Netflix Case Study Analysis

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Netflix PORTERS 5 FORCES As a start-up company, Netflix, like any other beginner’s company, had issues that needed to be addressed. The company owner, Reed Hastings has been successful in starting company like Pure Software in 1995 (INC). Therefore he was confident that he could add Netflix to his collection of success stories; which he did. To analyze this company effectively, Michael Porter´s five forces model will be used. Porter provided a framework that models an industry as being influenced by five forces. Strategic business managers seeking to develop an edge over rivalry firms can use this model to better understand the industry context in which the firm operates (QuickMBA). Rivalry Rivalry among competing sellers is one of the strongest of Porter´s five forces. Because competition is not perfect and firms are not unsophisticated passive price takers, Firms strives for competitive advantage over their rivals (QuickMBA). These lead firms to use whatever resource they have as weapon to gain competitive advantage. If you at the rivalry in the online DVD rental industry, you see that it is high. Rivals in this industry carry a feebly differentiated product, which intensifies threats from rivals. In this industry, the cost to switch or change suppliers is very low; making it easier for consumers to have less brand loyalty. They can switch wherever there is a lower cost being offered. New Entrants In my opinion, companies´ primary objective is to maximize profits. Netflix is in an industry with major growth opportunities. The firm will is threatened by other firms that have the available resources to compete with Netflix. Furthermore, the industry has a low entry barriers; making access to entry easier. Moreover, there is a high buyer demand in this industry which makes it attractive to other firms. Moreover, there is a pressure from incumbent members

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