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MGMT 479 Netflix Case Strategic Audit

Internal Environment

Strengths and weaknesses (SWOT)

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Corporate Structure

Unitary organizational structure or also known as U-form is the corporation structure that Netflix uses. “Netflix Inc. has a U-form or unitary organizational structure that involves a hierarchy for maintaining executive control and direction throughout the organization. However, this corporate structure is relatively flat compared to many businesses that have a hierarchical organizational architecture. For example, in Netflix’s organizational chart, all the main business executives directly report to the CEO.” (Netflix Inc.’s Organizational Structure & Its Strategic Implications – Rancord Society”, 2021). Their decisions marketing authority is decentralized into many unites. The main characteristics of Netflix’s corporate structure are Functional groups for online and non-online operations, Geographical divisions for managing regional market, and Divisions for various product types and operation types. The structure is clearly understood by everyone in the corporation. Most of the middle management has been eliminated thus helping the business communicate more efficiently and faster. The structure of Netflix is current with the objectives and strategies. Netflix has division for domestic and international streaming. This allows for the company to reach more customer and grow the business. “Netflix Inc.’s corporate structure is based on the business need to make rapid decisions as a way to respond to changes in the online entertainment market. This organizational structure allows the company to effectively perform against strong competitors, such as Amazon, Walmart, Apple, YouTube (Google), Disney, and HBO, among others.” ((Netflix Inc.’s Organizational Structure & Its Strategic Implications – Rancord Society”, 2021).

 

Corporate Culture

Netflix has a set of core values for its employees; Judgment, Communication, Impact, Curiosity, Innovation, Inclusion, Courage, Passion, Integrity, and selflessness. “Netflix notes that many organisations claim to have certain values, but that they are mainly for show. At Netflix, employees who follow these values to the letter are the ones who are most likely to be promoted. The values are fully expanded upon in the manifesto, giving employees a clear road map on how to behave.” (Peakon) According to Glassdoor, Netflix has a 4.1 out of 5 star rating. On Netflix’s website under careers, they talk about their culture and values and what they expect from their employees as mentioned before. They talk about creating the dream team and push for employees to want to do their best. “Our core philosophy is people over process. More specifically, we have great people working together as a dream team. With this approach, we are a more flexible, fun, stimulating, creative, collaborative and successful organization.” (Netflix) As of 2019, Netflix has published a report titled “Environmental Social Governance” that reports its environmental impact. “Netflix effectively sources all of its electric power from renewable sources. Where no direct source of green power is available, the company purchases renewable energy certificates (RNEs) to make up the difference. In this way, green energy powered Netflix’s entire internal power consumption of 94 gigawatt hours (GWh) in 2019.” (Nasdaq)

Netflix’s diversity does reflect on the culture they present. The company has published data reflecting its diversity since 2013. “Women make up half of our workforce (47.1%), including at the leadership level: directors and above (47.8%), vice presidents (43.7%) and senior leadership (47.6%). Nearly half of our U.S. workforce (46.4%) and leadership (42.0%, director level and above) are made up of people from one or more underrepresented racial and/or ethnic backgrounds, including Black, Latinx or Hispanic, Indigenous, Middle Eastern, Asian, and Pacific Islander backgrounds. The number of Black employees in the U.S. doubled in the last three years to 8% of our workforce and 9% of our leadership (director level and above).” (Inclusion Takes Root at Netflix: Our First Report) The company does take into consideration other cultures and nations. One way they do so is by streaming certain shows and movies that reflect their culture. They provide popular shows for customers to watch. “etflix (NFLX) offers its streaming movie and television service in more than 190 countries.1 However, the content you watch at home is not always available when traveling between countries.” (Investopedia)

Corporate Resources Marketing

When it comes down to Netflix’s marketing strategy, they seem to be pretty successful. Their free 30-day monthly trial is probably what catches most customers’ attention. According to Statista, Netflix currently has 203.67 million subscribers. They use strategy and innovation to be successful. Again going back to their objectives and values, they carry out and execute their performance and budgets. “Netflix had 203.67 million paid subscribers worldwide as of the fourth quarter of 2020. Most Netflix subscribers are based in the United States, with the U.S. accounting for over 73 million of Netflix’s total global subscriber base.” (Statista) Netflix increases profit in many different ways. One way they do this is by making predictions on certain shows or movies they release. They predict the number of people who will watch a TV show or movie. Then they will queue up the cost of investment with the prediction.

