Netflix – Group C

During this week, Lincoln Memorial University’s MBA students in MBA 595 will analyze top corporate organizations.

In this blog topic, Group C consisting of Willian Moura, Heidi O’Donnell, Nathan Mize, and Miguel Montoya will evaluate ‘Netflix.’

 Group Members: Executive Summary

 There certainly has been competition in the movie industry since the year 2000.  As a matter of fact, it is what the business world would call high stakes drama. 

As technology advanced and electronic devices were produced more economically and efficiently, they became available to mass consumers at a cost that most people could afford.  Families across the globe fully indulged in the pleasurable pastime of move watching. 

 Through the years, as technology advanced, newer, bigger, better, products hit the market.  No sooner would one company bring a product to the shelves then another new product would come out, TV screens were made bigger, Blue Ray and HDTV technologies came out, and people the world over were building video libraries. 

Barriers to entry were low so new products and new companies were formed overnight, it seemed.  As we will see, not everyone would survive in this competitive arena except those few that had a long-range vision and solid strategy.

See:   http://animoto.com/play/1BpNGTREjLKgumF4LwdNdA

Please share your insight on this topic.

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14 thoughts on “Netflix – Group C

  1. Netflix was a very innovative idea. Being able to watch shows and movies online and having movies sent directly to your house was a great concept. I created an account for myself a few years ago and definitely got my money’s worth. I stopped using blockbuster completely once I got my account, and it seems that many others also stopped using blockbuster, since it has been on the decline since then (Gamble and Thompson, p.311). The presentation did a good job of showing how convenient Netflix is to use and how many devices it can be used on. Although the prices of Netflix have risen, and I now only use the web-streaming account, I still use Netflix on a daily basis, because the media is always there and it’s easily accessible.

    Gamble, J. E., & Thompson, A. A. (2011). Essentials of strategic management: The quest for competitive advantage. New York, NY: McGraw-Hill/Irwin.

  2. I thought the group did an excellent job on their presentation. I thought the topic was rather interesting, considering the amount of bad publicity that the company has received over the past couple of months. While the ideas and vision Netflix had was very simple, it took a pure stroke of genius to pull it off. Before long, all digital content will be offered online. Netflix made the jump early, and are pulling in huge profits because of it. Netflix jumped on Blockbuster the first time in perfect timing, being one of the major competitors sending the company into bankruptcy. Gamble and Thompson state, “In 2008, Blockbuster recorded a net loss of $374 million on revenues of $5.3 billion” (p. 57). However, Netflix’s battle with Blockbuster is beginning to heat back up with the resurgence of the once failed entity. It will be interesting to see how the industry changes and develops over the next few years.

    Gamble, J. E., & Thompson, A. A. (2011). Essentials of strategic management: The quest for competitive advantage. New York, NY: McGraw-Hill/Irwin.

  3. I really like the group presentation and completely agree that a proper implementation is priceless. I have an account with Netflix and really like their wide selection of movies and TV series. However, Netflix last strategic moves was a disaster where many customer cancel their accounts and/or became very frustrate with the company. Netflix tried to implement to strategies, raise prices and create two companies, where customers’ satisfaction were affected and disrupted in some way its image. Success in initiating corrective actions usually hinges on thorough analysis of the situation, the exercise of good business judgment in deciding what actions to take, and good implementation of the corrective actions that are initiated (Gamble, Thompson Jr., 2011, p. 236). Although, they move fast in trying to correct their mistakes, the company’s reputation was somewhat affected.

    Gamble, J. E., & Thompson, A. A. (2011). Essentials of strategic management: The quest for competitive advantage. New York, NY: McGraw-Hill/Irwin.

