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Netflix relies upon its film recommendation algorithm as a key differentiator that will attract discerning customers. This model, that suggests movies of lesser popularity toease demand of newer releases, works well with the current catalog of smaller and independent movies it currently possesses. This strategy limits expansion of popularity and use to groups that have largely similar tastes in movies. For example, selection of Indian, or Bollywood, based movies are slim, making India a poor market for expansion at the current time. 5Strengths, Weakness, Opportunities, and Threats AnalysisA Strength, Weakness, Opportunity, and Threat (SWOT) analysis is a framework that allows managers to blend insights obtained from a company’s strengths and weaknesses (internal forces) and threats and opportunities (external forces). For Netflix, its strengths, weaknesses, threats, and opportunities can be seen below in (Exhibit 1). These factors have been weighted to highlight how much they affect Netflix. As shown inthe EFE/IFE appendix (Exhibit 3), Netflix is well rounded in capitalizing on its strengths and opportunities and is proficient at attacking heavily weighted weaknesses and threats. This has given them a rating of about average, however there is room for growth/improvement. The SWOT Bivariate (Exhibit 3) provides solutions to questions ofhow to capitalize on strengths and opportunities and reduce the impact of threats and weaknesses.
Netflix Business Case86BCG MatrixNetflix started out in the DVD rental industry. It was the first to pioneer DVDs bymail, it grew rapidly to encompass 90% of the United States. However, this market is slowly starting to lose revenue as more and more consumers are moving towards internet streaming and video on demand. This sector was originally Netflix’s biggest revenue generator but it has slowly started to level out the BCG (Exhibit 5), or growth share matrix, designates DVD rentals as a cash cow, despite this business not generating as much cash as domestic internet streaming; this is because this sector is in the mature phase of the product life cycle. Domestic streaming is in its growth phase; early adopters have already proven the industry and early majorities are taking notice. As such domestic streaming has become Netflix’s largest cash cow. With domestic streaming and domestic DVD rentals, Netflix can fund expansion in international streaming. International streaming is a star performer. This brings in a large amount of revenue but it costs a lot ofmoney to support growth. As such, Netflix needs to keep growing international streamingand turn it into a cash cow.7Competition Index and AnalysisThe competitive forces of threat of entry, power of suppliers, power of buyers, power of substitutes, and rivalry among existing competitors within the video delivery industry has been broken down in this section. Netflix has capitalized on the weakness of suppliers and the weakness of buyers to propagate a competitive advantage by providing an outlet to independent film and television show creators and offering a competitive price with excellent customer service.