Strategy in Context: Netflix
All the requirements are in the document. In addition: 1. When applying Porter's Five Forces, it is important to analyse with the different industry players and the nuances of why and how they gain power.
2. the need to consider issues related to the ethical dimension of the company.
Assessment Task
Assessment: 2000-word researched and referenced individual analytical case studyThis assessment is worth 70% of your final mark.
Your task in this assignment is to compose an analytical case study about a specific strategic decision made by a particular organisation. Your specific objectives are to:1. Describe the decision.2. Explain why the organisation made it. 3. Evaluate the ethics of the decision and suggest what the organisation could have done differently.
Duration: N/A Word Count: 2000 wordsTask specific guidance:
To achieve the assignment objectives, you must:- Conduct careful research into organisation’s activities and the internal and external environmental factors that may have shaped its decision.- Apply the theoretical perspectives we discussed in class to develop a critical understanding of your organisation’s decision and reflect on its ethical implications.- Provide references to all your sources.
Selecting the organisation and the strategic decisionAs you are expected to provide a detailed analysis of an organisation’s strategic decision-making process, you should select an organisation with sufficient information about its activities available to the public. The most natural choice is a large multinational or a major domestic organisation. The organisation does not have to be a commercial one. You can also select a public sector or a civil society organisation such as a government agency, educational institution, or an NGO. You must also focus your report on a specific strategic decision made by this organisation. This should be a decision made at a specific point in time. Examples of possible decisions include but are not limited to: - A decision to launch a particular product/service line. - A decision to move into a particular new market. - A decision to form a strategic alliance with another organisation. - A decision to sell off part of operations. - A decision to initiate a specific sustainability programme. - A decision to allow/supress labour union activity. - A decision that involved unethical activity (e.g. ignoring product safety defects, disregarding the wellbeing of specific stakeholders, etc.).The decision you write about has to be specific. For example, writing about ‘Volkswagen deciding to cheat on emissions tests’ is appropriately specific. Writing about ‘Volkswagen’s Corporate Social Responsibility policy’ is not as it is too general.
Elements to be addressedThe following table outlines the elements you are required to include in your case study.
An Introduction - Briefly explain what your selected organisation does (e.g. nature of activities, location, ownership structure). - Briefly describe the decision you will analyse. What did your organisation decide to do? Did the decision ultimately benefit the organisation?- Outline the structure of your case study.An explanation of why your selected organisation made its decision Every student will structure this session differently. Below are some suggestions of what you can write about. You are not expected to write about ALL these things. Instead, make a judicious selection of arguments that will allow you to develop a concise but effective explanation.
- Explore the decision-making process: who were the key people involved, when did it happen, where, was it a planned and deliberate move or was it emergent/reactive?- If you are writing about a commercial context: did the decision involve defensive or offensive strategy?- Identify key specific factors and/or social actors in internal and/or external environment of the organisation influenced or forced the decision. - Reflect on the power structures and relations within which the decision was made. These could include broad ideological constructs, internal and external institutional and value systems, resources and/or influential stakeholders. This may be particularly important for the discussion in the next section.
A reflection on the ethics of the decision and discussion of alternative courses of action. Base your discussion here on the results of your analysis from the previous section and your learning in such areas as stakeholder theory, innovation, business models, inter-organisational collaboration, alternative organisational forms, and ideological underpinnings of organisational practice.
- Was the decision ethical? E.g. how did it affect organisational stakeholders? What kind of values did it promote in the society? How did it impact the natural environment? You can consider both short-term and long-term implications. - If you were a manager making this decision, would you make a different one? Could using a different decision-making process help you make a more ethical decision?
Conclusion Clearly summarise your key findings and recommendations from the previous two sections.
Case study structure and formattingThe case study has to have an identifiable introduction and conclusion sections. The case study has to be written in a narrative form. You should tell the story of why an organisation made a particular decision. Writing narratives/stories is a complex skill, so be prepared to go through several drafts of your work before you make a final submission. Ensure that your writing is clear and logical. Your ideas should be interlinked, with points and arguments arranged in a logical order. You may consider splitting your case study into sections. You are also encouraged to use figures, tables and graphs to illustrate your arguments. Remember basic rules of good writing, such as: - Each paragraph should contain just one specific idea or point. - Sentences should not be too long. - Check your grammar, style, spelling and punctuation. - All tables and illustrations should be clearly formatted. - Your work should have a clean and professional appearance.
Required researchYour case study must be based on thorough theoretical and empirical research.
Use of theory: - Every argument you make in your case study must be grounded in one of the theoretical perspectives we discussed in class. You do not need to use all the perspectives we covered. Instead, you should select perspectives most helpful in the context of your case study. - Your use of theory should be creative, demonstrate wider academic reading and show understanding of how different perspectives are linked. - Please note that limiting your theory choice to the most basic strategy models such as PESTLE, SWOT and Porter’s models you will only gain you a basic pass mark (40% - 45%) at best.