  4. I thought that the group did an excellent job with their presentation of Netflix. Netflix was a pioneering industry that has only recently started to feel the heat of completion from red box and other rental move distributers that use vending machines. Netflix took the rental movie industry into a new direction by using a blue ocean strategy. A blue ocean strategy seeks to gain a competitive advantage by abandoning efforts of competition in existing markets through creating either a total new industry or finding way to expand the boundaries of an existing industry as in the case of Netflix (Gamble and Thompson, p.129). Unfortunately for Netflix, due to the technology advancements within the industry they are find that their position is shifting rapidly from a blue ocean strategy back to a red ocean one.

    Gamble, J. E., & Thompson, A. A. (2011). Essentials of strategic management: The quest for competitive advantage. New York, NY: McGraw-Hill/Irwin.

  5. I really enjoyed the presentation from group C. Netflix is an interesting entity, and the presentation does it justice. Netflix was ahead of everyone else in the video rental industry early on in its existence. They grabbed this competitive advantage by introducing the industry to the subscription-based business model, which provided subscribers with all the benefits of visiting a local rental store, such as blockbuster, but without the hassle of having to drive to the store and returning the movie by a certain time (Gamble & Thompson, 2011, p. 305).They continued this trend by entering internet delivery of content, which appears to be the way of the future. Competition from Redbox and the recent damage to their image are issues that Netflix will have to contend with if they plant to secure their sustainability.

    Gamble, J. E., & Thompson, A. A. (2011). Essentials of strategic management: The quest for competitive advantage. New York, NY: McGraw-Hill/Irwin

  6. The presentation was great! The whole Netflix movie rental industry is a very interesting case. Netflix was extremely innovative by taking the industry to a new level. I remember hearing about the company when it first came out and I loved their concept. It was so unique because it provided subscribers with “all the benefits of a local movie rental store but without the hassle of having to drive to store, pick out movie DVDs from a selection of primarily recent releases, and return the rentals by a specified time” (Gamble, p. 305). This to me sounds like heaven. Netflix found the right niche and begin their exploration of it! Way to go Netflix.

    Gamble, J.E., & Thompson, A.A. (2011). Essentials of Strategic Management: The quest for competitive advantage. New York, NY: McGraw-Hill/Irwin

  7. You did a wonderful job on the presentation. I really enjoyed watching it. I have been a Netflix subscriber for years now. When prices increased, I went from the two movies out at a time plus unlimited instant streaming to just the internet streaming. To me, it wasn’t worth the price increase. But, when I did have movies delivered to me, I was impressed by how quick the turnover was. According to Gamble and Thompson, Jr. (2011), “Netflix had developed sophisticated software to track its inventory and minimize delivery times” (p 309). The turnover is only a few days, and you have the unlimited instant streaming in the mean time. I just hope their prices don’t go up again in the near future.
    Gamble, J., & Thompson, A. (2011). Essentials of Strategic Management. The Quest for Competitive Advantage. New York, NY: McGraw-Hill Irwin.

  8. We have discussed Netflix many times in class, and it seems there is still some debate on their business practices. The fact is, Netflix has made some huge errors recently and will struggle significantly to recover. First, they separated the DVD and streaming industries and raised the price on many consumers overnight. This led to many subscription cancellations and a plummeting stock price. Second, the CEO sent out a pseudo-apology that left no resolution to the poor decision: the stock prices continued to decline. Third, Netflix lost their agreement with Starz, likely due to the perceived competition between Netflix and the cable conglomerates. Investors are bailing on Netflix, and it is becoming more unlikely they will recover. From June 30 to November 1, 2011 Netflix stock fell 66.88% (177.19).

    Netflix, Inc.: NASDAQ:NFLX quotes & news – Google Finance. (n.d.). Google. Retrieved November 12, 2011, from http://www.google.com/finance?client=ob&q=NASDAQ:NFLX

  9. I agree, Netflix is in red waters. They lost focus of what gave them their advantage, low cost and easy availability. When they increased the price and split the dvd and streaming market they disenfranchised their consumer base and got a quick and vehement response in one of the fastest loss of net value in corporate history. This goes to show the power of internet consumers. Amazon and Hulu have capitalized on these string of errors and now offer comparable services in which Netflix will never fully recover from. Additionally, Netflix entered into the mobile streaming market but bandwidth throttling and data charges are increasing consumer dissatisfaction, and essentially at the mercy of major mobile providers (Dawson). Netflix is in a real bad way.

