BS6201 Netflix UK Market Strategic Management Analysis Assignment Sample

INTRODUCTION

The Streaming videos on demand (SVODs) is the way to offer subscriber unlimited access to the video content on demand. In exchange of videos these organizations charges the regular fees to the consumers. The report will be based on the Netflix; this is an American subscription video on demand and top streaming services. The services offer the wide range of movies, award winning TV shows, documentaries and different internet connected devices. This has been launched in the year 2007 and founded by the Reed Hastings and March Randolp (Netflix, 2023). The primary headquarter of Netflix is mainly located in the Los Gatos, California. It has started as the DVD mail movie rental services, after that changed in the streamline services, now the more than 282.7 million subscribers are having paid membership in more than 190 countries within the year 2024. The report will be based on the particular geographic market which is based on the UK. The report will shed light on the performing PESTEL analysis of the macro environment. Moreover, this will demonstrate on the five forces of the industry and VRIO analysis.

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Performing PESTEL analysis of the wider macro environment

Political factors: The United Kingdom exists from the major European Union which has changed the whole trade regulations and relationships. In context to Netflix, it affects the licensing agreements and content acquisition with the production houses of Europe. UK’s compliance with the specific content is developing significantly. The government of UK promotes the entertainment and content sector via taking initiatives such as TV productions and film tax relief. It boosts the ability of Netflix to develop the local content like as Top boy and the crown, this attracting the audience in UK. As the market of SVoD increases, the regulators of UK like as monitor and Ofcom practices such as content regulations and data privacy.

Economic factors: Regular increasing living prices and inflation within the UK have decreased the disposable income, affecting the pricing strategies and subscription retention (Henry, 2021). The Netflix needs to manage hikes in prices along with managing the affordability. The rate of exchange instability put impact on the financial feasibility and operational costs of investing within the production based in UK and importing content. Apart from these economic challenges, entertainment digital market of UK is continued to boost. The services based on the subscription are suggesting the various opportunities related to the developing subscriber base of Netflix. The content privacy is major threat to the organizational security; it puts impact on the profitability. The fluctuating exchange rate might put impact on the economy when purchasing the content of others. On the other hand, the brand can gain profit from the original content such as TV shows and movies.

Social factors: The audiences of UK are enhancing the adoption related to the content on demand over the traditional TV (Netflix PESTEL Analysis, 2023). The spans based on shorter attention and trends of Binge watching favour the model of Netflix of releasing whole season in one go. The multicultural population of UK entails the reflecting the different cultures and ethnicities. International and local Netflix’s content library offer support to the diversity. The COVID-19 pandemic increased the demand for the entertainment at home. This flow balanced the models of hybrid work still increases the streaming in home and sustaining demand. The positive work environment functions within the organizational. The CEO of Netflix is known for the kind gestures and generous nature which have touched the major clientele base. The flexibility has offered benefits to organization. The latest trends related to the live streaming on the phone has made possible due to the Netflix.

Technological factors: Innovations within the compression algorithms, Dolby Atmos and UK UHD make sure about the viewing the experiences. The organization needs to invest within the technologies to be in competition. The Netflix emphasise on the information to customise the recommendations, this is important for the retention of user within the competitive market of UK. The increase of VR/AR and integration of gaming offers the threats and opportunities. The competitors such as Amazon prime videos, these are challenging the organization to innovate and avenues. The videos on the Netflix are available with the high quality

Environmental factors: The organization is commitment to gaining the Net zero emission via the year 2022 for the different operations. This includes the commitments resonate along with the sustainable conscious audiences within the UK. The streaming services mainly needs to major energy (Bogers et al, 2019). The efforts of Netflix to optimise the effective data centre are important within resolving the criticisms related to the environmental impacts related to the digital streaming. The growing awareness related to the climate change, the consumers within the UK demanding for the corporations’ accountability. The initiatives of the transparent sustainability, this boosts the brand image of Netflix.