Netflix is the world’s biggest online streaming service. Their performance goes above and beyond the marketing mix. The product is always reliable, it can access from most parts of the world where there is internet access, and the promotion continues to grow. The company operates in 190 countries around the world with the United States being its number one market. In the past, Netflix started off as a movie rental company where customers could subscribe and rent movies and video games. They then evolved to online streaming. This provided the company with competitive advantages because there went any online streaming companies at the time. Netflix is constantly putting customer experience upfront. Their performance has improved over the years. They have added new functions such as downloading a movie or show that you can watch offline. They change up the shows and movies every month. On top of that, Netflix now produces “Netflix Original Movies”. This alone is an advantage over competing companies because many of the customers can only watch that movie or show on Netflix. They would have to subscribe to the company. They also offer content that is similar to what the viewer likes. Before Disney Plus, Netflix had a majority of Disney movies and shows. However, that has now changed. Netflix would pay the rights to stream shows and movies while the customers would pay a monthly fee that covers the profit from Netflix.

Finance

Netflix’s objectives, strategies, policies, and programs are based on Porter’s five force model. They have been a leading competitor in the streaming industry. They are consistent with the corporation’s mission, objectives, strategies, and policies in internal and external environments. The corporation’s performance is outstanding. According to the stock analysis, their revenues increase every year exponentially. No negative trends were shown in the analysis proving that they will continue to predict growth in revenue in the future. Netflix compared the business model of Spotify’s business model, generic strategy, and intensive growth rates. However, within the past few years, competition has been growing. Competitors such as Hulu, Amazon Prime, and now Disney Plus have come runners-up in that order. Netflix is still the number one streaming service yet.

Work Cited

 

Netflix Inc.’s Organizational Structure & Its Strategic Implications

2019 English David Anderson Rancord Society from

Netflix Inc.’s Organizational Structure & Its Strategic Implications

 

Workplace Spotlight: Netflix Company Culture Focuses on “People over Process”

2021 English Ross Brooks Peakon, a Workday company from

https://peakon.com/us/blog/employee-success/netflix-company-culture/

 

Glassdoor https://www.glassdoor.com/Reviews/Netflix-Reviews-E11891.htm

 

Netflix https://jobs.netflix.com/culture

 

Netflix Just Started Reporting Renewable Energy Use and Content Removal

2020 English The Motley Fool Nasdaq from

https://www.nasdaq.com/articles/netflix-just-started-reporting-renewable-energy-use-and-content-removal-2020-02-09

 

About Netflix – Inclusion Takes Root at Netflix: Our First Report

English About Netflix from

https://about.netflix.com/en/news/netflix-inclusion-report-2021

 

Why Netflix Content Is Different Abroad

English Investopedia from

https://www.investopedia.com/articles/investing/050515/why-netflix-content-different-other-countries.asp

 

 

Netflix SWOT Analysis (Internal & External Strategic Factors)

2019 English Anthony Rivera Rancord Society from

Netflix SWOT Analysis (Internal & External Strategic Factors)

 

Netflix subscribers count worldwide 2013-2020

2021 English Statista Statista from

https://www.statista.com/statistics/250934/quarterly-number-of-netflix-streaming-subscribers-worldwide/#:~:text=Netflix%20had%20203.67%20million%20paid,Netflix’s%20t

