ 4,384,624.8562%3.452.75$
1,943,489.5428%3.131.91$ 706,344.5928%Domestic DVDs$
700,780.8610%2.021.56$ 254,692.7910%Total$
7,028,895.25100%$ 2,554,591.64100%
IE Matrix Before

Domestic
Streaming2.63.27000000000000050.62380000000000002Interna
tional
Streaming1.95000000000000063.01000000000000020.27650000
000000002Domestic
DVDs1.56000000000000031.81000000000000039.96999999999
99997E-2
IFE Scores
EFE Scores
IE Matrix After
Domestic
Streaming2.753.45000000000000060.62380000000000002Intern
ational
Streaming1.91000000000000063.130.27650000000000002Dome
stic DVDs1.56000000000000032.029.9699999999999997E-2
IFE Scores

EFE Scores
Fig 10. GrandFig 10. The Grand Matrix Rapid Market
GrowthQuadrant IIQuadrant I1. Market development1. Market
development2. Market penetration2. Market penetration3.
Product development3. Product development4. Horizontal
integration4. Forward integration5. Divestiture5. Backward
integration6. Liquidation6. Horizontal integrationWeak
Competitive Position7. Related diversificationStrong
Competitive PositionQuadrant IIIQuadrant IV1. Retrenchment1.
Related Diversification2. Related diversification2. Unrelated
Diversification3. Unrelated diversification3. Joint Ventures4.
Divestiture5. LiquidationSlow Market Growth
Fig 11. Plain Vanilla SummaryFig 11. Plain Vanilla
SummaryDomestic StreamingInternational StreamingDomestic
DVDPlain Vanilla SummaryMatrixRecommended
StrategyMatrixRecommended StrategyMatrixRecommended
StrategySPACEBCGIEGrandTotalSPACEBackward, Forward,
Horizontal IntegrationSPACEBackward, Forward, Horizontal
IntegrationSPACERetrenchmentBackward
IntegrationXXXX4Market PenetrationMarket
PenetrationDivestitureForward IntegrationXXXX4Market

DevelopmentMarket DevelopmentLiquidationHorizontal
IntegrationXXXX4Product DevelopmentProduct
DevelopmentMarket
PenetrationXXXX4DiversificationDiversificationMarket
DevelopmentXXXX4BCGBackward, Forward, Horizontal
IntegrationBCGBackward, Forward, Horizontal
IntegrationBCGRetrenchmentProduct
DevelopmentXXXX4Market PenetrationMarket
PenetrationDivestitureRelated DiversificationXX2Market
DevelopmentMarket DevelopmentLiquidationUnrelated
DiversificationXX2Product DevelopmentProduct
DevelopmentRetrenchmentXXXX4IEBackward, Forward,
Horizontal IntegrationIEMarket
PenetrationIERetrenchmentDivestitureXXXX4Market
PenetrationProduct
DevelopmentDivestitureLiquidationXX2Market
DevelopmentMost Recommended Strategy: Market Penetration,
Market Development, Product DevelopmentProduct
DevelopmentGrand1. Market developmentGrand1. Market
developmentGrand1. Retrenchment2. Market penetration2.
Market penetration2. Related diversification3. Product
development3. Product development3. Unrelated
diversification4. Forward integration4. Forward integration4.
Divestiture5. Backward integration5. Backward integration5.
Liquidation6. Horizontal integration6. Horizontal integration7.

Related diversification7. Related diversificationMost
Recommended Strategy: Market Development, Market
PenetrationMost Recommended Strategy: Market Development,
Market PenetrationMost Recommended Strategy: Retrenchment,
Divestiture, Liquidation
Fig 12. QSPMFig 12. QSPMStrategic Alternatives2) Partner
with television Networks to get Netflix original content on
television and vise versa. (S4, O8)1) Using the capital that
Netflix has raised, they should acquire Gamefly to develop into
the gaming industry to rent games and also download and
stream them online. (S7, O7)3) Acquire Redbox to lower the
cost of shipping and have movies available at nearby locations
(S7, T5)Key
FactorsWeightASTASASTASASTASOpportunities1) Develop
Brand Image - BTE50.1130.33----2) Develop a Demand for
Streaming Service - BTE10.1--30.3--3) Diverse Product
Offering - BTE70.0720.1440.2830.214) Use of Advertising -
BTE50.04------5) Listen to consumer preferences -
R40.0510.05----6) Market Share - R30.06------7) Market
Penetration0.08--40.32--8) Obtain Licenses to play newer
films/TV shows0.0340.12--10.039) Adaptability with
technology0.0620.1240.24--10) Economic impact0.04------
Threats1) Number of Rivals R10.0720.1430.2120.142) Product
Differention - POB40.0530.1540.220.13) Pricing Pressure -
POB30.0520.1----4) Availability of Substitutes -

