Expansion strategy is used to increase sales and

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Expansion Strategy is used to increase sales and products in the existing marketplace. It is also used to introduce a new product or develop a new market segment in an area to grow the existing service or product. When a company has years of success and financial growth an Expansion Strategy is used to sustain high profits and growth into other market places across the United States or overseas. One must look at developing a new business plan before expanding to anticipate sales and prices in the newmarket place or industry. By focusing on the current business to see where it can be enhanced would be the first step to building a new business plan. For Neflix, internationalexpansion would be the suggested approach. The specifics of this international expansion will be described in greater detail in Section 13. Retrenchment Strategy is used to reduce the size of the operation in order to cut expenses with the upcoming expansion. One may withdraw from one industry in order to expand in another or diversity interests and liquidating products. The advantage of
Netflix Business Case13Retrenchment Strategy is to build performance of a product that is not doing so well in the industry and to allow for better opportunities in the market place. 11 Pro-Forma Financial StatementsIn a letter to the Shareholders dated January 2015 [ CITATION Has15 \l 1033 ], Netflix provided revenue and profit margin data along with expectations of growth in the coming 2016, shown in Table 1. This represents the do-nothing-different case (DND). Table 1: Extrapolated Netflix Current Strategy Pro Forma FinancialStatement [ CITATION Has15 \l 1033 ]Note: EPS is shown in dollarsAlternative strategy Pro Forma Statement indicated that significant investment is required to initiate the strategy of international transition and shift to Netflix being a true multinational corporation rather than a U.S. firm that does business overseas. This statement is shown below in Table 2.
Netflix Business Case14Table 2: Netflix Alternative Strategy Pro Forma Financial StatementNote: EPS is shown in dollars12 Net Present Value AnalysisAssuming that operating income is analogous to EBIT (earnings before interest and taxes), net present value analysis can be performed on the DND case as well as the alternative strategy to identify which approach will generate greater income. The primary difference between the do nothing and suggested strategy is the heavy investment required to support beginning operations in foreign countries, as will be discussed in Section 13. The analysis is shown in Table 3: Net Present Value Analysis with 2015 Base and 3% DiscountAs seen in Table 3 the net present value of the alternative pathway generate a greater net present value despite the higher up-front costs to transition to the alternative approach. 13 Recommended StrategyNetflix strategy and long-term objectives should be to committed the strategy that is already implemented, “leverage core competencies” and expand into the international
Netflix Business Case15arena. In a global economy, Netflix has failed to gain and compete as effectively as

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