Sample Business Paper on Netflix Company Analysis

Netflix incorporation began in 1997 as an online subscription service that allows users to
stream and access movies, documentaries and films. The company also creates original programs
via the internet. The videos and films may be streamed or mailed to consumers in their homes.
The company boasts of a great number of customers who turns up to be more that 180 million
subscribers (Guadiana, 2020). Netflix has a global recognition as one of the major service
providers to respond to the increasing needs of consumers in purchasing online content.
Currently, Netflix stands out as the largest media-streaming company across the world.
Netflix continuously respond to external pressures in its industry as many other streaming
companies compete for the market share. One major competitor for Netflix remains Amazon
whose online content services falls in price below the rate charged by Netflix. Amazon also
boasts of 150 million subscribers across the globe. The large customer base enables Amazon to
pose a challenge to Netflix in the market. Other competitors include Tivo, huli and Warner
Media. Despite the competition, Netflix has a market capital share of $ 221.9 B (Aversa,
Haefliger & Reza, 2017). The company has been growing the range of services it offers over
years and continually updates its products to match the dynamic customer transition from
Television to streaming services. The company managers to compete since it offer original
content and charges favorable amounts to its customers.
The company’s main products include movies, series, documentaries and video streaming
services. The company cycles titles each month to provide updated content to its consumers. It
also produces its own original content that sells across the globe. Among the titles produced by
the company include Stranger Things. With a variety of content to offer to its customers, Netflix
continually increases its revenues over the years. This work aims at assessing the current
competitive position and external environment that Netflix operates in.

Mission/ Vision/ Goals

Netflix mission and vision statements really align the company’s employees since they
become motivated when they read the statements. The company chose those statements that
focus on cohesiveness making almost 70% of its employees aggravated. The company’s mission
statement invokes the need to enhance its streaming services to reach both the domestic and
global consumers. Netflix focuses on enhancing customer experience while it expands its
services and user interface. Also, the company focuses on operating with its net gains to achieve
the targeted profits.
Netflix envisions becoming a top global entertainer while it creates market that allows
film makers to showcase their content and reach out to their audience. With this vision in mind,
Netflix employees work collectively towards transforming the company’s strategies to reach the
rising global demand for original content. Thus, the company must align its organizational
structure and processes to achieve this great vision.
Netflix enjoys a variety of objectives that defines its purpose and enables it to achieve its
short and long term plans. The company’s goals include the following:
i. To increase Twitter mentions in 2020 by a margin of 10 %.
ii. To develop modest, unique and individual content directed to the main social
iii. To enhance conversion rates on adverts by 5%.
iv. To cater to niches and effectively provide each slice of its services to consumers
of different characteristics.


The above goals enables Netflix control its workers behavior and directs its operations in
the short term. The company must also continually revise its goals to focus on a holistic growth
based on its previous and current performance trend. Also, each employee must pass the
performance appraisal activity to demonstrate individual competence that will enable the
company achieve its mission and vision. Hence, the company must set achievable goals and
communicate to its employees on their importance.

Netflix Competitive Advantage Assessment

Netflix resources have become the basis upon which the company gains competitive
advantage. Once Netflix entered the TV show industry, most U.S. companies were forced to alter
how they made their television shows. The company began to fund TV production in 2011 using
its own capital. The company originally encouraged shows that most others firms had looked
down upon. The move made some companies which used to offer television content to cancel
their production. Netflix was forced to place orders on shows since no individual was willing to
perform a pilot to a new firm that would exit the market before placing a single order.
In 2013, two of Netflix’s shows became nominated in the Golden Globe as well as Emmy
events. The breakthrough put the company on a global map and enabled it to gain popularity in
the whole industry. Since the company did not have internal resources to pilot its projects, each
show that the company created enhanced the subscription numbers thus allowing it to increase its
client base. Incumbent networks began to skip pilots for their shows since Netflix’s success
signaled competition and informed them on the need to stay committed to their productions.
Since Netflix had claimed a global recognition, and having entered a prestigious level in the TV
show industry, 2013 became its breaking point.


