Essay About Reed Hastings And Large Scale

Netflex The New Trend
Essay Preview: Netflex The New Trend
Report this essay
Table of Contents
Company Overview 4
Issues 5
Analysis
External Analysis
Dominant Economic Feature 8
Competitive Forces — Five Forces Model 10
Driving Forces 12
Key Success Factors 14
Competitor Analysis 15
Industry Attractiveness 21
Internal (Company) Analysis
Company Strategies 21
SWOT Analysis 23
Value Chain Analysis 29
Competitive Strength Assessment 30
Strategic Issues and Obstacles 31
Alternative Courses of Action for Success 31
Recommendations 31
Implementation 32
Works Cited 36
Appendices
Corporate Officers A
Online Movie Industry Market Share B
Renting Process Flow Chart C
Growth Rate Chart D
Rental Price Comparison E
Ratio Comparisons F
S.W.O.T. Analysis G
Weighted Competitive Strength Assessment H
Unweighted Competitive Strength Assessment I
Financial Analysis J
Return on Assets / Return on Equity K
COMPANY OVERVIEW
Reed Hastings founded Netflix in 1997. He noticed that there was a demand for the ability to rent movies. With a large
customer base he figured there was no question that his company could fail. This began the online movie rental industry to a
large scale. With one company becoming successful, it wouldn’t be but a matter of time before others began to catch on and
begin to reap the benefits of someone else’s idea.
Reed Hastings has already been a success for beginning new companies. He first made a name for himself by going public
with Pure Software in 1995 (netflix.com/PressRoom). After the development of this company he began to acquire several
other companies and made Pure Software one of the 50 largest public software companies in the world by 1997; this until
they sold to Rational Software in 1997. From there Hastings moved on to other projects.
The other project in mind was Netflix. Hastings and a few colleagues formed Netflix in 1997, as formerly stated. Which by
1999, they had over one million subscribers in only three and a half years. Since the beginning of Netflix in 1997, they have
battled many different forms of DVD entertainment competition. The competition ranges from simply going to the local video
store, or actually going out to purchase a movie. It ranges too many other levels as well as many other mediums. Through the
beginning and even until today Netflix has been able to stay ahead of their competition; this mainly due to the seemingly
flawless method of getting the product to the end user, and back. “No one is going to out-hare Netflix,” Hasting said.
(Netflix-Maddox) With this bold statement, Hastings has been able to keep his word on it. He is able to keep his word mainly
because of the intricate rental system involved, also because they have until recently been what seemed to be the best deal for
renting movies.
Netflix seems to have a simple statement. “Our vision is to change the way people access and view the movies they love. To
accomplish that, on a large scale, we have to set a long-term goal to acquire 5 millions subscribers in the U.S., or 5 percent of
the U.S. TV households over the next four to seven years.” (Maddox, c-14) This statement appears to be plausible as long as
they figure a way to keep the Blockbusters and the Wal-Marts of the world at bay.
“Netflix launched its movie rental service in 1999 with the goal of using the DVD format and the Internet to make it easier for
people to find and get movies they will enjoy. As a result, our members can reliably discover and enjoy lesser-known titles. As
we succeed, more people are watching more films, and filmmakers are reaching a larger audience. In turn, we believe they
will produce more new films. Netflix strives to be the worlds largest and most influential movie supplier.
(netflix.com/pressroom)”
ISSUES
Primary
Ð* The first strategic issue that Netflix will need to cover is how to gain a larger consumer base. Without more members they
will have a hard time keeping up with the competition. Many of their competitors have longer operating histories, larger
customer bases, greater brand recognition and significantly greater financial, marketing and other resources than Netflix does.
Some of their competitors have adopted, and may continue to adopt, aggressive pricing policies and devote substantially
more resources to marketing and Web site and systems development than Netflix does. The rapid growth of their online
entertainment subscription business since their beginning may attract