Essay about Netflix Case Study

Words: 1449
Pages: 6

Case #6 – Netflix’s Business Model & Strategy

1. How strong are the competitive forces in the movie rental marketplace? Do five-forces analysis to support your answer.

Firms in Other Industries Offering Substitute Products
There is a small amount of possibilities for substitutes. The only substitutes would be illegally obtaining the movies by downloading or streaming, purchasing ³bootleg´ DVD¶s, or waiting until the movie is aired on public or cable TV stations.
Suppliers of Raw Materials, Parts, Components, or other Resource Inputs
Consisting of only a small number or suppliers, buyers do not have the upper hand. If suppliers run out of stock or decide to cut supplies short, there are not many alternatives to obtain DVDs
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What is your appraisal of Netflix’s operating and financial performance based on the data in case Exhibits 2, 3, and 4? What positives and negatives do you see in Netflix’s performance? Use the financial ratios in Table 4.1 of Chapter 4 as a guide in doing the calculations needed to arrive at an analysis-based answer to your assessment of Netflix’s recent financial performance.

Based on the exhibits, Netflix has had a steady increase on revenues and subscriptions form 2000-2007. From operating at a loss in 2000 of $58.5 million, by 2004 they increased their profits and earned income. In 2000, they had a debt to equity ratio of 1.38, and by 2007 decreased to .955. Every year from 2004 and on, Netflix received a net income as opposed to a loss from 2000 to 2002. From2000 to 2007, the number of subscribers also increased, doubling each year.

8. How does Netflix’s competitive strength compare against that of Blockbuster and rival VOD providers? Do a weighted competitive strength assessment using the methodology presented in Table 4.4 of Chapter 4 to support your answer. Does Netflix have a sustainable competitive advantage over Blockbuster? Why or why not?

Yes, Netflix does have a competitive advantage against Blockbuster. They have better delivery times compare to Blockbuster. Blockbuster has a better ability to provide good customer