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In order to have the lowest unit cost, profits are often low.Cost leadership is not dependent upon the structure of the market.Cost leadership is a defendable strategy because:Allows for a firm to defend itself from powerful buyers, as buyers often are able to bringdown the price.This strategy can also help a business defend against suppliers. The strategy can provideflexibility when inputting costs. Cost leadership is a strategy which makes it hard for competitors as they would not beable to see the profits needed to enter the market. DifferentiationAn organization offers a unique product.An organization is able to create its own market.The different approaches to differentiation are below: Different designBrand imageNumber of featuresNew TechnologyThe reasons that differentiation is a good strategy are below.
NETFLIX18Creation of brand loyalty in which competitors are reduced.By the company being unique it will create barriers for competition while reducingsubstitutes. Differentiation will often mitigate any buyer power.Focus or Niche StrategyThis strategy deals with the business focusing on a particular group, buyer, or otherproduct segmentation. This is a way for a business to compete when others have focused on differentiation orlow cost strategy. In Netflix’s case it is apparent that they are doing well and have found a niche in the athome video rental. In addition in the recent past Netflix has used a diversification strategy inorder to appeal to more consumers who wished to not wait for the video to be mailed. Netflixwas able to do this through technology to bring instant downloads to the customer. In order forNetflix to continue to grow the company should look to have a horizontal diversificationstrategy. This could be accomplished by going after the gamer. Through Netflix’s currentplatform it could offer the same services to gamers. GameFly would be a company similar toNetflix that it could acquire that would appeal to many customers that Netflix currently attracts.Below are the costs of the acquisition and financials.
NETFLIX20NPV analysis201520162017Outflow$30,000,000$600,000$600,000Inflow$31,283,250$1,377,300$1,502,500Cash Flow$1,283,250$777,300$902,500PVF @ 10%$1$1$1NPV$128,350$77,300$90,250Recommended Netflix StrategyIf Netflix plans to be a dominant player in the years to come their strategy and long-term objectives are going to have to include international expansion. Business units such as YouTube and Skype have seen huge success in the international markets and have been able to correct their mistakes that were made in the domestic markets. Skype revenues are about 80 percent international while YouTube usage though popular in the United States well over half comes from international (Umiastowski, 2013). American culture is very relative capitalizing on the culture exportation while being able to drive down the costs to acquire the culture, licenses, is going to be important. Netflix is going to have to increase the amount of shows that it is