Legal factors: UK has tough IP laws; these are significant for the organization to protect the licensing agreements and original content. Post brexit, the United Kingdom impose the major production of the local content demand the organization to invest within the British content. The compliance with (GDRP) General data protection regulations within UK makes sure about the consumer data protection.

The macro environment of UK provides the challenges and opportunities for the Netflix. The effective and supportive government, increasing needs for the technological development and digital entertainment make the favourable situations. On the other hand, sustainability needs regulatory compliance and economic pressure demands for the strategic navigation. The organization requires emphasising on the technological innovation, affordability, content production to manage the leadership within the market of UK.

Five forces analysis of the Industry

Threat of new entrants (High): Streaming technology advancement and decreased prices for the infrastructure of cloud permits novel entrants to enter in the market of SVoD. The niche platforms and novel start-ups (ITVX, BritBox) supply to the major segments of UK and increasing the rivals. The extensive content and established brand Netflix makes the major barriers for the novel entrants. On the other hand, by managing the benefits demand for regular investment within the technology and original content (Fuertes et al, 2020). The initial investment is particularly moderate, ascending the operations to effectively compete with the reach and quality of Netflix. This poses the major challenges for the novel entrants.

Bargaining power of suppliers (Moderate to high): Studios and producers have majorly leveraged, mainly for the increasing demand for the content. The change of Netflix towards production in house reduces the reliance on the suppliers (Hitt et al, 2020). This might boosts the operational costs. The partnership with the cloud providers and (ISPs) internet service providers such as AWS, this is impacting the quality of streaming. The rivalry creative industry of UK boosts the price of gaining the top talent for the effective and original production.

Bargaining power of buyers (High): The customers of UK have different options of the SVoD, creating them more sensitive for price. The different service such as Prime video of Amazon providing numbers benefits, the Netflix is facing the high pressure to diversifying the services. The effortless switching and cancelling subscription, it leads to fluctuating the loyalty of subscriber. The flexible plans of pricing and refreshing content might reduce the churn rates. The subscribers are expecting high experiences related to the tailored view, this is pushing the organization to regularly investment system which is driven by AI.

Threat of substitutes (High): The channels of UK such as 4’s all 4 channel, BBC iPlayer and streaming ad supported, these are alternative which are cost free to the services of SVoD (Netflix Porter's Five Forces Analysis, 2023). The social media platforms, podcasts and gaming particular compete for the customer attention. The different organizations like as Tik Tok and YouTube provides the content in shorter format, decreasing the time spent of consumers on the services of SVoD. The different rivals are exploring the advertising models of the hybrid subscription (Disney+) provide the affordable substitutes to the premium pricing of the Netflix. 

Industry rivalry (very high): Netflix majorly competes with the international giants like as Apple TV+, Amazon prime vide and Disney+. These are having the major offering of the unique content and also have the budget. The regional players such as BritBox include the major competition. The heavy investment within the creating the original content and rights of the major shows (Games of throes based on the NOW), this develops the high competitive environment. Netflix needs to produce the content with the high quality to boost the market share. The number of household in UK has been subscribed to any one of the SVOD services; the demand is increasing so this creates the major issue related to converting the users.

The organization operates within the high competition landscape of SVoD within UK, this is indicates via extensive library and strong brand. The different threats from the various substitutes, new entrants and consumers, these are mainly cost conscious. The user exprinces would be important for the Netflix to boost the leadership

Performing internal analysis of company

VRIO framework

Value: The capabilities and resources of Netflix might enable to reduce the threats and increase the opportunities. The vast catalog of Netflix, this is involving the original and exclusive productions such as the crown and stranger Things. It is offering the value via attracting the different audiences internationally. The localised content within the major market such as UK boosts the appeal. The development in the algorithm offers the users a effective and customised recommendations, enhancing the user engagement and retention. The feature includes the major value within the SVoD’s competitive space (Steiss, 2019). With the subscribers more than 238 million, the scale of Netflix make network effect, increasing the ability to smoothly invest in the novel content. Via scale of economies and technology production, the organization can produce the original and high quality content.

