Evaluating Netflix's Organization's Business Strategy

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A business strategy is "the overall, long-term plan of an organization to fulfill its' purpose" (BuisnessSetFree, 2013). A business strategy defines the purpose of the company, and describes where the company is currently, where it wants to be, and how it is going to get there. A business strategy is particularly interesting since business does not operate in a vacuum, thus the strategy must evolve and adapt to situations in the marketplace, including the economy and other factors. Netflix, the video streaming and DVD movie rental service, has established the desire to become the best global entertainment distribution service, license entertainment content around the world, create markets that are accessible to film makers and help content creators around the world to find a global audience (Brand Research, 2012). To this end, the company has determined the best strategy to achieve these results.

Netflix was started in 1997 and originally competed with Blockbuster Video and Hollywood video primarily. As on demand video technology evolved, the company adjusted its business strategy to adapt to the new technology, adding instant streaming video. This was an effective decision for the company, since most local and national video rental stores did not or could not keep up with this change in format. Netflix, by establishing itself on the Internet, had a strategic advantage to its competitors.
Part of the success of Netflix strategy is its ability to take advantage of weaknesses in its competitor's business model. Traditional video rental stores forced the customer to become members, go to the store to select movies, and encumbered members with late fees. Netflix, in contrast, signed consumers up and let them enjoy selecting movies out from the comfort of their own homes. Customers could avoid the trip to the video store. In addition, there were no late fees, a huge selling point early in the company's history. This enabled customers to keep movies for as long as they wished, without the fear of added charges.

A key part of Netflix's original business strategy involved the absence of formal real estate, an investment their competition had incurred. Netflix strategy benefited from the ease and cost of ...