Case

5
.
.

.
.

1
2
3
4
5
6

508
508
508
508
508
508

..

..
..
..
..

[ 7]

(2602650)
-
14/2

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Where Are We Now?

(Company Background)

..4

..........................................................................................
.............................7

EFAS
..10

........................................................................................
........................15

ICFAS
....16

.......................................................................................2
3

...........................................................................................
...........................................24

IFAS
35
(SWOT
Analysis)..38

MBA Young Executive 14/2

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership
Where Do We Want to Be?

(Vision)

..40
(Mission).

.40
(Key Success Factors)
....40
(Corporate Goal)
.4
1

MBA Young Executive 14/2

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

How Will We Get There?

43
GE
Model
......44
(Corporate Strategy).
.45
(Business Strategy)
..48
(Functional Strategy)
...50

50

53

..57

..57

MBA Young Executive 14/2

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

.59

59

......62
Action
Plan
...63

.65

(Strategic
Map)
...65
(Key Performance Indicator)
.66
Reference
.71

MBA Young Executive 14/2

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Where Are We Now?

(Company Background)

. 2000 Technology



Laptop
VDO
DVD Digital Video Disc Technology
2008
85%
DVD Technology
DVD
DVD
DVD

Technology Blu-ray
High Definition

Technology
Technology
DVD
Download
Technology


Cable TV Internet

MBA Young Executive 14/2

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netflix .. 1997 Reed Hasting

Pure Software .1991
Reed Pure Software
Software
1 50 Reed Pure
Software 750
Netflix
Online
Netflix Online . 1999

2 4
Netflix
Website

Netflix

Netflix

Netflix
Netflix

6

MBA Young Executive 14/2

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Brand Awareness Netflix

Netflix
2

DVD

-
Internet

Netflix

Blu-ray Disc

Internet

Netflix
2007
Internet
Netflix

Internet 2008 LG Electronics

Netflix
Netflix

Netflix
Netflix

MBA Young Executive 14/2

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Website Netflix

Website

Netflix

DVD
50

Netflix

DVD
1-3

Netflix
Internet Promotion

2
Netflix

Word of Mouth
Netflix

MBA Young Executive 14/2

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

(Environment Analysis)

Netflix

MBA Young Executive 14/2

10

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

MBA Young Executive 14/2

11

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

MBA Young Executive 14/2

12

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

(EFAS External Factors Analysis Summary)

1.
MBA Young Executive 14/2

13

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

1.

(Growth fo GDP
Per Capita)

0.3

0.6

2.

(Inflation Rate)

0.2

0.6

MBA Young Executive 14/2

(
20072008)

14

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

3.

(Growth Of
Consumer
Expenditure On
Leisure and
Recreation Per
Capita)

0.5

2.
Technology
1.

DVD

2.

2.20

0.3

1.2

0.3

1.2

MBA Young Executive 14/2

Netflix

DVD

DVD

Netflix

-
15

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Internet

3.

Internet

0.2

MBA Young Executive 14/2

0.8

Internet

Internet

Netflix
Internet

Netflix
File

Internet

Netflix

-
Internet

425

Netflix

Netflix

16

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

2.
Technology
4.

0.2

MBA Young Executive 14/2

0.4

Netflix

3.60

17

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

3.

1.

3.

2.

0.7

0.1

MBA Young Executive 14/2

2.8

0.3

18

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netflix

3.

Rating

0.2

2.75

0.55

-
Rating

3.65

4.
1.

0.5

MBA Young Executive 14/2

2.75

1.375 -

19

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

4.
2.

0.5

3.5

MBA Young Executive 14/2

1.75

Neflix

Lifestyle

3.12
5

(EFAS)

20

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

1.

0.30 2.20

2. Technology

0.30 3.60

1.08

3.

0.15 3.65

0.55

4.

0.25 3.12
5

0.78

MBA Young Executive 14/2

0.66

3.07

21

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Porters 5 Force

Porters Five Force Model

1.

(Competitive Rivalry)

2.

(Treat of New Entrants)

3.

(Treat of
Substitutes)

4.

Supplier (Bargaining Power of

Supplier)

5.