Operations and Logistics

Corporations Services, Objectives, Strategies, Policies, and Programs

The manufacturing services of Netflix are subscription-based streaming-service that lets the subscribed members watch movies and all forms of TV shows even without having commercials on their internet-connected gadgets. The corporation also allows people to download TV shows as well as movies to android, iOS, and even windows gadgets. The operational objectives of Netflix are purpose to bring every person closer to one another (Shattuc, 2020). Other objectives include entertaining the world, and making clients choose the type of show they want according to their taste (“Netflix Inc.’s Organizational Structure & Its Strategic Implications – Rancord Society”, 2021). Operational strategies in Netflix include but are not limited to sticking to original content, embracing technology innovation, focusing on user satisfaction, working under phased expansion, and upholding regional partnerships. The interpretation of the five-word policy of Netflix is that “expense only what you would otherwise not spend, and is worthwhile for work” the objectives, policy, and strategies of the company are in line with its mission which is “To entertain the world.”

Type and Extent of an Operations Capabilities of the Corporation

The nature of Netflix operations is a clear indication that the company has enough resources and is capable of delivering the services they are after. The extent of capabilities has been gauged from the following perspectives. Availability of licenses and support from all content creators and copyright holders. The corporation also enjoys a high potential for distributing music, textual content, and videos online

Vulnerabilities of Manufacturing Service Facilities

Netflix majorly relies on the internet to deliver its products and services. This implies that there are no physical resources required in the transmission of services. This, therefore, means that service facilities are not vulnerable to natural disasters or any local strikes. The company has remained global for quite a long now. This means that the nationalization of the government will have little impact because the firm has all that is needed to continue with its operations.

Appropriate Mix of People and Machines and Support Staff

The corporation enjoys an appropriate mix of people and machines when it comes to product and service delivery. The firm comprises well-trained people who are capable of handling technology in use. The people in the firm are specialists in the major technology that is in use. Netflix makes use of Adaptive Bitrate Streaming technology in adjusting the quality of video and audio propagated. This helps to match the requirements of the clients. Support staff in the company have clearly defined roles of what they are supposed to be doing. Hence, their collective energy helps the organization attain its objectives.

Organization Performance Relative to the Competition

The biggest competitor of Netflix is Amazon. In terms of the provision of video streaming and downloading services, Netflix is significantly doing well. Its performance, when compared to Amazon, is relatively higher and better. In the recent past, however, Amazon has started picking so well. For instance, in the last quarter of 2019, Amazon prime video had 150 million subscribers, the highest number that is nearing that of Netflix. This is however a potential threat, but it has not performed better than Netflix is doing now. The number of clients addressed by Netflix is higher than Amazon.

Utilization of Appropriate Concepts and Techniques by Operations Manager

The operations manager of the corporation is utilizing necessary techniques and concepts just to ensure that everything is going on well and the performance of the firm is positively impacted. The manager strives to create a cost-friendly environment that members will be willing to pay. For instance, the members are allowed to cancel a subscription. This makes it cost-friendly. The manager is keen on employing the most recent technology in the organization. The objective of including the new technology is to uphold the efficiency with which the services are delivered and the extent of satisfaction. With technology, scheduling of services, management of the inventory and distribution, and manufacturing of services have been impacted positively because the managers have all the necessary resources needed.

Operations Adjustments

Yes, the operation of Netflix is flexible and they adjust to conditions within the country and also at the global level. The most recent situation is the COVID-19 pandemic. The firm underwent several operations adjustments just to ensure that everything remains intact. The changes in the operations were meant to ensure that constraints felt have been contained. During the COVOD pandemic, the company reduced the streamlining bit rates in entire Europe. This was aimed at taking off some pressure from the network infrastructure. The company was also forced to shelter its network resources in space and remove them from people’s houses. The goal of this was also to ensure normal operations within the organization despite the situation across the globe.

Environmental Sustainability When Making Decisions.

