Netflix: Globalization, Technology, Industrial Organization, and Resource-Based Model

Week 3: Strategic Management and Strategic Competitiveness Assignment
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Many different organizations have been achieving greater success worldwide. While some thrive, others shut down a few years into operation fueled by different factors. This paper will look into Netflix, a company that has maintained its competitive edge and lasted for more than two decades. Specifically, this paper will analyze the influence of factors such as globalization, technology, industrial organization model, resource-based model, vision mission, and stakeholders and how they ensure the company's success.
Globalization
Globalization has several aspects, including the company's global expansion, the impact of global competition, and the global economy. Currently, Netflix operates in more than 190 countries, which has significantly impacted the business model. Through global expansion, Netflix has attained a higher subscriber base and diversified its revenue streams. However, it is essential to note that globalization poses challenges, such as navigating different regulatory frameworks. For instance, Netflix faces a challenge with China, especially in navigating its regulatory framework. In terms of competition, globalization results in intense competition from the various streaming services in other countries, such as Amazon Share and Hulu, all competing for a market share. Finally, the global economy impacts Netflix's growth potential in revenue and profits. A challenge arises when the region's economic downtimes affect the company's growth.
Technology
Since Netflix's inception, the company has always utilized technology to deliver services. It was established as a DVD rental service whereby people could place their requests online, and their movie requests could be delivered through postal addresses (Schmidt, 2019). This was a blue ocean invention strategy because the blockbusters used traditional brick and motor methods. Netflix underwent several strategic changes, but the most significant was in 2007, when it introduced online streaming services, which laid the foundation for using Over-the-top services (OTT) (Cebeci et al., 2019). OTT has enabled Netflix to offer services to its consumers anywhere worldwide and through any media device. Netflix has also invested highly in data analytics to improve its content offerings. Data analytics can be defined as the process of examining, transforming, and modeling data to extract insights and information that can be used to inform decision-making. For instance, Netflix's recommendation algorithm is powered by data analytics to appraise the viewer's watch and search history to offer feasible recommendations.
Additionally, Netflix also uses data analytics to understand what content it will be able to produce, which will enable it to retain its client base. The use of data analytics for organizations' growth has been gaining momentum over the years, as it encourages disciplined thinking and focused decision-making (ISACA, 2020). Another way Netflix has leveraged technology is through cloud computing features. It uses Amazon Web Services (AWS) for everything cloud computing. Through this, Netflix can reach its client base and also, and the accessibility of content is enhanced. Finally, Netflix utilizes social media to promote its content. For instance, there is currently a social media campaign with hash tag #queencharllote geared at promoting an upcoming series under Netflix. Netflix has greatly leveraged social media influencers to promote the brand and anticipated movies. Automation has been used to streamline services such as payments, and they also have an application.
Industrial Organization Model
Industrial organization model deals with the strategic behavior of firms and how they interact in the industry to determine their market competition and profitability. Using this model, competitive advantage can be achieved through parameters such as cost, resources, and also the differentiation of products. Netflix's advantage is that it provides unique and personalized streaming services since it utilizes a unique proprietary recommendation algorithm. Additionally, Netflix's investment in gaining original content also gave it a competitive advantage since it now offers unique content to its subscriber, thereby enhancing its value for services. Whereas Netflix has focused on getting original content, its cost leadership strategy has also played a role in maintaining a competitive advantage. It has helped the company have relatively low subscription fees and attract a broad customer base to maintain its market position.
Resource-Based Model
A resource-based model is a theory related to achieving competitive advantage that argues that the organization’s tangible and intangible resources are the key determinants of its ability to attain competitive advantage (Burney et al., 2021). However, the organization needs to leverage them effectively. Based on this model, Netflix can attain above-average returns for various reasons. One of them is that it has a unique library featuring unique content that includes original content and other licensed content, which is helpful to the subscribers. As of 2022, Netflix spent 16.84 billion dollars on content alone (Statista, 2023). While competitors such as Hulu offer the same services, they cannot access the new content. Netflix also has unique resources that it can use to attain a competitive advantage. Its blue ocean strategy of being the pioneer in streaming services has greatly helped it maintain its competitive scope by creating a brand reputation. Lastly is the use of algorithms to provide recommendations for its users.
Vision