(Bargaining Power of
Buyers)

MBA Young Executive 14/2

22

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

(ICFAS Industry Competitiveness Factors Analysis

Summary)

1.
(Competitive
Rivalry)
1.
0.4

MBA Young Executive 14/2

0.8

DVD

4 Segment

DVD,
,
Video on Demand

Product, Price,
Place, Promotion

23

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

2.

Online DVD
Rental Service

0.15

3.5

1.
(Competitive
Rivalry)
3.
0.15

Internet-based
Content Provider
MBA Young Executive 14/2

0.525
DVD

Internet

Supply

Demand

0.6

Netflix

Content
Provider
Video
24

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

4.

0.3

0.6

Streaming

Netflix

2.525

2.
(Treat of New
Entrants)
1.
0.35
3
1.05

DVD

MBA Young Executive 14/2

25

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

2.
(Treat of New
Entrants)

2.

MBA Young Executive 14/2

0.45

1.8

Supplier

Netflix
26

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

2.
(Treat of New
Entrants)

first mover

3.

0.2

MBA Young Executive 14/2

3.5

0.7

3.55

27

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

3.
(Treat of Substitutes))
1.
0.4
2
0.8

Technology

Video on Demand,
Download File
Internet

2.
0.3
3.5
1.05

MBA Young Executive 14/2

28

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

3.
(Treat of Substitutes))

3.

Technology

MBA Young Executive 14/2

0.3

3.5

1.05

Netflix

Technology

Internet

29

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

3.
(Treat of Substitutes))

Netflix

2.9

4. Supplier
(Bargaining Power of Supplier)
1.
0.3
2.25
Forward
Integration
Supplier

MBA Young Executive 14/2

0.675 Supplier

Supplier

Supplier

30

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

4. Supplier
(Bargaining Power of Supplier)

Supplier

2.
Supplier

MBA Young Executive 14/2

0.7

1.4

Emotional Benefit

Functional

Suppiler

Supplier

Supplier

Suppiler

Supplier
31

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

4. Supplier
(Bargaining Power of Supplier)

2.075

1.8

5.
(Bargaining Power of Buyers)
1.
0.6
3

MBA Young Executive 14/2

32

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

5.
(Bargaining Power of Buyers)

2. Switching Cost

MBA Young Executive 14/2

0.4

2.5

DVD
Switching Cost

Internet
Netflix
Switching Cost

Barrier
Netflix
33

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

5.
(Bargaining Power of Buyers)

2.8

(ICFAS)

1.

0.30

2.

3.
4. Supplier

0.20

5.

0.15

MBA Young Executive 14/2

0.20
0.15

1.00

2.52
0.7575
5
3.55
0.7100
2.90
2.07
5
2.80

0.5800
0.3113
0.4200
2.78

34

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netflix Blockbuster
Red Box

5 = 1 =

1.

3.5

2.
3.

3.1
Brand
3.2

3.3

3.4

3.5

4.5

4.25

3.83

Netflix
Blockbuster Redbox

Netflix

MBA Young Executive 14/2

35

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

(Strength) (Weakness)
Mc Kinsey 7-S Model Strategy,
Structure, System, Style, Staff, Skill Share Value

(Strategy)
1.

Corporate Strategy

Netflix online movie rental

subscription service
Core Strategy Netflix

DVD by mail Streaming content
Objective
Netflix
2

1.

DVD
DVD

2.

Internet Based
Delivery

MBA Young Executive 14/2

36

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

2
Netflix
Blu-ray

Netflix

Growth Strategy
Netflix
1.

DVD Online

2.

3.

Internet Delivery

DVD Internet Delivery

Internet Delivery

Netflix

2. Business Strategy
Netflix 6

1.

DVD

MBA Young Executive 14/2

37

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

2.

DVD

3.

4.

5.

Package
Lifestyle
Promotion

6.