The operation keenly takes the issues of environmental sustainability into account before making any decision in the organization. It should be understood that watching online videos accounts for the largest portion of internet traffic. This is approximately 60% of the total traffic that is being generated online. When the traffic is high, more carbon dioxide is generated because of high power consumption. Due to this health factor, the operations manager keeps track of the processes undertaken in the firm to ensure that the traffic does not go beyond limits. This will keep the level of carbon as low as possible and within the normal levels.

Human Resource Management

Corporations’ Current HRM Objectives, Policies, and Programs

Netflix’s HRM objective is to establish an employment policy that aims at making good and productive use of the human resources within the corporation. Some of the strategies that HRM is utilizing include proper hiring strategies, regular performance assessment, upholding cooperative behavior, and managers’ actions as ambassadors of work culture. (“Netflix Inc.’s Organizational Structure & Its Strategic Implications – Rancord Society”, 2021)The corporation HRM operates on the principle of HR HBR. These objectives and strategies are well defined

Performance of HRM in Improving Fit Between Individuals Employee and Job

HR works while upholding the issue of workplace diversity. The techniques and concepts followed during the hiring process ensure that the right person has been mandated to perform a certain task. Once employees have been taken in, a good number of them are retained on matters to do with current affairs and technology(“How Netflix Reinvented HR”, 2021). This makes employees relevant, minimizing the turnover rates and strikes. The HR offers alternatives for containing employees, like allowing them to work from home when the situations in the office or policies in place do not allow them to take what they are doing. Compliance and adjustment to the current situation are among the emerging trends from the situation. This analysis positively supports the organization’s strategic move and hence its competitive advantage.

HRM Performance of Similar Corporations

As mentioned earlier in the paper, Netflix closely competes with Amazon. The company has been performing better compared to its competitors. In this light, the HRM of Netflix has been performing better compared to their companies, hence the reason why they are on top. A lot of HR-centered information revolves around the ideologies which were developed by the former chief talent of the company(“How Netflix Reinvented HR”, 2021). It is popularly known as the ‘Culture Deck’ and this is where everything is revolving around and hence, the better performance within the organization. From a general perspective, this has enhanced quality and efficiency, proper design of programs, and better relationships with associated unions and partners.

HRM manager’s Concepts and Techniques of Improving Performance

The HRM manager has implemented several techniques and concepts intending to ensure that compliance and performance in the organization have been attained. The HR department at Netflix subjects employees to regular training to ensure that they remain relevant to the current economy. Another technique in place is making information readily available and easily accessible. This allows the members to access all they require for performance with ease. Selective hiring is another technique that ensures the right people are available for any duties in the organization.

Management of Corporations’ Diversified Workforce

Netflix is ranked among the top five companies in the United States which have a better score in employees’ diversity. In support of the ranking, the following are the management strategies Netflix has in place which ensures that a diversified workplace has been maintained. An appropriate hiring process that welcomes diversified employees. The merits of the employees are taken into account and balancing embraced. The company comprises inclusive policies which ensure that every person has been incorporated. The provision of diversified training and effective communication also ensures that workforce diversity is maintained.

HRM adjustment to The Varying Conditions

The HRM department of Netflix is flexible to variations in national and global conditions. Netflix HRM implemented the following adjustments. Employees were advised to work remotely from home. This was in the effort of ensuring that social distance has been attained. The company freely reskills its employees to ensure that they remain competent in all duties that they are supposed to be doing and that they are in line with the current technology.

Role of Outsourcing in HRM Planning

Netflix corporation enjoys the following roles and advantages as a result of outsourcing the HRM planning. Outsourcing planning applies an expert eye to the HR policies to be implemented (Pontes, 2020). This is because the company will secure a comprehensive review of the policies in place. It also upholds the employment relationship as well as streamlines the hiring orientation. This results in the provision of quality and efficient services.

Role of HRM Manager in Strategic Management Process.

