Business Policy &

Strategy Final
Output

In partial fulfillment of the requirements to the

subject MGNT410: Business Policy & Strategy

Submitted to:
Professor Jacqueline
Morta

Submitted by:
Estrella, Adrianne
Dennise P.
Miranda, Royette B.
Navarro, Trisha
Ysabelle M.
 I. Strategic Objectives

Netflix Inc.’s mission statement and vision statement target the entertainment
market. Netflix Inc.’s corporate mission is “To entertain the world.” This mission statement
is based on the nature of the company in providing on-demand movie streaming services.
Similar to the corporate vision statement, this corporate mission emphasizes operations
in the entertainment industry, as the business thrives in addressing consumers’
expectations and preferences about the media they access.

Netflix Inc.’s corporate vision is “To continue being one of the leading firms of the
internet entertainment era.” Aligned with the corporate mission statement, this vision
statement highlights the company’s strategic objective of being at the top of the
competition.
Netflix’s Strategic Objectives

Cost Leadership. Netflix Inc.’s strategic objective is cost leadership, which in Michael E.
Porter’s model ensures competitive advantage through minimized costs and, frequently,
minimized selling prices. This enables the online entertainment company’s business
model’s competitiveness based on low costs and the corresponding ability to sell at
affordable prices, without necessarily being a best-cost provider. In this strategic
objective, Netflix broadly acquires more customers in the online entertainment market, in
contrast to focus strategies that concentrate on specific market segments.

Through intensive growth strategies, the cost leadership strategy for competitive
advantage gains the biggest market share, relating to Netflix Inc.’s corporate mission and
vision statements, which point to the strategic plan and goal of attaining and maintaining
leadership in the international online entertainment industry.

Differentiation. Differentiation involves developing the online business and its products
in ways that make them different from the competition. For example, Netflix develops its
competitive advantage by producing its own original content, aside from streaming
content from third parties. The differentiation generic strategy enables the business model
to attract and retain customers, thereby supporting intensive growth strategies for further
expansion of the online operations.

II. Strategy

Market penetration and development focuses on Netflix’s objectives and the

removal of barriers to enter into the global market successfully. Identifying expenses of
expansion and identifying countries where investment make most sense for revenue
stream is the strategy Netflix will follow.

Netflix will be able to minimize barriers by developing relationships within the live stream
industry in foreign countries, understanding the best way to operate. Netflix will learn to
understand the red tape that may already exist through government regulations on
entering the markets. If the red tape does not exist, this will give Netflix the opportunity to
expand and be able to assist the country in determining what would be appropriate
standards for the industry and offer ideas and solutions on policy.
Market Penetration is the main intensive growth strategy of Netflix Inc. in expanding its
business operations and multinational market reach. In the Ansoff Matrix, this growth
strategy involves selling more of the online company’s streaming services in the markets
that the business already has. This growth strategy’s objective of growing revenues and
market share depends on how Netflix’s generic strategy maintains competitive
advantages to gain and retain more customers in current markets.

Market development works by selling the company’s current online streaming service
and original content to new markets. For example, in applying this growth strategy, one
of Netflix’s goals is to grow the business by entering more countries, which serve as new
markets. Competitive advantages are essential in making Netflix’s business model
effective in generating profits in these new markets.

One of Netflix Inc.’s major strengths is its high brand equity, which is the business benefit
and value associated with the company’s brand, relative to competitors. In addition, its
large platform of content producers and consumers is a strength that allows Netflix to
maximize its operational effectiveness, service attractiveness, and business growth. For
example, as the platform’s entertainment content creators increase, the service attracts
a larger population of consumers, which in turn attract more producers.

III. Goals

Netflix’s Long-Term Goals

First, Netflix has published its long-term goals which can be found on its company’s
investor-relations site. The long-term view is built on the following key ideas:

• “Over the following decades, streaming entertainment will replace linear TV, and
we hope to keep leading by offering an amazing entertainment experience.”
• “We don’t offer pay-per-view or free ad-supported content. Those are fine business
models that other firms do well. We are about flat-free unlimited viewing
commercial-free.”
• "If you think of your own behavior any evening or weekend in the last month when
you did not watch Netflix, you will understand how broad and vigorous our
competition is."
• "We are making great headway with our slate of original series, which is a rapidly
growing proportion of our spending. Any linear network would be proud to show
them."
Recommended Goals

According to the current global situation and Netflix’s quarterly reports and objectives,
Netflix may benefit from achieving the following:

• Increasing the distribution of original content and possibly purchasing more movies
that are highly rated by viewers upon analysis. Netflix should first identify the
countries/regions where investing would make the most of possible revenues.
• Enhance support teams that cater to consumer problems.
• Attract customers who may have exhausted their current entertainment provider’s
offers or are no longer committed to their cable and are about to end their
subscription.