Brand Awareness

Brand
,

3. Functional Strategy
3.1

Marketing Strategy

Product

Switching Cost
Lock-In Netflix
Internet-Base Delivery

MBA Young Executive 14/2

38

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Price Package
Lifestyle
(Odd Pricing)
$8.99


Promotion
Place Netflix
Netflix

Internet


Brand Awareness
Netflix

Promotion
Netflix Promotion

Netflix
Netflix Package
Lifestyle
8 Package 8 Package
Internet-Base Delivery

Lock-in
Netflix ( Switching Cost
)
3.2

Operation Strategy

Internet-Base Delivery
MBA Young Executive 14/2

39

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Blockbuster
Lock-In

Hardware Software

Movie Recommendation Software

Supplier



Starz
Entertainment
Logistics

(Customer Relationship
Management) Program Movie Recommendation

3.3

Human Resources Strategy

Netflix



Netflix

MBA Young Executive 14/2

40

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

3.4

Financial Strategy

Netflix

MBA Young Executive 14/2

41

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Key Ratio Netflix Inc. :

http://moneycentral.msn.com/

MBA Young Executive 14/2

42

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Ratio Netflix Inc. :

http://www.reuters.com/finance/stocks

(Quick Ratio Current Ratio)

Netflix

Netflix

Asset Turnover Netflix

( 2.5 )

Netflix
Asset Turnover

ROE Netflix
5

Netflix
ROE

Netflix
ROI ROA
Netflix

5

Long Term Debt to Equity Ratio

Netflix Netflix
Total Debt to Equity
MBA Young Executive 14/2

43

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Ratio Long Term

Netflix

Netflix

Netflix
Times Interest Earned Netflix
Netflix

: Netflix


Netflix

Price to Book :

(Structure)
Netflix
(Functional Structure)

MBA Young Executive 14/2

44

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netflix

Netflix





Netflix
Netflix

(System)
Netflix Website - www.netflix.com

1)

MBA Young Executive 14/2

45

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netflix

account
(DVD
Stock) Streaming Content

(easy-to-use) account

customize add-on
service viewing history, subscribers queue, movies
review, recommendation service features

Netflix
contents
Netflix
Third-party service

Website Netflix interface

Streaming Blu-ray format

(Merchandising)
(Inventory Optimization)
2)

Netflix Recommendation Service

Viewing History Inventory Levels

DVD DVD


Netflix Netflix
Recommendation Service Inventory
Optimization
Inventory Utilization

MBA Young Executive 14/2

46

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

3)

Netflix (Distribution Center)

50
DVD
first-class mail US Postal Service
1 ( 95%)
DVD
US
Postal Service
Netflix

Netflix

Netflix
UPS

UPS
Netflix
4)

Customer Service

Netflix Customer Service 2

Hillsboro Oregon

(Style)
Netflix Functional Structure
Netflix

MBA Young Executive 14/2

47

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

(Staff)
2008 Netflix fulltime employee 1,644 Netflix
part-time temporary employee
1,626
Netflix demand DVD
shipments Netflix
Collective Bargaining Agreement
Netflix

(Skill)
Netflix
Netflix

Netflix
Netflix
Pro Sports Team Kids
Recreation Team Netflix

(Shared Value)
Netflix

MBA Young Executive 14/2

48

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

7
Values are what we Value
Freedom & Responsibility

Context, not Control

Highly Aligned, Loosely Coupled

Pay Top of Market
Promotions & Development
Netflix
DVD by mail
Streaming Content online

MBA Young Executive 14/2

49

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

(IFAS Internal Factors Analysis Summary)

1.

DVD

0.15

4.5

Online Content
Provider
Streaming

0.1

3.

0.1

2.

MBA Young Executive 14/2

0.675 Netflix DVD

0.3
Netflix
DVD
online

Online Content
Provider Video
Streaming

contents
Netflix

Apples
iTunes
0.3
Netflix

DVD

Netflix

US Postal
Service
50

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

4.

5.

MBA Young Executive 14/2

0.15

2.5

0.1

3.5

UPS

0.375 Netflix

Netflix

0.35 Netflix

Subscriber
Acquisition Cost

2008 Subscriber
Acquisition Cost
28%
51

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

6.

Website

0.1

4.5

0.45

7.

