Answer To: MA722AssgntThree(3) MNG932002 Strategy and Case Analysis Assessment 3 – Case Study Due Date: 9:00 am...
Aarti J answered on May 25 2021
How NetFlix Beat Blockbuster
Executive Summary
Usually the big companies control the market, but sometimes the small companies become better and Beat the big ones and then dominates the market. This report will view the main points which helped NetFlix to acquire its competitive advantage and then win against Blockbuster that went bankrupt and destroyed. In this report we would be analyzing the startegies which were adopted by Netflix and Blockbuster and how the company was able to beat blockbuster through its strategies.
How NetFlix Beat Blockbuster 12
Introduction
With the competitive edge, the companies take different measures to attract the customers and beat the competition. With the increasing trend of the online streaming and emerging market of video on demand. This paper would take into consideration, the analysis of Blockbuster and Netflix and how the company attained competitive edge.
Netflix:
Netflix, Inc. (Netflix) is one of the booming online streaming service provider. The company offers online subscription for watching different movies and TV shows on the internet. The movies and the videos are streamed on the Television through internet. Netflix is one of the companies which provides competitive advantage as against the traditional outlets.
Blockbuster and Netflix were rivals from 1997 until 2013. Blockbuster made its profits from supplying a library of entertainment to its consumers. Netflix entered into the market in 1997 offering the same service but with a twist. Unlike Blockbuster, Netflix would be a mail ran business with no physical store locations. Netflix made it possible for consumers to order their rentals online, have them delivered to their house, consumers could return the movies when they wanted at no extra cost, all for a low monthly fee. Netflix’s approach to movie rentals was so successful that in an attempt to save itself, blockbuster started to offer a similar option (O’Neill, 2011). In order for a product to become its market leader, the CMO must create a shift in its product demand that favors its company, making it more attractive than its competitors (Brunson, 2018). CMOs must maintain its market shares and contain cost in order to delay the onset of the decline stage, the goal is to prolong the maturity stage as long as possible (Brunson, 2018).
Usually the big companies control the market, but sometimes the small companies become better and Beat the big ones and then dominates the market. This report will view the main points which helped NetFlix to acquire its competitive advantage and then win against Blockbuster that went bankrupt and destroyed.
Five force Analysis
With the help of the Porters Five Forces Model the e-commerce industry is analysed from different perspectives.
Buyer power
Buyer power is one of the most important factors that decides the future of the company. The switching cost of Netflix is quite easy as the company has minimal signing cost. The new companies are giving free trials for a month which is offered by the companies. With the new arrivals like Amazon Prime, whose cost is quite minimal the bargaining power of the buyers is quite high in case of Netflix.
Supplier power
The bargaining power of the suppliers is also quite high, as the content is based on licencing. On the expiry of the licence, the suppliers can take the rights away from Netflix which can affect the content of the company.
New entrants
The new entrants in the market is high, as the online streaming has increased with the increased use of internet and technology. The television channels like HBO, CBS have launched their website and online streaming videos. Thus intensifying the competition.
Substitutes
The threat of substitute is moderate. With different options like DVD, cable television, DVD rentals has increased. They are the biggest substitute which gives high competition to Netflix.
Rivalry
The competition in the market is high. With the increasing number of online streaming companies like HBO, Amazon Prime, the digital on Demand Company the competition between the firms has intensified.
Competitive Advantage:
Competitive advantage is related to service or good which can be offered with low price or special features (Investopedia, 2018). Usually the competitive advantage link to distinct innovations. Some of the aspects that was taken care by Netflix includes:
Disruptive innovation: This concept means that, a company which has fewer resources to challenge big companies in a successful way. This method usually depends on exploiting the sides that are neglected by major companies which move toward to profits only. Then the small company offers these services and goods at a cheaper price. Finally, the big companies can’t face this market change because of it less flexible (Christensen., Raynor & McDonald, 2016).
Netflix is company which offers high definition video streaming for more than 23 million person in the USA and Canada (Adhikari, Guo, Hao, Varvello, Hilt, Steiner & Zhang, L, 2012, P1) and it has 40 million customers around the world (Madrigal, 2015). Its products bitrate rate is 3.6 Megabytes each second. The company attracted the customer and provides them with a good service and a special competitive advantage. That helps it to compete with BlueStar and remove it from the competition (Adhikari, Guo, Hao, Varvello, Hilt, Steiner & Zhang, L, 2012, P1).
Gain a competitive advantage over Blockbuster
Although in 2010 the market had high traffic because there are many competitors in video streaming field as Blockbuster Online, Amazon Video-on-Demand, Netflix had a high market share as a result of its competitive advantage that has a variety of properties:
1. Netflix presents high quality of the service which is offered online or by the delivery of the videos DVD during one day only. The company service doesn’t require the customers to go to the shops for having the videos. At the same time, Blockbuster has tried to open new shops in the different areas that have a high quantity of the customers (Strader, 2018).
2. Netflix videos characterized by...