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Introduction: Netflix In India - Strategic Decision Making
The purpose of this assignment is to produce a strategy report for the CEO of Netflix, Reed Hastings, analyzing the global strategy of Netflix and their strategy for India. It shall discuss the overall success of the global strategy of Netflix using an appropriate model. Next, it shall discuss whether or not the strategy of Netflix India is sustainable and whether or not Netflix India follows the overall organizational strategy using appropriate models.
Question 1
Netflix Inc.’s business model follows a solid developmental methodology (Ansoff Matrix) and their overall upper hand system (Porter generic strategy model). The overall global strategy of Netflix is as successful as Netflix not only focuses on music but also on series and motion pictures to showcase unique substances. The organization hires highly efficient employees, gives freedom and responsibility to the employees, and shares information openly that helped to gain success. They offer diverse content including 1300 TV series, and 3000 movies in each nation, they did not lock the user in long-term contracts and made it easy to cancel subscriptions at any time (Sull and Turconi, 2021). The organization has also incorporated the "level rate membership income" model and the "cost plus" model as there are no advertisements in the streaming stage. They also invested to develop new content and partnered with Hollywood producers like Ryan Murphy, Kenya Barris, and others to develop content and it helped in their success. The general system of Netflix is cost-effective and the Michael E. Doorman model offers an upper hand to the organization by limiting their selling cost and expenses (Khoo, 2023). Netflix focuses on market penetration procedure and such an approach is based on the company's value chain and plan of action that addresses client's demand via customized changes such as through portable application settings and others. Wherein, Netflix’s forceful development in building market reach and market entrance has the corporate vision and mission to acquire the biggest market share and that ultimately helps in their success.
Porter's generic strategy reflects 4 elements including cost leadership where organizations include a strategy of becoming the most competitive company from the perspective of cost in the entire market, the next element is the cost focus where a company includes a strategy where they become very competitive in cost, particularly for a product or niche, differentiation where a company is recognized for their quality or uniqueness and differentiation focus where a company has differentiated focus for a market niche (Bajaj, 2020). Based on such a model it shall be mentioned that Netflix did not have cost leadership as they offer membership at a higher price as compared to other streaming mediums like Amazon in the global as well as in the Indian market and they also do not have cost focus as they do not compete for cost. They have a differentiation strategy as they focus on developing original content and have a differentiation focus as they developed unique content in the local language and cooperating with local companies which gives them competitive advantages (Onyusheva and Baker, 2021). Netflix incorporates such a strategy as they believe that entering a new market shall give them more revenues and offering content that suits local culture shall help to engulf more customers rapidly. For example, they incorporated such a strategy and gained success in Indian Market.
Figure 1: Showing Porter's generic strategy model
Another model that is Ansoff Matrix indicates that the product developmental procedure of Netflix includes selling a bigger amount of web-based features in the existing market. The market development process of Netflix includes hierarchical improvement of Netflix as an “auxiliary exceptional developmental” approach. Market penetration highlights pitching on new business sectors for internal “real-time” features and exceptional substance. One of the points for Netflix to execute this developmental plan is to extend its business in more countries that expand its market, and customer base and fill new business sectors. Engaging in the internet-based service that depends on value rationality, the expense initiative related to the conventional methodology of the organization helps to address the forceful developmental plan (Onyusheva and Baker, 2021). Such business methodology of Netflix shall enjoy profound benefits to gain more revenues in new regions or new markets. Such a global strategy has helped Netflix to become successful till now.
Question 2
Netflix entered Indian Market at the beginning of 2016. Hastings in the opening ceremony mentioned that Netflix was the first platform to allow for “binge viewing” and provided the viewer’s power over entertainment. Although Netflix enjoyed entering India they were concerned about the slow internet speed in India and the price-sensitive clients (Saldanha and Aranha, 2022). Thus, they had different choices in acquiring the market, Netflix has a month-free trial option for Indian customers. Netflix also worked with local film companies and develop original Indian series and published them in various local languages. Such conventional and major developmental strategies helped the organization to extend partnerships across a broader geographic region and they enjoyed critical benefits in terms of revenues.