Organisation/decision research: - Your case study should also be based on thorough and detailed empirical research of the activities of your organisation. - Your final case study may not present all of the research that you conducted. You only need use evidence most relevant to supporting your arguments. For instance, you may conduct extensive research into the external environmental factors and find that only one or two of them played an important role. In this case, you should only write about these relevant factors and exclude other less relevant information. - Your sources of information about the organisation and its environment can include the following:- Organisation’s website and press releases, annual reports, CSR/sustainability reports, organisational structure charts, mission statements, etc. available on it. - Reputable newspapers and magazines.- Business history journals such as Business History, Business History Review and Enterprise and Society. - Books written about the organisation. - Government and international organisation websites – e.g. OECD, UNCTAD (The World Investment Report in particular), WTO, WHO, relevant NGO websites, etc. - Your sources must be trustworthy and reputable (avoid tabloids, ‘yellow press’, consulting company websites and papers written by other students). - It is not appropriate to use Wikipedia as a source at your level of study. If you find yourself reading Wikipedia articles, please go to the reference list and the end and explore the original sources instead.
Word countThe maximum word count for this assignment is 2000 words. You are allowed to be 10% under or over the world count. Tables, figures, the list of references and appendices are not included in the word count. Be judicious with the use of tables and appendices. They should not be used to circumvent the word count. This means that tables should not be overly long or detailed, and appendices should only be used to provide brief supplementary information. Any information central to your argument should be put in the main body of your case study and not in the appendices. Do not exceed the word count by more than 10%! A mark penalty of 5% will be applied to submissions that exceed the word count.
How to obtain help with your assignmentIf you have questions about your assignment or have difficulty completing it, please post it on the assessment discussion board on the module Brightspace site. If you send your question by e-mail to any of the module staff, it will be answered on the discussion board. Only questions of confidential and personal nature will be answered through e-mail. Module staff will answer your questions within 48 working hours (staff will not be available during evenings after 5 pm and weekends). Please note that tutorial leaders and the module leader will not be able to read case study drafts prior to their submission. However, you can obtain help with your assignment by doing one or more of the following: - Post the organisational decision you are planning to analyse on the Brightspace discussion board. This will allow the module tutors to advise you on whether this decision is appropriate for the assignment. - Post specific questions about your coursework on the Brightspace discussion board. - Attend the coursework consultation sessions that will be timetabled in your tutorial hours towards the end of the semester. - Study all the materials posted in the Assessment section on Brightspace carefully. Please do not leave it too late to ask for help if you run into difficulties.
General study guidance: • Cite all information used in your work. Try to ensure that all sources in your reference list are cited in the text of your work, and all sources cited in the text of your work appear in your reference list.
• Reference and cite your work in accordance with the APA 7th system – the University’s chosen referencing style. For specific advice, you can talk to your Business librarians or go to the library help desk, or you can access library guidance via the following link:o APA 7th referencing
• The University has regulations relating to academic misconduct, including plagiarism. The Learning Innovation and Development Centre can advise and help you with how to avoid ‘poor scholarship’ and potential academic misconduct.
• It is possible to arrange 1:1 consultation with a LIDC tutor once you have planned or written a section of your work, so that they can advise you on areas to develop.
• Do not exceed the word limit.
Strategy in Context: Netflix
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Table of Contents Introduction. 3 Netflix’s Strategic Decision involves Unethical Activity. 4 Porter’s Five Forces – Competitive Intensity. 5 Threat of Entry. 5 Threat of Substitutes. 5 Buyer’s power 5 Suppliers’ Threat 5 Threat of Rivals. 6 Offensive Strategy by Netflix – Internal Analysis. 6 Ethics of the Decision. 8 Netflix Innovation and Business Model 8 Influence on Stakeholders; Stakeholder Theory. 8 Consequences of losing image – ideological perspective of taking action. 9 Course of Actions. 10 Conclusion. 10 References. 12
"Strategy in Context: Netflix"
Introduction
Evolving technologies and consumer preferences have disrupted the business arena and related offerings to create value in the market, for which businesses are consistently modifying their strategies to attain an edge in the market. Illustrating the case of the streaming industry, Netflix leads the game. With over 190 nations and 223 million subscribers, Netflix is amongst the most popular media streaming providers worldwide. Users can stream TV shows, documentaries, and movies in various genres and languages (Netflix, 2022). (Anderson, 2019) indicated that the organizational structure at Netflix Inc. is hierarchical, though it has been modified to allow for greater business agility and a better response time to shifting market conditions worldwide. This decision helps Netflix retain its growth and adapt to meeting the demands of its customer base, which includes providing original media content and on-demand streaming services.
Competition in the streaming video market is increasing, so Netflix plans to adopt data-driven, AI- and Machine Learning-based strategies for adapting its content and services. Therefore, the launch of Netflix's cutting-edge AI recommendation system is imminent. Using this tool results in yearly implicit efficiency gains of $1 billion for the business. A tailored suggestion rather than a general strategy helps retain more customers (van Es, 2022). However, the company was criticized for its unethical behaviour because AI and other innovations often breach users' privacy to attract a sizable audience. Therefore, Netflix displays content based on user browsing habits and search queries, which can result in skewed recommendations (Larsson, 2021). The study similarly takes a theoretical approach to examining the external and internal influences on a specific strategic decision made by Netflix. The case study also recommends an approach to making moral choices in the video streaming industry to serve the target demographic better.