Netflix provides convenient TV content and delivers it to consumers in their homes. The
company’s basic business model aims at reducing its customer’s efforts of visiting a video rental
hoard. Also, by changing from DVD’s only to include streaming reflects its competency and
allows it to manage the streaming video platform. Strategically, the company allows its
customers to access video content without worrying about lateness or payment of return fees to
video rental zones.
The company’s core strategy invokes the need to increase the streaming subscription
business in both the domestic and global settings. Netflix produced environments that apply on a
number of internet-connected machines which includes the televisions, mobile devices as well as
computers. The company has licensed a growing volume of content geared towards the
streaming arena. Additionally, the company envisions enhancing the content it provides and
improving customer experience in a variety of ways. The above strategy will continually enhance
the company’s productivity and put it on a competitive edge in the show industry.
One of the company’s strengths includes its ability to offer competitive prices and
selecting hybrid content for its users. As Khalil & Zayani (2020) asserts, a user can see access
many shows through streaming or just on DVDs with only $10 per month. Also, users become
more flexible when high numbers of DVDs come out in every moment. They can easily choose
those that they enjoy most and thus become comfortable with the company’s production. These
varieties prove less expensive than cable movie platforms. Currently, the company invests more
in expanding its streaming services and has greatly reduced the use of DVDs.
Netflix operates on low fixed costs and this move has caused the company to reap high
returns in the long-run. Since the company offers a huge variety of selections to its users, the cost


of operation will surely level up to enhance its profitability. The company dwells on licensing
since it provides digital content while reducing the physical products. Thus the company only
uses the fixed costs on research and other general administrative costs. Ideally, the company
must ensure that the benefits derived from the licensing activities and production through
provision of top-notch content that will attract and maintain its consumers while providing room
for new subscribers.
In addition, since Netflix operates in a dynamic TV industry that experiences rapid
transformation in the current digital era it must enhance innovation to attract a large market
share. Introducing online streaming has enhanced the company’s recognition on the globe. For
instance, about 35.16 % market share in video streaming directly falls to Netflix. Other content
providers like You Tube and Amazon enjoy 17.5% and 4.2% market share (Khalil & Zayani,
2020). The above figures prove that Netflix remains superior in the streaming industry with
nearly half of the global market share.
Lastly, Netflix can fall under the oligopoly structure due to the presence of few online
content providers and a looming high number of subscribers. Since only few companies exist,
Netflix has the audacity to boast of its services as a result of a large customer base and high
market demand for online content (Wenzel, Mahle & Pätzmann, 2016). Also, the fact that the
company leads in providing streaming content makes it influence the market prices. Thus, all
other competing firms must harmonize their prices while referring to the company’s figures. The
pricing strategy of Netflix has enabled it to sustain its profit margins over the years and
continually stay optimal.

Netflix External Environment


Netflix focuses on providing original streaming content to its subscribers. The company
currently operates in more than 130 countries. However, each country specifies the type of
content to operate in its environment. Also, the amount of content required in each nation varies
geographically. While most people love Netflix services, others may not be happy with the
content. The following discussion represents the political, economical, social, technological,
environmental and legal factors that define the company’s performance.
Political factors
The company does not operate in all countries. Thus it cannot provide content from all
nations. The U.S. government has restricted the company from operating in some countries like
North Korea and Syria. Also, censorship in China restricts the company from rendering services
to Chinese people (Wenzel, Mahle & Pätzmann, 2016). The company must seek permission
before carrying out their business and this proves costly since it will have to heavily sensor its
Economic factors
The weak dollar and presence of competitors poses a challenge to Netflix in the countries
it operates. The weakness of the currency greatly impacts the company’s ability to grow as it
continually get predisposed to fluctuating exchange rates. Also, as other streaming sites emerge
they take content from Netflix and hence cause the company to develop more original content for
its users.
Secondly, the increase in monthly subscriptions impacts its customers. Netflix slowly
grew its monthly subscriptions over the years thus making it loose some of its customers to other
competitors (Rataul, Tisch & Zamborsky, 2018). Since consumers become restless of the


increasing subscription charges, the company’s original products received a hit from its
Lastly, other competitors provide free options to their customers for content. Thus,
Netflix must beware of such torrenting activities which may lead to a big loss in its customers.
Research suggests that such malicious activities will not stop now and hence Netflix must ensure
it secures its business in future.
Social factors
Netflix enjoys a fantastic work setting where employees enjoy relaxed dress codes and
receive several vacations each year. Additionally, Netflix contributes to community development
by offering scholarships to students pursuing higher learning programs. The company also helps
charities that provide financial aid to low-income students across the globe.
Importantly, the company boasts of a compassionate CEO. Reed Hastings donates his
own funds to charitable organizations. His kindness and selflessness puts the company on a
bargaining edge to its customers.
Technological factors
The company provides content of high quality. The videos produced by Netflix also stand
out as competitive in the market. The company employs a special system that compresses videos
while maintaining its quality (Wenzel, Mahle & Pätzmann, 2016). The compressed video allows
one to use less data when watching. More people appreciate the feature especially when
subscribed to the monthly package.