POB20.0420.0830.1220.085) Cost of shipping0.01--
30.0330.036) Price of Substitutes0.04--30.1210.047) Movie
Piracy taking away from business0.0310.03--20.068) Timing of
entering International Market0.03--40.1230.099)
Licensing0.0320.0640.1210.03Total0.99Strengths1) Distribution
Network - CPM80.1120.2240.4410.112) Market Share -
CPM40.09------3) Strong Brand name Value - CPM5,
CPM70.0830.24----4) Partnerships with television
companies0.0840.32----5) Advancement in
Technology0.0730.2140.2820.146) Customer Service -
CPM60.0710.07----7) Capital Raised0.140.4--30.38) Research
and Development0.06--20.12--9) Company Involvement in
growth0.03------10) Affordable Pricing 0.0820.16--
10.08Weaknesses1) Limited Range of Products0.0420.08--
10.042) Licensing Restrictions0.0110.01--20.023) Decline in
DVD use0.01----10.014) Stock Market Stall0.05------5) Price
Elasticity0.05----10.056) Data chargers on mobile
networks0.02------7) Shipping Costs0.02--10.0220.048)
Competition Expansion0.02------9) Loss of Subscribers0.01-----
-Total13.032.921.6
Fig 14. Income StatementHistorical and Projected Income
Statement Fiscal Years 2010-2019Year Ending January
1stFigures in thousands of
(CURRENCY)<==>ProjectedActual20192018201720162015201
42013201220112010Revenue10,141,971.868,975,196.347,942,6

51.637,028,895.256,220,261.285,504,656.004,374,562.003,609,
282.003,204,577.002,162,625.00Cost of Goods
Sold6,455,959.265,713,238.285,055,963.084,474,303.613,959,5
60.723,752,760.003,117,203.002,625,866.002,039,901.001,357,
355.00Gross
Profit3,686,012.613,261,958.062,886,688.552,554,591.642,260,
700.561,751,896.001,257,359.00983,416.001,164,676.00805,27
0.00Gross Profit
Margin0.360.360.360.360.360.320.290.270.360.37SG&A
Expense373,251.68330,311.22292,310.81258,682.13228,922.24
261,741.00180,301.00119,687.00117,937.0064,461.00Depreciat
ion &
Amortization138,452.23122,524.10108,428.4195,954.3484,915.
3554,028.0048,374.0045,469.0043,747.0038,099.00Operating
Income3,174,308.702,809,122.742,485,949.332,199,955.161,94
6,862.971,436,127.001,028,684.00818,260.001,002,992.00702,7
10.00Operating
Margin0.310.310.310.310.310.260.240.230.310.32Nonoperating
Income- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0Nonoperating Expenses- 0-
0- 0- 0- 0- 0- 0- 0- 0- 0Income Before
Taxes3,174,308.702,809,122.742,485,949.332,199,955.161,946,
862.97349,369.00171,074.0030,480.00359,522.00267,696.00Inc
ome
Taxes1,047,521.87927,010.50820,363.28725,985.20642,464.788
2,570.0058,671.0013,328.00133,396.00106,843.00Net Income

After
Taxes2,126,786.831,882,112.241,665,586.051,473,969.961,304,
398.19266,799.00112,403.0017,152.00226,126.00160,853.00Co
ntinuing OperationsDiscontinued OperationsTotal
OperationsTotal Net IncomeNet Profit MarginDividends per
Share- 0- 0- 0- 0- 0- 0- 0- 0- 0- 0Sales
growth13%16%15%14%13%14%cog as %
revenue0.680.710.730.640.630.64G&A as %
revenue0.04754902030.04121578340.03316088910.0368026732
0.0298068320.04dd&a as%
revenue0.00981496390.01105802140.01259779650.0136514117
0.01761701640.01
Ahmed - Adidas -BSAD490- Winter-2015
TWOS Matrix for Adidas
Strengths
Weaknesses
Opportunities
Strategy 1: More dynamic product innovation based on the
changing lifestyle of the people and making product unique in
fashion and appeal.

Strategy 2: Increase in both product portfolio and revenue by
utilizing complementary technologies and e-commerce.
Strategy 3: Increase revenue by undertaking measures for
backward integration.
Strategy 1: Enhancing both product quality and customer
service utilizing complementary technologies and e-commerce.
Strategy 2: Getting hold of North American market based on the
increased demands of premium products and higher market
diversification.
Strategy 3: Increase competitiveness against the competitors
through product line expansion.
Threats
Strategy 1: Increase bargaining power through high quality
products and efficient supply chain management.
Strategy 2: Increase price competitiveness in developed
countries based on higher revenue from developing countries to

One More Episode An Industry and Competitive Analysis for Netfl.docx

One More Episode An Industry and Competitive Analysis for Netfl.docx

Recommended

Recommended

More Related Content

Similar to One More Episode An Industry and Competitive Analysis for Netfl.docx

Similar to One More Episode An Industry and Competitive Analysis for Netfl.docx (11)

More from hopeaustin33688

More from hopeaustin33688 (20)

Recently uploaded

Recently uploaded (20)

One More Episode An Industry and Competitive Analysis for Netfl.docx