0.1

0.4

8. Customer
Retention

0.1

2.5

0.25

MBA Young Executive 14/2

2007
Netflix

index

Movie
Trial review

Netflix
Recommendation
Service (

Inventory
Optimization
Netflix

Inventory Utilization

DVD Rental
Service

()
Netflix

52

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

9.

0.05

3.5

10.

0.05

3.5

MBA Young Executive 14/2

Netflix

Brand Loyalty

0.175

Netflix

Netflix

0.175 Netflix

3.45

53

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

(SWOT Analysis)

Strengths
1.

Netflix DVD

DVD
value
proposition

2.

Netflix Distributors
Content Providers Revenue Sharing Agreements
contents
Content Providers
Netflix contents

3.

Netflix
online promotion
Free Trial Period

1 2007
$40.86 1 $29.12
2008

4.

Netflix
Netflix
index
Movie Trial
review

Weaknesses
1.

Netflix
( 4 ) $4.99
(Limited Plan) $47.99 (Unlimited Plan)

MBA Young Executive 14/2

54

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netflix

2.

Netflix Customer Retention

3.

Netflix DVD
Netflix Netflix

Opportunities
1.

High Definition online video streaming

2.

online

Netflix

3.

Netflix
Netflix
Nickelodeon Disney
contents

Threats
1.

( US
Postal Service)
Netflix DVD

MBA Young Executive 14/2

55

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netflix
2.

Netflix
Blu-ray format
HD DVDs Netflix

3.

DVD

Wal-Mart

Online Content Providers
iTunes Napster

4.

Netflix

Netflix

5.

Free Download
Netflix

MBA Young Executive 14/2

56

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Where Do We Want to Be?

(Vision)

Netflix Content (Standard)

(Personalized) Broadband
Contents
Text
Contents
(Mission)

Netflix


(Key Success Factors)

Comprehensive Library of Titles

Internet-based Subscription Model

DVD Rental Outlets, DVD Retailers Cable,
Satellite, Telecommunication Provider
Custom Interface
Personalized
Merchandising Recommendation Service
Inventory
Optimization

(Growing Scale)


Internet
delivery of content Netflix

MBA Young Executive 14/2

57

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Streaming
Content

(Corporate Goal)

(1-3 )
1.

1.1

20%

1.2

Subscriber 30%
Subscriber
1.3

DVD by mail Streaming Content

2.

2.1

Gross Margin 5%

Subscriber Acquisition Cost

10%
2.2

3.

3.1

Positive Feedback 90%

3.2

Churn ()
2.5% 10%
3
MBA Young Executive 14/2

58

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

3.3

Brand Loyalty

4.

4.1

10%

4.2

4.3

Partner

4.4

Call Center

4.5

Content provider
On Stream
DVD

5.

5.1

5%
5.2

(3-5 )
1.

1.1

MBA Young Executive 14/2

25%
59

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

1.2

10%
1.3

DVD-by-mail Content Provider

Content
2.

2.1

5%
2.2

2.3

2.4

3.

3.1

3.2

4.

4.1

4.2

5.

Brand

5.1

MBA Young Executive 14/2

60

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

How Will We Get There?

GE
Model

3
1.

(Corporate Strategy)

2.

(Business Strategy)

3.

(Functional Strategy)

EFAS, ICFAS IFAS

Online DVD Rental Service Netflix

Blockbuster Internet-base content
provider Netflix
Apple iTunes

Streaming
Netflix
Netflix

MBA Young Executive 14/2

61

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netflix
DVD rental service by mail
Netflix
Content Provider Video Streaming

(ICFAS) 0.60
(EFAS) 0.40
(0.4EFAS + 0.6ICFAS)
(IFAS)

3.07
(EFAS)
2.78
(ICFAS)

(EFAS + ICFAS)
(IFAS)

0.4

1.228

0.6

1.668

2.896

3.45

Netflix
5 GE Model

MBA Young Executive 14/2

62

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

MBA Young Executive 14/2

63

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

(Corporate Strategy)

GE Model
Netflix
Netflix
5 GE Model

1.
2.