The Ansoff matrix mentions that 4 elements including market penetration reflect focusing on expanding sales of the existing product and it is the safest option. The next element is a product development and it is riskier as it refers to introducing a new product in an existing market. The next element is market development which refers to putting an existing product in an entirely new market and it can be done by finding a new use for a product or by adding new features. The last element is diversification which is the riskiest among the four elements where a company introduces a new product in a new market. Based on the model, it shall be revealed that Netflix used market penetration and market development strategy (Czinkota, et al., 2021). They introduce their existing service which is web-based streaming videos and series in India and altered some of the features. For example, they started developing content that suited local Indian culture, and that made Netflix India’s strategy sustainable.
However, it shall be mentioned that despite including an efficient business strategy and being present in India for a long period, they only received 4.2 million customers. However, the company has the chance and option to change the such dynamic by concerning more on the local content likewise; such a market development strategy can help to attract more users in the new market of India. Netflix also planned to release its first comedy series which was Indian specific series and worked with production firms in India to secure popular films and streaming rights. Less expensive web-based series helped the organization to attract huge potential customers for Netflix. India is the second largest internet user after China and they have over 570 million internet-using customers moreover, the number is increasing rapidly. Such excellent infrastructure helps to gain a huge customer base and the Indian citizens got access to Netflix and along with Amazon. However, the membership amount is bigger as compared to Amazon and it is one of the disadvantages for Netflix (Sull and Turconi, 2021). Furthermore, based on Bowman’s Strategy clock, Netflix uses a focused differentiation strategy that reflects offering high value at a higher price in a particular market niche.
India offers greater opportunities for streaming media companies as Indian citizens have a considerably growing appetite for entertainment material. Moreover, India comes in the top three in terms of mobile usage but internet connections are poor, and charges for data are excessive. Netflix is resolving such issues through its "open connect program", which is expected to reduce network clogs as well as improve the streaming quality. Furthermore, the initiation of Jio connectivity helped Indian citizens as the data charge was affordable and it offered high-speed internet. Netflix also developed video codecs that shall allow viewers to watch recordings (Nafees et al., 2021). Such market development strategies shall help the organization to gain further revenues and thus, they shall gradually lower their membership amount so that their subscription increases in the Indian market and their market penetration becomes successful.
Question 3
Netflix has already gotten local permits for their internet-based video for 42 states in Central America, the Caribbean, and South America. However, their next objective was market advancement and to extend their income as well as development by entering new regions (Wayne and Castro, 2021). However, after entering the Indian market, Netflix aimed to attract consumer interest by using the strategy that they have used in the United Kingdom and the United States. Netflix did not invest much in local programming in India (Kumar, et al., 2020). Thus, to some extent, the approach softened the expansion approach in India. However, The Netflix India strategy was different from the overall Netflix strategy as the Indian viewers got wider access to the original material of Netflix however; there were only 100 films from Bollywood available on the platform. Cowen Group Inc has done a survey where around 57% of the Netflix customers in the US mentioned that their motivation for joining Netflix was the original content of Netflix but the global views did not have such huge exposure to original content initially as compared to Indian viewers (Wayne and Castro, 2021).
India has become one of the key markets for international players as Indian focus on technology to produce economies of scale, entice the consumer, and offer service at a more competitive price. Although, the administrative and political framework of India was regulatory and hard to change and India includes a semi-administrative structure having explicit leadership and regulatory abilities and a deeper grounded focal government supervising it but Netflix using their global strategy of market development became sustainable in India (Gómez and Munoz Larroa, 2023). Furthermore, its global strategy of Netflix includes value integrity, respect, excellence, collaboration, and inclusiveness. They encourage independent decision-making by employees and share information openly and they use the same strategy for India also. The global strategy focuses extremely on the streaming video business, their strategy was to stream TV series, documentaries, movies, and stand-up comedy but not to broadcast sports, user-generated content, or news similarly Netflix India also showcased TV shows and other video contents (Sull and Turconi 2021). Netflix also collaborates with Hollywood producers and similarly collaborated with Bollywood producers to offer local content.