Netflix's Strategic Decision Involves Unethical Activity
Netflix predicted a much lower increase in membership (only 1M) than expected (1.8M). Aside from the pandemic's impact, the high cost of acquiring new subscribers, increased prices associated with producing content, price inflation, and intense competition are all contributing factors to Netflix's slowing subscriber growth (Netflix, 2022). The lowest subscription count is indicated, as illustrated in the figure below.
Figure 1: Subscription Count for Netflix (Netflix, 2022)
With a focus on the decision-making process, Netflix identifies the rising rivalry and changing consumer trends in the media streaming industry as a threat, for which Netflix decided to adopt 4.0 technology to understand those trends with analytics and modern tools to automate the consumer decision process. Netflix initially evaluated consumer responses with clicks and views, but with AI use, Netflix managed to sustain consumers for an extended period (Goel, 2020). Consequently, Netflix is shifting its strategy to make an impression on viewers with significant innovations. (Rana et al., 2021) claim that AI/Data Science/ML is used by Netflix in its day-to-day operations, specifically in the form of algorithms that recommend movies to watch and AI that ensures high-quality streaming at even lowered bandwidths. As a result, Netflix uses AI and ML to determine what kinds of visuals will appeal to different people. Though unethical, it helps the company's bottom line. The decision to take this action was made after carefully considering the internal and external factors that affect brand positioning in the streaming industry, which are discussed below.
Porter's Five Forces
For analyzing the significance of the decision in the aggressive market, Netflix determines the outcomes by comparing with the present rivals in the media streaming sector. With this decision, Netflix makes entry into the market more challenging because it requires high financial and potential security risks. As a leading platform, Netflix has more leverage in negotiations with content makers than a new entrant would. In addition to keeping viewers hooked for much longer and saving Netflix about a billion dollars annually, the Netflix Recommendation Engine also helps the company save money (van Es, 2022). As a result, developments in AI and ML are crucial for Netflix.
Focusing on the available substitutes, Netflix invested in innovation due to emerging demand in Gen Z. (Westcott et al., 2022) demonstrated that Gen Z is more interested in music, social media, and video games than it is in watching movies, which are still widely enjoyed by their elders. The need for customization thus increases in the mass media industry. Although Netflix's monthly subscriber count is the primary revenue driver, customers' purchasing power is amplified by the presence of various streaming platforms. Nearly half of those surveyed (49%) said they would stop paying for a video-streaming service if prices went up (Westcott et al., 2022). Some customers are not as price-conscious as others, opting instead to prioritize content quality before cost.
Netflix obtains content in several ways, including licensing existing content, creating original television shows, and purchasing special distribution rights to existing shows created by others. As a result, competing streaming services like HBO spend huge sums gaining rights to popular web series like "Friends" (Crews et al., 2020). Netflix's capacity to create original content in response to user preferences will rely on its capacity to be agile and embrace change. Other than that, the decision is potent to counter rivals in the media streaming industry. (Rahman,2021) mentioned that competitors like Disney+ and Hulu, Amazon Prime Video, Apple TV, and Paramount are among the most significant challenges Netflix faces in the streaming industry. Traditional rivals to Netflix have deep pockets, extensive libraries, and experience in luring top talent in the entertainment industry.
Offensive Strategy by Netflix – Internal Analysis
With the focus on the present competition in the media streaming industry, companies are consistently evolving their strategies based on offensive and defensive approaches to retain the market. According to (Velu, 2018), a defensive mechanism supports the business in protecting its existing business model from the extreme rivalry in the market. Other than that, an offensive strategy is competitive to alter the existing business model with innovative actions to lead the competition. Netflix, which uses a decentralized model and embraces new technologies to gain an edge in the market, has a team that collaborates with business units, technical staff, and other experts to conduct research. In a competitive market, Artificial Intelligence (AI) and machine Learning (ML) have given Netflix a significant advantage in retaining viewers. As a result, Netflix has cemented its position in the entertainment sector thanks to its tailored recommendation system, which aims to present the shows a viewer is most likely to watch at a particular moment (Goel, 2020). One tactic they use to pique subscribers' interest in recommended content is tailoring movie posters to individual tastes, as described below.
Figure 2: Recommended banners for different users (Think ML, 2022)
With this, Netflix uses an offensive strategy to compete against rivals. Contextual bandits led the Netflix ML framework after the company tried batch learning and A/B testing with mixed results. During this procedure, Netflix keeps track of every activity, including watch time, search results, preferences, ratings, and clicks on the web (Think ML, 2022). An individual's profile is the foundation for the algorithm's ability to find commonalities between users and recommend what to watch next.
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