Introduction
Netflix was founded in 1997 as a DVD-by-mail rental company, competing with the more established video rental chains such as Blockbuster and Hollywood Video. Twenty years later, in 2020, the company and the firm have transformed with technological advancements and other factors (Siegfried, 2021). Blockbusters have sought financial security for a long time, and Netflix’s DVD box has given way to an extensive web-based video library. Additionally, this library is gradually leveraging Netflix’s unique substance rather than allowing items from major Hollywood studios. Netflix’s progress has been inconsistent, and by 2020 the company expects $24.9 billion in revenue, up 19% from 2019, with a net profit of $2.8 billion and $1.9 billion since 2019 (Siegfried, 2021). The organization is expected to surpass 200 million supporters in 190 countries by 2020, up 34 million from the previous year.
For the last decade, Netflix has been ranked among the established studios. In February 2019, Alfonso Cuarón received a Foundation grant for Best Director in recognition of a remarkable performance in Rome, and this case marked the first time a Netflix creation won an Oscar (Siegfried, 2021). The organization garnered 14 Oscar nominations that year, surpassing some big conventional studios like Warner, Central and Widespread. However, when Netflix’s streaming method generated enough revenue, its partners started becoming their key competitors. Warner and Disney, the world’s biggest diversion companies, have expressed significant interest in their streaming phase despite competition from tech giants like Amazon and Apple.
The Problems that the Firm Encounters
The issues Netflix faces are highly associated with its sizable growth based on a broader customer base and stiff competition with other established companies. Currently, Netflix has nearly 47 million subscribers in the US, comprising the majority of Americans (Crawford, 2020). Netflix has exhausted its market in the United States, and there is a fundamental need to find somewhere else to hide from the understood agreements and several subscription memberships. To cope with the shutdown, Netflix increased its rating, marking a considerable challenge in adapting to clients’ needs and harsh economic situations.
Netflix also experiences challenges in international growth. Netflix expanded its coverage into almost all major markets outside of China. The company has completed operating in around 50 countries with18 million global supporters or subscribers. Through this initiative of expanding its business universally, Netflix created a new classification of supporters and, in turn, gradually incorporated these new collections, which is a challenging easy task (Crawford, 2020). Although Netflix grew and thrived in the UK, Latin America, and Scandinavia, more regional competitors emerged worldwide. Also, Netflix’s stunning global launch means its library became sorely lacking in some countries relative to its performance in the US. The company also spends many resources to win global rights to blockbuster content because of stiff competition.
Disruptive innovation outlined Christensen’s hypothesis further reflects the technological challenge faced by Netflix. As Strott (2017) notes, this case indicates that any practical and organized organization may be overwhelmed and compromised by progressive newcomers to the industry. Netflix exemplifies disruptive innovation’s problematic development, given that early remote Netflix membership management failed to appeal to standard blockbuster subscribers who hired new on-demand delivery. Netflix targeted a population that its opponents ignored by offering a secondary alternative at a lower price, and eventually entered the market by adding things standard subscribers needed, upgrading them, and outdoing other established firms in the industry.
Strategic and Operational Analyses
Netflix could return to its role as one of the leaders in the media industry with practical strategic and operational planning. The first strategic approach that needs to be addressed involves internal management considering that Netflix’s collapse began when its CEO promoted fraudulent content streaming practices and mailing costs increased (Hitt et al., 2019). The company should investigate promoting business systems that achieve consistency for sponsors. Unexpected changes and increases in membership administration fees should be avoided at all costs.
Organizations should also focus on offering their products under one location and brand. Netflix is a well-known brand that can make great deals if the costs are kept at excessive levels (Hitt et al., 2019). For instance, the company should be directed to understand the US to need to promote dominance in the market. Stepping into the global market becomes a busy endeavor that does not guarantee profit. The competition in the market is stable, and the best organizations are those that have close relationships with key stakeholders. Moreover, the ability to continually expand the shows and films available to supporters is critical. Hence, differentiating administrative ideas, passed on to supporters more quickly than competitors, is a critical strategic approach that Netflix should adopt.