Additionally, the company transformed from the user interface and algorithm system to
allow customers to respond whenever they watch content. Currently, a consumer has the ability
to say if he/she liked or disliked a particular content.
Environmental factors
Since the company focuses more on online content, it can operate in any given
environment that has good network. With the introduction of 5G network, the company will
increase its service provision to all its operational settings.
Legal factors
Netflix can be restricted in countries it operates. Thus, before identifying a new market,
the company must analyze the legal restrictions and provisions so as to ensure swift entrance.

Five Forces Model Assessment

Threats of new entrants
Netflix must take care of the entrance of new providers as they may cause its customers
to close their subscribed accounts and join new firms. Since these organizations have different
sizes, the initial costs like technology and marketing would rise.
Power of suppliers
Supplying content also poses a challenge to Netflix since some of its content may not
feature in a large number of cinemas. While the company increases its power, those other
companies will struggle to reach its position (Peach, 2020).
Power of buyers


The buying power of customers continues to rise as a result of mushrooming streaming
services. Thus the company cannot underestimate the power of buyers since they have the choice
to watch what they want.
Threats of substitute products
The number of people watching traditional TVs continues to fall over years. Hence,
Netflix will experience a low threat when a substitute product comes up.
Competition rivalry
Netflix experiences a high rivalry from its competitors. For instance, Amazon may
choose to provide extra services while maintaining the customer’s subscription fees hence
creating a customer backlash.


Netflix, a renowned online content service provider has a great global recognition in the
current digital era. The company which boasts of a significant customer base has various
strengths that facilitate its continuous growth in the current century. The introduction of
streaming services escalated the company’s progress. Although competition poses a challenge to
the company, its creation of original content makes it enjoy a favorable market share and
maintain its profitability.
Netflix must revise its strategy to ensure it meets the changing needs of its customers.
With the encroachment of new entrants, the company must align its goals towards achieving a
global customer experience while responding to the threats that comes from its competitors. The


company should continually update its patent to ensure it provide unique services that attracts
more subscribers and retain the existing ones.
Further, I recommend that the company invest more on innovation and develop new
features that enhance its customer’s experience. New features will attract new subscribers hence
growing the supply power for Netflix. As more people subscribe to the content, more profits
flows in the company.
The company must also ensure its consumers are protected. The privacy policy designed
by the company should respond to the rising cases of cyber security and fraud. When consumers
fell that their personal life is protected, they will become loyal to Netflix and continue using their
Lastly, the company should offer price friendly subscription services to attract and retain
more consumers. Favorable pricing strategy will assist the company to beat its competitors and
increase its revenue.


Aversa, P., Haefliger, S., & Reza, D. G. (2017). Building a winning business model portfolio.
MIT Sloan Management Review, 58(4), 49-54.
Guadiana, G. (2020). A Netflix experience: reimagining the direct-to-consumer platform
(Doctoral dissertation, Massachusetts Institute of Technology).
Khalil, J. F., & Zayani, M. (2020). De-territorialized digital capitalism and the predicament of
the nation-state: Netflix in Arabia. Media, Culture & Society, 0163443720932505.
Peach, R. (2020). The Little Handbook of Risk: Mitigate it & turn threats into opportunities (Vol.
1). Gatekeeper Press.

Rataul, P., Tisch, D., & Zamborsky, P. (2018). Netflix: Dynamic capabilities for global success.
Wenzel, P., Mahle, I., & Pätzmann, J. U. (2016). Streaming Services & Service Design: An
Analysis of Netflix and Amazon Video Based on the Gap Model by Parasuraman, Berry
& Zeithaml. Markenbrand, (5/2016), 20-31.