The SAFe framework gives visibility to the decision-making process. It includes three elements such as suitability which analyze the problem that has to be solved, acceptability which refers to whether the option offers an acceptable return and feasibility which refers to the methods of executing the options. Likewise, it shall be discussed that Netflix India differs in terms of suitability as Netflix India has the issue of the network, price sanative customers, money-sensitive customers, and competitors such as Amazon, Disney Hot Star, platforms and others and the global strategy mainly the has competitor issue. Moreover, both the strategy guarantees acceptable return in terms of increased subscribers and increased revenues. The global and Indian strategy heads employees' views, favors quality, and develops organic content and that makes both the strategy feasibility. Thus, mainly there are various similarities and some dissimilarities between the Netflix global and Netflix Indian strategy.
Recommendations
The Indian government has expanded rules and disciplines for sharing unlawful documents, shut down some critical sites, and included strong algorithms to monitor such trends. The regulations are authorized after some group or party such as content designers or streaming suppliers reports about such document-sharing sites or private sites to neighboring experts. Thus, real-time platforms like Netflix shall monitor private players and focus on offering excellent material, and superior client experience to become sustainable. Furthermore, the organization shall diversify and offer videos on a variety of devices, and opting for such choices and options shall make Netflix India sustainable. They shall collaborate with nations where Netflix is not present, such as China, South Korea, and others, and discuss relaxing the government rules in those nations (Steck et al., 2021). Moreover, Netflix shall be concerned about the content and shall not showcase unlawful content to persists in those new areas. Moreover, according to their global strategy of entering a new market, they shall also focus on market penetration and market development and offer their service accordingly that suits the local culture to remain sustainable.
Conclusion
In conclusion, the success of Netflix's global strategy is reflected in its efficient use of the Ansoff matrix and Porter's generic strategy model, as well as its focus on market penetration and differentiation. Additionally, the success of Netflix's global strategy is reflected in the fact that the company prioritizes market penetration and differentiation. In India, Netflix pursued a sustainable approach of creating local content, providing a free trial for one month, and forming partnerships with local production companies. Netflix was able to achieve success in the Indian market by adapting its worldwide approach to meet the unique demands of the Indian consumer base, which included sluggish internet speeds and clients who were sensitive to pricing. The organization's basic principles, which place an emphasis on employee empowerment, quality, and unique content, stayed the same even if there were minor discrepancies between the global strategy and the Indian strategy. In conclusion, in order for Netflix to maintain its financial viability, the company needs to concentrate on providing high-quality content, keep an eye on private players, diversify their products, and work with new areas to broaden their market reach.
Reference
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Gómez, R. and Munoz Larroa, A., (2023). Netflix in Mexico: An Example of the Tech Giant’s Transnational Business Strategies.Television & New Media,24(1), pp.88-105.
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Onyusheva, I. and Baker, A.S., (2021). Netflix: A Case Study on International Business Strategy Development.The EUrASEANs: journal on global socio-economic dynamics,6(31), pp.40-52.
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Steck, H., Baltrunas, L., Elahi, E., Liang, D., Raimond, Y. and Basilico, J., (2021). Deep learning for recommender systems: A Netflix case study.AI Magazine,42(3), pp.7-18.
Sull, D. and Turconi, S., (2021). Netflix Goes to Bollywood.
Wayne, M.L. and Castro, D., (2021). SVOD global expansion in cross-national comparative perspective: Netflix in Israel and Spain.Television & New Media,22(8), pp.896-913.
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