Ethics and Sustainability Issues
Netflix is exploring environmental issues in CSR and trying to achieve consistency in its CSR practice. The critical ethical concern for the company involves reducing its carbon footprint and managing waste. Over the next few years, Netflix faced problems monitoring fossil fuel byproducts and perceived high carbon emissions. Netflix provides instant, circular energy by powering its server farms and using AWS to perform web-based information functions, which consume a lot of energy (Msosa & Govender, 2019). Netflix needs to be careful and address CSR environmental concerns. To overcome the environmental difficulties of managing its carbon footprint, Netflix developed a triple-crossing method which involves reduction, retention, and elimination to solve environmental problems.
Netflix uses cloud services from Amazon’s web administration and its open interface content delivery network for streaming, which accounts for 5% of carbon footprints. The Intergovernmental Panel on Environmental Change (IPEC) announced in 2018 that global temperatures should not exceed 1.5 degrees Celsius above premodern temperatures to solve ozone depletion and reduce carbon footprints (Msosa & Govender, 2019). The organization aims to achieve a global temperature of no more than 1.5 degrees Celsius and a reduction in greenhouse gas emissions to net zero by 2050. This situation will help them reduce emissions when they reach the target temperature. Netflix will preserve existing carbon stocks by destroying them to prevent carbon from entering the climate by taking on endangered conservation projects (Msosa & Govender, 2019). In 2020, Netflix will consolidate its efforts to restore a typical essential environment and achieve clean, zero fossil fuel byproducts. These activities include restoring grasslands, removing carbon from the air, and restoring healthy soil.
Non-compliance is another key ethical issue facing Netflix. The company understands the importance of fossil fuel byproducts and is committed to the Paris Agreement and compliance. However, Netflix faces difficulties such as direct emission from Tier 1, a byproduct of fossil fuels by market and region. For example, Netflix’s ozone-depleting footprint of 36,506 MTCO2e in 2019 (Msosa & Govender, 2019). In some classifications, Netflix has limited operational control, making it difficult to estimate and reduce fossil fuel byproducts when drawing direct or external organizations to create them. Netflix turns off webcasting and power consumption on client gadgets and ignores them. This case is considered a CSR non-compliance because it does not accurately estimate the fossil fuel byproducts produced.
Proposal of Action Plans
Netflix could apply various approaches to restore its brand and enhance its performance despite its challenges. Restructuring the organizational structure to accommodate inclusive decision-making will allow it to avoid potential compromise from management, considering that its CEO has been associated with a dysfunctional system (Hitt et al., 2019). The CEO promoted an original content streaming system, and mail transportation costs rose since other stakeholders were overlooked in decision-making. This plan will enable the company to investigate the promotion of business systems that achieve consistency for sponsors and clients and avoid sudden changes and additional membership administration fees that could jeopardize its performance.
Netflix should also focus on offering its products under one brand despite working internationally. Netflix is a well-known brand that can do excellent business if costs are kept at dangerous levels. The company has lost its market power and experienced the challenges mentioned above because of a lack of consistency, but it can regain its importance if it respects the people’s will (Hitt et al., 2019). The competition in the market is intense, and the best organizations work with critical partners. Hence, only firms that endeavor to satisfy clients with cost-effective measures and popularize the brand will succeed in the industry.
Conclusion
The critical concern for Netflix involves achieving consistency in its service delivery to clients. The company has demonstrated some inability to make crucial decisions and, in turn, left the impression of sudden significant change throughout the organization. Proponents favor stable and predictable administration that this company should adopt to facilitate consistency and inclusion. Netflix also needs to focus on meeting the demands of US customers since its brand is established there despite growing internationally. Instead of focusing on excess energy in global markets, Netflix should explore the possibility of expanding its customer base locally and focusing on sustainability issues.
References
Crawford, C. J. (2020). Netflix’s speculative fiction: Financializing platform television. Lexington Books.
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2019). Strategic management: Concepts and cases: Competitiveness and globalization. Cengage Learning.
Msosa, S. K., & Govender, J. P. (2019). Environmental impact and CSR responsibilities. CSR, Sustainability, Ethics & Governance, 151-168.
Siegfried, P. (2021). Business management case studies: Pran-rfl, Netflix, Mc Donalds, Google, Tesco, Apple, Coca-Cola, psa group, Mercedes, Tesla, Toyota, Beximco, KFC, LBC Lao brewery company. BoD – Books on Demand.
Strott, L. B. (2017). Streaming is the new black: A consumer-based examination of Netflix Inc. Original programming and streaming strategy. [Master’s thesis, Drexel University].