In Netflix, the HRM manager undertakes major roles in the strategic management process. the first one is the evaluation of the HR capabilities and the second one is the implementation of the human resource management strategy. The manager is supposed to be aware of the potentials and capabilities of the entire HR team. This upholds the understanding of the employees together with their roles and contribution to the organization. Under this role, the manager also undertakes skills inventory on the existing employees (Pontes, 2020). Implementation of the human HR management strategy is normally done after evaluation and forecast of the organization has been undertaken. This is almost the last stage. The task allows the manager to develop a quality workforce that can enable the company to grow in the coming future.

Information Technology (IT)

Corporations’ Current IT Objectives, Strategies, and Policies

The objective of Netflix is always remaining the best option in global entertainment and the distribution of the content via the internet. Through the internet, IT has been ensuring that all the overall objectives are attained. The overall strategies of the company are equally applicable in IT. Hence, they are clearly defined and support the performance (“Netflix Inc.’s Organizational Structure & Its Strategic Implications – Rancord Society”, 2021). The objectives are consistent with the company’s mission and objectives.

IT Performance in the Corporation

All form of information that the clients might require for their satisfaction is available on the internet. The content of the corporation can be shared in multiple formats, increasing the number of people who can access it. The decisions of the company to make information available in multiple formats are advantageous. Advancement in technology has enabled the organization to survive in so many ways. The decision to uphold technology has enabled the firm to survive despite the pandemic.

Comparison of IT Performance with Similar Companies

The major business in Netflix heavily relies on the internet which is an immediate branch of IT. Internet is managed under the IT department. Since the organization has been doing fine, generating a lot of revenue, while operating online, it is evident that its IT performance is better compared to other companies (“Netflix – Behind the Scenes – Technology and Operations Management”, 2021). The corporation is making appropriate use of the internet to grow. Since it is global, both intranet and extranet are also utilized well.

Concepts Utilized By IT managers

The IT manager of Netflix utilizes several techniques that have ensured that evaluation and improvement of the company performance are easier. The techniques have facilitated efficient storage of information and management of online platforms as well as the implementation of a logical decision-making approach (“Netflix – Behind the Scenes – Technology and Operations Management”, 2021). Some of the techniques employed are an accurate delegation of duties, setting attainable goals, proper time management, and provision of feedback more often. The techniques collectively work together to enhance performance.

Global IT Presence

Netflix corporation comprises a very vibrant IT presence at which is at a global level. Since the mode of operation of the company is majorly online, the online platforms in place are well established (“Netflix – Behind the Scenes – Technology and Operations Management”, 2021). The company does not have any challenges with passing information across the boundaries.

Role of IT Manager In strategic Management Process

IT management plays a vital role in the strategic management of the organization in the following ways. Through formulating and implementing IT-based training programs and organizing IT-based workshops. The manager also develops and implements IT policies and guides that the organization should follow at any given time. The manager also identifies potential IT opportunities and allocates funds to them.

 

References

How Netflix Reinvented HR. (2021). Retrieved 31 March 2021, from https://hbr.org/2014/01/how-netflix-reinvented-hr

Netflix – Behind the Scenes – Technology and Operations Management. (2021). Retrieved 31 March 2021, from https://digital.hbs.edu/platform-rctom/submission/netflix-behind-the-scenes/

Netflix Inc.’s Organizational Structure & Its Strategic Implications – Rancord Society. (2021). Retrieved 31 March 2021, from https://www.rancord.org/netflix-organizational-structure-design-organizational-chart-characteristics

Pontes, F. P. R. D. O. (2020). Netflix, inc.-media entertainment services (Doctoral dissertation). Retrieved from https://run.unl.pt/handle/10362/106862

Shattuc, J. (2020). Netflix, Inc. and Online Television. A companion to television, 145-164. Retrieved from https://onlinelibrary.wiley.com/doi/abs/10.1002/9781119269465.ch7