(Horizontal
Integration)

Netflix

1)

Market Penetration

2008 Netflix
(Churn) 16.8%

Netflix

MBA Young Executive 14/2

64

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netflix
(Customer Feedback)

Subscriber Plan (Redesign,

Repackage)

MBA Young Executive 14/2

65

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

2)

Market Development
Netflix
Online DVD Rental Movie
Streaming

Brand Awareness

3)

Products and Service Development

Netflix
Content

DVD Rental Service (DVD by mail)

Netflix DVD

DVD


Internet-based Video Streaming Netflix
Contents

Netflix Integrate
Netflix

Content Providers

MBA Young Executive 14/2

66

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

MBA Young Executive 14/2

67

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

(Horizontal
Integration)

Netflix
Netflix Growth Strategy
Software
Online DVD rental
concentric growth Software

Netflix
DVD
Content provider
internet
Netflix


IT Infrastructure

Online Contents
Netflix
Strategic Partner
Netflix Waltz Disney

MBA Young Executive 14/2

68

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

(Business Strategy)

Netflix Online DVD Rental

DVD

segment
Disney

Netflix Differentiation Strategy

(Board Differentiation)


(segments)

Netflix

MBA Young Executive 14/2

69

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netfilx

Brand Loyalty

Brand Awareness

Brand Awareness

Brand Awareness

Unmet Need
Brand Awareness

Netflix
(Board
Differentiation) segment

MBA Young Executive 14/2

70

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

MBA Young Executive 14/2

71

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

(Functional Strategy)

1.

2
DVD-by-mail Internet-based
content provider
DVD-by-mail Netflix
Blockbuster Redbox Netflix
First Mover
Online DVD Rental Service

Netflix

Content Provider Netflix

Contents
Contents
Netflix

Apple
iPod iTunes
integrate Apple

Video Streaming Netflix Apple

YouTube
Free Content Netflix

(STP)
Segmentation Target Market
Netflix

MBA Young Executive 14/2

72

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Video Streaming
Netflix Segmentation

Target

Netflix

Apple iTunes
Positioning

Delivery Netflix
Positioning Netflix
Efficient Delivery
System
High

Apples
iTunes
Low

High

Products &
Services
Variety

Low

Perceptual Map
Netflix
Delivery System
(DVD-by-mail) Video Streaming
deliver contents

MBA Young Executive 14/2

73

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Products
Netflix

Segment
Supplier
Supplier

Supplier

Segment
Segment Segment
Blockbuster
Focus

Focus
Netflix
Program

Netflix
Program

Program

CRM Netflix

Netflix

Brand Loyalty
Price

Subscriber plan () Netflix
8
MBA Young Executive 14/2

74

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

$4.99 $47.99

$13-$20 Netflix Subscriber plan
Plan
Netflix
package 3-4
Plan

Place
Netflix Core
Business
Netflix.com Interface
Netflix

Download Contents


Personalized Merchandising
Recommendation Service Value-added
Netflix
Features
Value-added
account


Promotion
Promotion 2
Promotion Package

MBA Young Executive 14/2

75

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Promotion Package

Customer Retention
Netflix

Promotion Package
12
1
Brand
Awareness
Netflix
Brand Loyalty

2.
1)

Netflix
Netflix

Netflix Netflix

Netflix
MBA Young Executive 14/2

76

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netflix

Brand Loyalty Netflix
Movies Streaming Netflix

Internet

2)

Technology

Technology

Movies Streaming
Technology Netflix
MBA Young Executive 14/2

77

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netflix

3)

Netflix

Netflix

Netflix

Movies Streaming

Netflix
MBA Young Executive 14/2

78

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

4)

Netflix

Netflix Promotion

Netflix Supplier


Netflix
Supplier Share

Movies Streaming

5)

MBA Young Executive 14/2

79

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netflix

Netflix

Netflix Netflix

Netflix
Technology

Movies Streaming

(Economy of Scale)

Software

MBA Young Executive 14/2

80

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netflix

6)

Netflix

7)

Netflix

MBA Young Executive 14/2

81

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Balance Score Card

3.
Netflix

IT Infrastructure

Data Center

MBA Young Executive 14/2

82

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

4.

