Essay on Renting and Netflix

7315 Words Jan 2nd, 2008 30 Pages
TABLE OF CONTENTS

NETFLIX, INC. 1 Company Images Montage 1

INTRODUCTION 2 Purpose Statement 2 Company Profile: Netflix, Inc. 3 Industry Profile: Video Tape and Disc Rental 4
INTERNAL ENVIRONMENT ANALYSIS 8 Resources 8 Capabilities 11 Core Competencies and Distinctive Competencies 14 Value Chain Analysis 17 Weighted Competitive Strength Assessment 30 SWOT Analysis 33
REFERENCES 34
APPENDIX 36 Team Evaluation Form 37

Company Images Montage

INTRODUCTION

Purpose Statement

The purpose of this report is to analyze the internal environment of Netflix, Inc., within the Video Tape and Disc Rental industry. To begin
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Although Netflix's revenue increased in 2005, net income declined from $21.6 million in 2004, to $5 to 10 million in 2005. Lower net income was a result of reducing subscription fees in November 2004, to keep Netflix's competitive edge, as other companies were entering the market. Management's prediction for 2006 is that revenue will increase to $940 million, with pretax income at $50 to $60 million (Maddox & Thompson, 2006). To enable Netflix to provide one-day delivery service to 90 percent of its members, the company has 41 shipping centers in the United States. The shipping centers are strategically placed across the country and contain approximately 70,000 DVD title selections (Netflix Overview, 2006).

Intangible Resources Netflix's intangible resources have helped the company maintain a competitive advantage in a very competitive market. Netflix has a strong customer base and its reputation is known for one-day delivery service and customer satisfaction. In 2006, FGI Research rated Netflix as number one in online retail customer satisfaction. At the end of 2005, the company had 5.5 million subscribers, and 93 percent of its subscribers said they would recommend Netflix to a friend (Netflix Overview, 2006). In a survey conducted by Netflix, customers said since joining Netflix, they rented twice as many movies per month, and were more satisfied with their home-entertainment experience. To provide the best customer service, Netflix

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