Competitive Strategy Of Netflix Inc.: Porter's Five Forces Model?

2974 Words12 Pages
This essay will critique the competitive strategy of Netflix, using two equally weighted questions, and using where appropriate cited theories, concepts and techniques discussed on the course and supporting and cited sources of evidence. Netflix was founded in Scott’s Valley, California in 1997. Netflix Inc. is a provider of on-demand Internet streaming media available to viewers in all of North America, South America and parts of Europe, and of flat rate DVD-by-mail in the United States, where mailed DVDs are sent via Permit Reply Mail. Netflix Inc. is considered to be in the video entertainment industry, which distributes to consumers through movie theatres, airlines, hotels, and in-home (Inc, 2013). Netflix and its competitors serve in-home…show more content…
Sometimes the managers need to take other external factors into their consideration not only the intensity of rivalry between existing competitors, the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, and the threat of substitutes. In order to make this Porter’s Five Forces Model complete or perfect, the managers should combine this model with other external models such as the PEST model, the Porter Diamond, competitive generic strategies, the industry life cycle and any other external factors models which will give the a very detailed overview the threats and opportunities of an…show more content…
Porter said that by adding value to a product and creating uniqueness in product to attract customers, customers are more likely to purchase the product at a higher price. This was very much the case with Netflix as they adopted a Differentiation Strategy. Netflix were the first in their industry to allow consumers to access their website and search and access products that they wanted to see. The Netflix website incorporated a search engine which allowed the consumer to differentiate between what genre of movie they would like to scroll through. For example, if a consumer was only interested in watching a Comedy they could simply input comedy into the search engine and scroll through all the Comedy movies available on Netflix. This gave Netflix a great Competitive Advantage over their competitors because consumers were not spending time scrolling through movies that they had no interest in watching and therefore consumers were more likely to return the Netflix. Netflix management showed incredible talent in marketing their products through supply chains that already existed. One such example of this is the United States postal service. Netflix have used and continue to use Differentiation Strategy to create the competitive advantage in order to gain the market
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