    Dawson, Christopher, 2011. “Some parting thoughts on Netflix” Between the lines. http://www.zdnet.com/blog/btl/some-parting-thoughts-on-netflix/63261

  10. Thompson and Gamble state that in 2008 Blockbuster was global leader in the movie industry controlling a nearly 40% market share (p. 310). Before signing up for Netflix I used to rent from Blockbuster. I believe this is the case with most people. It wasn’t that Blockbuster did a bad because they did a fine job. Rather their downfall occurred from bad planning and lack of vision. Blockbuster was replaced by a much more innovative and efficient organization. Blockbuster simply just cant contend with Netflix. The price of a month membership of Netflix is the price of one or two movie rentals from Blockbuster.
    Gamble, J., & Thompson, A. (2011). Essentials of Strategic Management. The Quest for Competitive Advantage. New York, NY: McGraw-Hill Irwin.

    • I appreciate your comments and feedback, Paul. Like you said it wasn’t that Blockbuster did a bad because they did a fine job. Rather their downfall occurred from bad planning and lack of vision. In my opinion Blockbuster can’t keep losing money on its total access program for long. Blockbuster has implied it may raise prices and cut marketing for the service. However, believes Blockbuster, with few other growth prospects, is more likely to stick to its strategy now that it’s drawing blood from Netflix. I think the problem for Netflix is renewed competition from Blockbuster. With its store movie rental business withering away, Blockbuster has spent heavily on its Netflix competitor program. The service delivers movies through the mail but also allows customer to exchange videos in person at Blockbuster stores.

  11. This was a great video and I love the part about the CEO coming in quickly to fix the mess. According to Gamble and Thompson executives must “stay on top of how well things are going” and manage by walking around. In this case, the executives heard very quickly the response of the public and pulled the plug on the latest strategy. However, I wonder if anyone did the correct research before putting this into play? Did they ask the consumers? Did they have surveys? Focus groups? Or did they just come up with the idea and put it out there due to pressure? At least they listened when the consumers complained. What part do you feel that they missed when they come up with this new pricing policy?

    Gamble, J., & Thompson, A. (2011). Essentials of Strategic Management. The Quest for Competitive Advantage. New York, NY: McGraw-Hill Irwin.

    • Thanks for you comments Angela. In my opinion, Netflix’s executives lost track of the principles that had gotten them to be so successful o the first place. It is not uncommon to see mistakes like this one in the world of business. Oftentimes corporations are doing so well that they almost feel untouchable and make bad decisions that end up costing them an entire trajectory of success. In this case, Netflix failed to foresee the devastating consequences of making a poorly planned decision, perhaps to make a quick profit. Lesson learned for those aspiring to achieve success in business; never loose track of what got your company to be successful on the first place and to always foresee the long term consequences of short term decisions.

  12. In 2008, according to Gamble and Thompson, Blockbuster was global leader in the movie industry. This is an industry that will be very interesting to watch in the near future. I believe, however, the war is currently Netfilx’s to loose. They were, up until recently, in a great position. However, with the blundering at the top regarding the price increase and how it was handles, as well as the now you see me, not you don’t fiasco with Qwikster has created an opening for the competition to enter or resurrect themselves. However, with that said, at least the made the proper course correction when they did. It did show that the company has the wherewithal to make those tough decisions and also tai the heat for making those decisions. Well done on the video and summary.

    Gamble, J., & Thompson, A. (2011). Essentials of Strategic Management. The Quest for Competitive Advantage. New York, NY: McGraw-Hill Irwin.

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