Netflix

Netflix

1)

Recruitment

Turn
Over Rate
Netflix

2)

Compensation & Incentives

Netflix

3)

Training & Development

MBA Young Executive 14/2

83

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netflix

Knowledge Management

4)

Performance Appraisal

5.
Netflix

Movies Streaming

Movies Streaming

Technology Netflix

MBA Young Executive 14/2

84

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Technology

6.
(Investment)

1)

Netflix


Netflix

Netflix

Netflix

Netflix Netflix

MBA Young Executive 14/2

85

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Movies Streaming

Netflix
Technology

Share Supplier

Netflix

Movies
Streaming

Technology
Technology
Netflix
Technology

MBA Young Executive 14/2

86

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Technology

Technology

Netflix

2)

(Finance)

Netflix Netflix

Netflix

2

-
(O/D)
(Promissory Note)

- Trade Finance

Netflix

MBA Young Executive 14/2

87

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Netflix
Netflix

-
Netflix

MBA Young Executive 14/2

88

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

CSR

Netflix

1.

Package Recycle

Netflix
Package

CSR

2.

Netflix

3.

Promotion

Netflix

MBA Young Executive 14/2

89

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership
ACTION PLAN

1.
2.
Brand Awareness Core Competitive
Advantage
Value-added
3. (Subscriber Plan)

4.

5. Promotion Package

6.

7.

8. (Help) (FAQs)

1.

2. Technology

MBA Young Executive 14/2

90

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Technology

3.

4.

5. Supplier Share
Supplier

6. Website

7.
Movies Streaming

8. Call Center

2.

1.

1.

MBA Young Executive 14/2

91

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Movies Streaming

2.

3. Share
Supplier

4.

1.

MBA Young Executive 14/2

92

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

(Strategic Map)

Growth
Strategy

ROS
25%

Value-added

Brand

Loyalty

Deliver

DVD-by-mail
Vedio
Streaming

MBA Young Executive 14/2

Productivity
Improvement

IT

93

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

(Key Performance Indicator)

KPI

Baseli
ne

Target

25%

ROE

22%

Gross
Margin

4%

MBA Young Executive 14/2

Initiate

Share
Supplier

5%

94

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

KPI

Current

Ratio

Debt To
Equity
Ratio

Baseli
ne

Target

1.62
(Jul 09)

>1.65

Initiate

11.5
(Jul 09)

<11.0

Trade Finance

Supplier

Share
Supplier

MBA Young Executive 14/2

25%

Brand
Awareness

95

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

KPI

Baseli
ne

Target
30%

Churn
= %

4.2%

2.5%

N/A

80%

Initiate

- Brand
Loyalty
-

- Call
Center

-
(Help)

(FAQs)

29%
(200
Sub
8)
scriber
Acquisiti
on Cost

MBA Young Executive 14/2

30%

Brand
Awareness

Subscriber Plan

96

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

KPI

Baseli
ne

Target

Initiate
-

MBA Young Executive 14/2

50

1-3

- Contact

97

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

KPI

Baseli
ne

Target

Initiate

Internet

Shut
Down
Rate

N/A

Defect
Rate

N/A

< 1%

MBA Young Executive 14/2

Software
Hardware

Website
-

98

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

KPI

Shut

Down
Movies
Rate
Streaming

Turnove
r Rate

Baseli
ne

Target

N/A

N/A

<5%

Initiate

MBA Young Executive 14/2

99

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

KPI

Baseli
ne

Target

N/A

N/A

MBA Young Executive 14/2

Initiate

Technology

-
Technology

Technology

Positive -
Feedback

80%

100

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

KPI

Baseli
ne

Target

Initiate

MBA Young Executive 14/2

N/A

-
24

Training Road Map

101

2602650 Strategic Management

Case 5: Netflix Battle for Market Leadership

Reference

. 2551

BSC (Balance Scorecard)
2. .. .
2542
3. Thomson/Strickland/Gamble McGraw Hill 2008
Crafting & Executive Strategy : The Quite Competitive
Advantage : Concept and Case
4. http://www.netflix.com/
5. DATAMONITOR Netflix Inc. SWOT Analysis, Publication
Date: 17 Jul 2009
1.

MBA Young Executive 14/2

102