Netflix Case
Essay by Ida Amalie Mølsgaard • October 26, 2015 • Course Note • 996 Words (4 Pages) • 1,238 Views
Page 1 of 4
- Netflix case
- a) From which activity would you expect a bigger return, reacting to your competition or delighting your customer
- Competition:
- On a long-term basis, reacting to your competition. You must stay agile and alert to changes in ones operating business area. If you don’t reflect and counter to competition within your radar, you might overlook server changes that will leave you on the bottom of the ladder.
- Pay attention to the changing landscape
- Customer:
- By delivering thorough customer service your may ensure long-term customers and hereby customer loyalty, both essential variables to increasing a business return.
- You want to make your customers happy, so they will stay with you, and not move over to competitive firms. In this extension you will also react to and diminish your competition.
- If you managed to delight your customers – and offer the best customer service you are ahead of the competition
- b) Is on-line video rental subscription an example of a disruptive or sustainable technology? Be prepared to back your assertion
- Netflix is an example of a disruptive technology / innovation
- They broke an existing market (movie-rental) and created a new one (online movie rental). This changed the movie rental market, and threatening the existing order of things.
- The core of this disruptive technology was their business model, offering; Value – convenience – selection
- Netflix used a business model that didn’t fit the ways Blockbuster made money
- Later Netflix took a radical move, switching away from its old business model (sending out rental DVDs by post) to a new one (streaming on-demand video to its customers). This was a sustainable technology move.
- c) What was Blockbusters likely response to Netflix according to Christiansen?
- They would try to cram and adapt the innovative idea of online video renting in a way that made sense to their business. (Trying to stuff a square into a whole)
- They would try to morph the product to fit into their existing processes and values.
- d) What, if anything, could Reed Hastings and his team have done to keep Blockbuster from entering the online video rental subscription business?
- They could have differentiated more in their motivations or skills. As asymmetries in these power the process of disruption. Hereby they could “fly beneath the radar”, only to grow stronger before the incumbent (Blockbuster) would choose to fight back.
- Make their business model less attractive
- e) Under what circumstances would you want an incumbent to enter your market? If you are Netflix (Disruptor), when would you want Blockbuster (The Incumbent) to enter your market (DVDs through mail)?
- As outlined in the case, it can pay off to be a low cost company in a market where a high-cost incumbent enter, as they might help bolstering the market. Blockbusters global marketing campaigns, helped increase the general awareness for online DVD rentals, which Netflix benefitted from.
- Malcolm Gladwell
- 1. “How David beats goliath; when underdogs break the rules”
- The theory of this article is related to the biblical story of David and Goliath.
- By thinking about what the counterpart not expects us to think about, to care about what nobody expects us to care about, to do what nobody expects us to do you can win a match and succeed.
- How underdogs, as David and the basketball team from Redwood City can beat the odds and succeed when acknowledging their weakness and hereby choses an unconventional strategy.
- 2. “The Sure thing – How Entrepreneurs really succeed”
- The success of great businessmen or entrepreneurs is not about being a great risk-taker, it is about being a great predator, and incur the least risk possible while hunting.
- “Watch the downside; the upside will take of itself” – it looks at how to figure out a sure thing better than the rest
- 3. Luke Johnson’s rebuttal to Malcolm Gladwell’s article on “The sure thing”
- Luke Johnson critique at Gladwell is based on his lack of field work and real interactions with entrepreneurs.
- Further he states that Gladwell’s references to Paulson as an entrepreneur lacks the characteristics of what it entails to be an entrepreneur.
- 4. “All Strategy is local”
- Through examples of different companies in different industries (EX. Wal-Mart) the article discusses the importance of dominating a local market in order to gain competitive advantages.
- 5. “Beating the odds when you launch a new venture”
- Great entrepreneurs don’t take risks; they manage them.
- In some extension this article shares the same thoughts as Gladwell, as it states that success will come to those who are able to quickly identify and systematically eliminate risks.
- Further they argue, that a new venture one should look at the most important uncertainties; deal killer risks, path-dependent risks and easy win high ROI risks.
- Clayton Christensen
- 6. The Innovators Dilemma film clip
- If you want to kill a giant, (how can one make the product more affordable and effectible) put them on the run instead of engage with them
- Large business’ (integrated mills) “choose” to overlook disruptive technologies (minimill) until they become more attractive profit-wise. Disruptive technologies, however, eventually surpass sustaining technologies in satisfying market demand with lower costs. When this happens, large companies who didn’t invest in the disruptive technology can face the fact of being left behind.
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