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Some of the policies spelt out in the Netflix terms of service and in its web site could not be achieved. A good example is where the company was sued by one of its customers in 2004 for failing to submit the rented DVDs in one day’s time as claimed in the policies.

Samsung one of the phone manufacturing companies announced in 20th February 2012 a deal with blockbuster to stream thousands of movies to laptops, ultra books, smart phones, smart TVs of the company.

There are no clerks in the when shopping for the movies in the company’s web site. Furthermore the Netflix Company has stocked its web site with millions of movie titles making difficult to choose the best movie. Too many options confuse the customers and they spent much time trying to decide which movie to rent. The advent of new social net works such as face book, chat rooms posed a challenge to the company on the best way to innovate this social net works for greater interaction with the clients.


The company’s policies should be reevaluated to ensure that they are attainable. The company will endeavor to formulate policies that are specific, measurable, and achievable within a specified period of time. This will avoid generalization and ambiguity which cost the company. To be able to deal with the emerging competitors such as Blockbuster partnership with other electronic making companies will be increased.  This will help counter the activities of the competitors. Already we have made a step by partnering with Wal-mart the world’s largest retailer. Wal-mart has given Netflix their DVD rental service.

The problem of not having clerks to consult in the web when choosing videos has been partly dealt with. The customers are being encouraged to look at the ratings of the videos in the web sites because the figures are not biased. The advice of store clerks is being discouraged. The store clerks understand our tastes, preferences and may read your moods. Their advice may therefore be biased.  Netflix acknowledges the fact that social networks  is a useful tool and it has already one site that allows people to see which movies their peers and family members are renting.

Future Strategies/Plans

Increase partnership with electronic companies to allow streaming of Netflix movies in internet enabled computers, smart phones, and TVs. Monthly flat rate charges of Netflix streaming subscription are to be reduced.  The reduction in this charge will allow many customers to enjoy the services. Furthermore the company will enjoy economies of scale and increase the business competitive advantage in the market. Netflix plans to translate its movies to non English languages as begins its services to Ireland, United Kingdom and other continents such as Africa and Asia. The company plans to expand its market due to the stiff competition it’s now facing from rival companies such as Blockbuster.

In addition the rate of licensing of new content from its owners is to be increased. Netflix also plans to improve its social network sites. The improvement will be achieved by making the web site more accessible to customers. Other features such as chat rooms will also be improved. This improvement is meant to enhance more interaction with the customers. This will help in knowing the ever changing tastes and preferences of customers. Knowing the demands of the clients helps in innovations and adaptability of the company.

Analyzing The Market Situation

Porter’s competitive market states that market competition can be affected by five major forces. These forces can be divided into two major categories that are horizontal and vertical competition. The horizontal competition is affected by three forces. The first force is the threat of new entries. Secondly is the threat of established rivals.  The third force is the threat is the threat of substitute products. On the other hand the vertical competition is affected by two market forces. The first one is the bargaining power   suppliers. Secondly the bargaining power of consumers.

Analyzing the market using porter’s Competitive five forces reveals that vertical competition has not affected the market that Netflix operates in. This means that the bargaining power of suppliers and consumers had little effect in this market. On the other hand horizontal competition affected this market greatly. There were threats of established rivals such as Blockbuster. Other threats were the presence of substitute products such as obtaining the movies in the physical stores were also present.

Using the porter’s competitive five forces to analyze the market is very helpful. This is because it helps the business to identify which particular stakeholders have been affected by the market forces. Whether it is the suppliers, consumers, or the threat comes from other competitors. This helps the business in concentrating its efforts with the affected stakeholders and deal with the threat affecting them. But the problem with porter’s competitive five forces is that it looks so much at the relationship between the company and outsiders. However it fails to look at internal operations such as organization’s weaknesses and strengths.  

Strengths: Netflix became very popular especially the flat rate monthly subscriptions. The company has also good integrated software for merchandizing, logistics and purchasing.


Opportunities: sale of physical media is decreasing while demand for direct digital distribution of videos is increasing.

Threats: competition from of established rivals such as Blockbuster


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