Question 1 Netflix make decision effectively within the internal organization and create value to its consumer, it is essential for Netflix to understand the competitive advantages and strategic competencies of its organization with the help from Netflix resources, capabilities, core competencies and value chain analysis. Tangible ResourcesCase Fact StrengthWeakness Financial ResourcesRevenue grew by 25 percent to $4883. 7 million and net income by 44 percent to $32. 3 million (Ireland,et, al. 2013 P298)Ability to generate funds with the increment in revenue ability to control their overhead expenses
Increase of almost 300 percent in the value of share to an all-time high of $119. 50 (Ireland,et, al. 2013 P298)Ability to generate funds via issue of shares Long-term debt financing as it issue a $200 million aggregate principal amount of senior notes(Ireland,et, al. 2013 P306)With the long term debt, Netflix might have problem to finance their long term debt in the near future which thus might drag down their profitability Organizational Resources Functional structure with specialized functions (Ireland,et, al. 2013 P312) Employees can feedback to its individual management easily.
Various department can also support the Netflix firm strategy Physical Resources10 regional distribution centers (Ireland,et, al. 2013 P300)Wide coverage to reach consumer easily and allows efficiency in delivery 58 warehouse Innovation logistic system(Ireland,et, al. 2013 P305)It allows Netflix to have prompt delivery to all their customer Technological Resource10000 orders processed each day by its own proprietary software system (Ireland,et, al. 2013 P300)It helps to speed up the delivery process and provide consumer with prompt delivery View instantly allowing subscriber to stream data system (Ireland,et, al. 013 P305)Improve the accessibility for consumer by having an alternative ways of viewing videos Netflix main strength will be its supply chain system, with the high volume of demand Netflix is still able to meet its target by having more than 97 percent of customer able to receive their DVD within one business day. However, the key weakness will be the high long term debts that Netflix have which might cause them to have issues in settling their financial debt and thus leads to financial instability. Intangible ResourcesCase FactStrengthWeakness Human ResourcesAverage employee doing the job of three to four people.
Talented in their roles (Ireland,et, al. 2013 P306)Employee is capable, talented and efficient in the roles. With their talents they are able to provide innovative ideas to Netflix Recruiting, rewarding and retaining the best talent (Ireland,et, al. 2013 P306) With the rewarding, Netflix can prevent high turnover rates and also there will be more commitment from the employee due to high rewarding given to them Reed Hasting found Pure software in 1991. Master in computer science from Stanford university in 1988 (Ireland,et, al. 2013 P307) Experience in management and also managing employees
Innovation ResourcesFree rental coupon to consumer that purchase DVD sets (Ireland,et, al. 2013 P299)Innovative ideas to market Netflix products with low marketing cost Work with amazon in exchange for promoting Netflix for rental heavily trafficked web site(Ireland,et, al. 2013 P299)Low cost in marketing and allows more user to be aware Netflix. A unique idea that its competitors have not thought of it. Consumer might not be willing to disclose their information to Netflix or use their service as their private information is being share with other organization which thus invade their privacy
Developed patented and maintained extensive personalized video recommendation system based on user rentals rating and reviews (Ireland,et, al. 2013 P300)Unique features that allows consumer to access videos that might interest them. This unique features will attract more consumer to use Netflix instead of other competitors due to the convenience Reputational ResourcesBoosted its brand recognition by selling bill Clinton’s grand jury testimony for 2 cent plus shipping (Ireland,et, al. 2013 P299)Helps to market Netflix as an affordable dvd rental industry. Thus helps to increase Netflix reputation as an affordable dvd rental company
Legal issue of did not provide unlimited dvd rentals and one day delivery as promised in its marketing materials(Ireland,et, al. 2013 P300)Might lose some trust from consumer as it seems that Netflix is overpromise under deliver as they might not be able to deliver as per what they promise. The key intangible resources that resulted in Netflix main strength is having a good human resource such as capable leaders and efficient employees however the key weakness of the firm are the bad reputation of Netflix due to the legal issue that they face. Capabilities CapabilityResourcesAnalysis
DistributionOrganizational and physicalNetflix have a well structure logistic which able to handles a huge amount of customer and high daily demand from consumer Human Capital ManagementHuman resourceAble to motivate the employee by providing with high rewards to retain talent and willing to spend on talented employee DeliveryTechnologyAble to provide cost effective and quick delivery service to all its consumer MarketingReputational, technological and innovationAble to create a brand image with low marketing cost which helps to raise awareness from consumer Finance ManagementFinancialNetflix is able to manage their financial resources and thus leads to an increase in revenue and net income In conclusion with the analysis as per above, Netflix capabilities includes distribution, human capital management, delivery, marketing and finance management