Rarity: The Netflix is equal with the developing entertainment, grasping the major position globally and in UK. The reputation for offering the original content with the high quality is tough to replace. The Netflix is establishing within the SVoD, this mainly enjoys the user loyalty and brand recognition within the crowded industry. The data of user behaviour of Netflix is rare and permits for the content decisions; this includes the green lighting highlights on the predictive analytics. The partnership with the broadband providers of UK such as Virgin media makes sure about the access to the organization. It is creating this major rare resources within the developing the distribution.

Imitability: The different competitors such as Amazon prime video and Disney+ invest within the exclusive content, duplicating the global scale of Netflix related to original programming might be challenging (Netflix Vrio Analysis, 2023). Even though, rivals might boost the recommendation systems, the algorithmic maturity and vast information pool are really hard to copy. The rivals might imitate the strategies of marketing but the developed trust of Netflix as the leader within the streaming industry of UK is not that easy to copy.

Organization: The ability of Netflix to organise the resources which controls the success in managing the competitive benefits. The innovation of culture within the Netflix “responsibility and freedom”, this culture increases the effectiveness and creativity. It is making sure that workers are line up with strategic objectives. Cloud architecture of Netflix offers support in the streaming with the high quality. The strength of Netflix permits the adaption of the enhanced demand. The investment of organization within the specific content, this showcases the effective understanding of the preferences and local tastes, also developing market penetration.

The organization posses the major imitate resources, rare and different valuables which are mainly organization to offer support to the strategy of business (Lasserre and Monteiro, 2022). The major benefits might involve the scalable, customise infrastructure, original content and brand equity. On the other hand, managing the different benefits need the ongoing investment within the content creation and innovation to affect the competitors.

SWOT analysis of Netflix

SWOT Matrix of Netflix within UK

Strengths	Weaknesses
Netflix has the strong brand reputation and become one of the top rated television programs. This is having the global presence, affordable to the UK and scale. Netflix is having the customised algorithms related to the revenue based subscription. The organization has adaptability and ongoing modifies the services, based on the choice of viewers and market. The original TV shows and movies provide the ample of opportunities to budding the filmmaker.	The Netflix has limitation within the copyright, this tolls on the revenue.  There is lack of particular original content within the different countries. The debt of organization is also enhancing. The organization is having the high reliance on the on the revenue based on the subscription. The negative viewpoint related to the policies of account sharing.
Opportunities	Threats
The organization carries an effective brand reputation, the increasing need for the OTT platforms within the present market permits for the brand to expand. Netflix might boost the subscriber base via effective strategic partnership with the local market. This will permit to capture the major local market (Netflix SWOT Analysis, 2023). This can increase the collaboration with the creative industries of UK Netflix can utilises the sustainability initiatives which can boost the reputation	Netflix can face the high competition from the Amazon prime video and Disney+ The government regulations within the different countries might hold Neflix from the more expansion The organization is facing issues related to the content piracy. Many consumers choose to watch from the pirated version without paying. The consumers are having different options from the different entertainment like as TikTok and gaming

Strategic advice for the leadership of Netflix

Exploit opportunities: Recently, Netflix developed the subscription tier which is ad supported to appeal major cost sensitive consumers. In order to boost the success within UK, the organization needs to modify the model via placing and optimising to manage the content recommendations and user experience to boost the engagement. The partnership with the creative talent and production houses might make sure about the cultural relevancy and localisation. Local production’s tax incentives can decrease the prices. By creating on forays early within the gaming, the organization might diversify the portfolio via options of casual gaming and interactive storytelling. By decreasing the dependency on the content which is traditional and attracting the consumers who are younger. By showcasing sustainability efforts, this includes the decreasing the carbon footprints and optimising the information centres. The organization might attract the consumers of UK who are environmental conscious and boost the reputation of brand. Restricted access is not permit the organization to operate within different countries, if the Netflix agrees; the norms of government don’t permit it.

