Consolidated Paper: Netflix

Group: Netflix

Kristina Carrera, Johnny Cartham, Michelle Hammond,

Kameka Lawrence, Yesenia Rios

MG485 – Winter 2016

Group Assignment #1

-RESOURCES-

Netflix has established themselves as a market leader in the online streaming industry. Through the use of their unique resources, they have built a foundation to gain a competitive advantage. Resources are defined as the inputs for producing goods or services for the firm. Environmental scanning and internal analysis helps a company identify internal and external resources to help the decision-making process and to assist is implementing and executing strategies. Internal resources involve resources within a company which can be controlled, these include tangible resources such as financial, organizational, physical and technological resources; as well as intangible resources such as human, innovation and reputational resources. External resources are resources the company has no control over; these resources include environmental, political, economic, legal and social resources.

Netflix utilizes their technological resources to constantly improve the quality of their services by providing fast network systems for online streaming. They take advantage over their human resources to collaborate with others to expand on licensing agreements with various studios to increase content available to customers. Through reputational resources, Netflix promotes their brand name by aggressive marketing tactics to gain customer loyalty and to increase subscription plans.

Technology is utilized as both internal and external resources. Technology and the internet is a driving force of the industry and a major external resource for Netflix. New technologies allow the company to continuously innovate and improve their services.  Economics also play a key role in resources for Netflix. They have only just tapped into the U.S. market, however, by offering services globally, Netflix will gain a larger market share.

-CAPABILITIES-

Capabilities are part of the foundation of the competitive advantage of a company.  It is the unique ability that a company uses its resources to get the outcome envisioned.  Netflix has several capabilities, but the two that stand out the most are their online streaming and marketing skills.

The online streaming is defined under product management. They have the ability to develop online streaming to smart television, video consoles and other devices and they deliver this services with superior quality that others cannot compete with.  Most smart televisions and game consoles already come with the Netflix application on them and all a customer has to do is log on. They have tapped in to a virtual streaming market and part of that capability comes from have a large and competitive library.

Netflix has marketed their brand name effectively by being the first company to send DVD’s by mail and having affordable prices. Reed Hastings established an effective customer service to get trust and honesty with his customers. An example of this is when in 2011 he raised the prices and tried separating the company in two, one for streaming and the other for mailing DVD’s. When he realized that it was not a good idea he came out openly that he made a mistake, which many perceived as an act which created trust and honesty. He has also been keeping up with technology advances and has been quick to react to the upgrades in technology to incorporated online streaming to the new and upgraded devices. Having movies and shows created exclusively for Netflix has also been a good marketing technique allowing them to remain unique.

-SUSTAINABLE COMPETITVE ADVANTAGE-

        In order for a company to attain sustainable competitive advantage, they must meet four specific criteria requirements for core competencies. These competencies mean that the brand is valuable, rare, costly to imitate, and non-substitutable. By ensuring that the company is valuable, they help their company neutralize any impending threats while exploiting any opportunities. To ensure the brands rarity, is to also ensure that the brand, and its’ ideals, are not possessed by many others. By creating a product or service that is costly to imitate, they are creating a unique and valuable organizational culture or brand name, while also creating interpersonal relationships, trust, and friendships among managers, suppliers, and customers alike. Finally, by ensuring a non-substitutable brand, they are ensuring that there will be no other strategic equivalent on the market.

While Netflix continues growing in success, it is not safe to say that they meet all four of these criteria requirements in full. Their strongest capabilities which allow them such a heavy competitive advantage against their competitors, such as Hulu and Amazon Prime, are their valuable capabilities and their non-substitutable abilities. Netflix uses their valuable capabilities to help eliminate other competition by keeping their price affordable, while also offering content such as Netflix original shows and movies, and customizable accounts for each individual person so that the movie choices may be tailored to fit that individual persons interests. While Hulu offers similar services, they pale in comparison to what Netflix offers.