Counter threats: Netflix might emphasise on the differentiating via formats of innovative content, exclusive partnership and different models of revenue (Mintzberg et al, 2020). Via providing the bundled plans along with the making loyalty rewards and telecom companies. The organization might attract the consumers long term based and decrease the churn rates. Effectively working with the regulators of UK makes sure about the adherence to developing legal standards. This includes the laws of data privacy and content quotas, reducing the penalties risks. By evaluating the options such as merchandise which are tied with the major shows (The Witcher or stranger Things) might offset the reliance on the subscriptions.

Mitigate weaknesses: By introducing the family plans and flexible pricing to boost the price sensitivity within the UK. Effectively adopting the pricing strategy, this might boost the consumer retention. The password crackdown of Netflix related to sharing password has increased backlash. Increasing the system of guest pass and options of family sharing can resolve the consumer dissatisfaction and decreasing the revenue losses.

Build on strengths: By increasing the ongoing investment within the high quality content with the original production within the UK, the organization might retain the market edge. By using the AI to boost the effective recommendation system, this is making sure that users can discover the needed content (Ferlie and Ongaro, 2022). This can boost the satisfaction and engagement of the consumers. The utilisation of the global hits which effectively encourage the spin offs locally, this is mixing the global attraction with the different consumer preferences.

The leadership of Netflix within the market of SVoD of UK relies on the developing different opportunities such as gaming and ad supported tiers. The different regulatory threats and countering are major competition within the industry. The strategic investment within the partnership, pricing, innovative and content, these will make sure that competitive advantages and sustainable growth.

CONCLUSION

Conclusively, it states that the Netflix mainly operates within the high competitive industry of SVoD, in this the developing need of strategic agility and consumers preferences. Due to the existing European Union, the Netflix has to face different challenges related to the trade regulations. This might put impact on the content acquisition of the organization which can affect the operational process. The inflation and prices of the living is regularly developing which can affect the major content production and subscribers. The population of UK is focusing on adopting the on demand content which offers Netflix an effective opportunity to expand the services. The organization is releasing the seasons at once which can increase the attraction of the consumers. The innovation within the different algorithms, Dolby Atmos, which ensures that experiences of the consumers. Netflix is aligned with its commitment which is related to achieving zero emission through the year 2022. The increasing advancement of the technology which might reduce the threats related to the novel entrants.

REFERENCES

Books and journals

Bogers, M., Chesbrough, H., Heaton, S. and Teece, D.J., 2019. Strategic management of open innovation: A dynamic capabilities perspective. California Management Review, 62(1), pp.77-94.

Ferlie, E. and Ongaro, E., 2022. Strategic management in public services organizations: Concepts, schools and contemporary issues. Routledge.

Fuertes, G., Alfaro, M., Vargas, M., Gutierrez, S., Ternero, R. and Sabattin, J., 2020. Conceptual framework for the strategic management: a literature review—descriptive. Journal of engineering, 2020(1), p.6253013.

Henry, A., 2021. Understanding strategic management. Oxford University Press.

Hitt, M.A., Arregle, J.L. and Holmes Jr, R.M., 2020. Strategic management theory in a post‐pandemic and non‐ergodic world. Journal of management studies, 58(1), p.259.

Lasserre, P. and Monteiro, F., 2022. Global strategic management. Bloomsbury Publishing.

Mintzberg, H., Ahlstrand, B. and Lampel, J.B., 2020. Strategy safari: The complete guide through the wilds of strategic management. Pearson UK.

Steiss, A.W., 2019. Strategic management for public and nonprofit organizations. Routledge.

Online

Netflix PESTEL Analysis, 2023. Online. Available through https://www.edrawmax.com/artcile/netflix-pestel-analysis.html

Netflix SWOT Analysis, 2023. Online. Available through https://www.edrawmax.com/article/netflix-swot-analysis.html

Netflix Vrio Analysis, 2023. Online. Available through https://www.pdfagile.com/blog/netflix-vrio-analysis

Netflix Porter's Five Forces Analysis, 2023. Online. Available through <https://www.edrawmax.com/article/netflix-porters-five-forces-analysis.html>

Netflix, 2023. Online. Available through <https://www.netflix.com/in/>