IV. Implementation Plans

Based on the goals from above, Netflix’s strategies are bold and must be well-planned
and executed flawlessly.

1. Increasing the distribution of original content and possibly purchasing more

movies that are highly rated. Netflix will first identify countries where investments
make most sense in terms of revenue. Netflix would profit from continuing the
product development path in the form of continuing to produce new original
content. Based on BMO’s report last January, Netflix is set to spend about $11.1
billion in content purchase and production, which can be risky now considering the
uncertainty given the current crisis, but Netflix is known for having taken big risks
before. Finance should understand the company is spending big money for a big
reward. Operations should consider increasing the cost of service, to reflect there
is original content that can only be viewed on their platform. Marketing should
utilize social media and create a large marketing push for Netflix original content,
to ensure the financial risk is worth it. Research and development would be
spearheading this development. That department will look at what content has
been received positively and begin developing ideas for new content from there.
2. Enhance support teams that cater to consumer problems. Operations should
spearhead this project and consider outsourcing or hiring more customer support
agents to grapple with its increase in demand since the pandemic. Marketing
should address the customer support issue that customers have been facing.
Finance should allocate adequately to the hiring of support agents and give
financial information as to whether hiring more would be more financially feasible
than training staff currently there.
 3. Attract customers who may have exhausted their current entertainment
provider’s offers or are no longer committed to their cable and are about to
end their subscription. Netflix stated after releasing its Q1 report that it exceeded
its projected quarterly subscribers, and have given an estimate of 7.5 million new
subscribers for Q2. Based on research on other implementation plans with similar
objectives, Marketing would take the lead on this project by first creating a market
plan to attract potential customers. They would also need to devise a sales tactic
for these potentials. Also, Finance and Operations would need to evaluate and add
necessary resources to accommodate the growth in the number of customers. At
this point, Netflix may look into debt financing if they need to generate more cash.

V. Netflix’s Score Card

Performance indicator Measures / Target Time Assigned

estimation Department
Customer satisfaction Feedback survey Yearly Marketing

Service quality Feedback survey Quarterly Quality Assurance

Employee satisfaction Employee survey Monthly Human Resource

Financial Revenue 15% - 25% increase Quarterly Finance

annually
Financial Ratios Higher than Industry Yearly Finance
Averages
Number of subscribers 5% - 15 % increase Quarterly Operations
annually

• Customer satisfaction

Measurement that determines how happy customers are with the company’s
services and products. It is important to know that they are satisfied with the
performance of the company because they are the main revenue source of the
business. In addition, it is the company’s goal to provide the best entertainment
services for them.
• Service quality

It is an assessment of how well a delivered service conforms to the client's

expectations. It is important to measure and track the service quality of the company
because it must be maintained in order for the customers to be satisfied. In order to
achieve the goals of the company, they have to ensure that the quality of the services
they offered is upgrading throughout the years.

• Employee satisfaction

Employee satisfaction is the extent to which employees are happy or content with
their jobs and work environment. In order for the company to achieve their goals, they
must have the most capable employees to do it. Employees must be treated as asset
for the company, and they must make sure that their employees are happy with their
workplace.

• Financial revenue

Every company’s goal is to earn revenue. Netflix must have their own target
revenues annually and hit it. They must monitor the profitability of the company
because it tells whether the business can continue through out the years and achieve
their long-term goals.

• Financial ratios

Financial ratios are relationships determined from a company's financial

information and used for comparison purposes. It is important to track and compare
the ratios of the company in the industry averages. Whenever their ratios are lower
than industry average, they must fix it because it means that there are certain flaws
that needed to be fix. Netflix must maintain their ratios better than the average in order
to keep the company profitable and stable.

• Number of subscribers

The number of subscribers of Netflix tells how many people are enjoying their
services. They must keep their subscriber numbers increasing because one of the
goals of the company is to expand their market. Expanding their market means that
they are targeting to increase their subscribers. Keeping track of their subscribers will
really help them operate the company.
VI. Execution

In the execution of the strategic plan, several issues might arise for those who
manage and monitors the plan. The company has many goals in their strategic plan, and
there are different goals under it order to achieve the end goal. Managers might be
confused on what to prioritize first. In addition, sometimes setting a strategic goal might
change the way of operating the company. Internal turmoil might arise if the tasks are not
divided properly.

Expanding the target market might be problematic to Netflix also because there
are certain countries that has a lower economy, they must adjust with the economy of
such country to penetrate the market successfully.

The strategic plan is formulated first in the top of hierarchy of the company and will
be passed down to different department heads. The head of each department will be
distributing the task to their managers and they will be the one who will communicate to
their employees. Netflix is committed to their plan ever since the company has started
years ago. It is the company’s strategy to stick with their plan and invest time and money
in order for them to achieve their long-term goals. Netflix will stay committed to their plan
because the company’s aim is to serve the best entertainment service to the people and
will achieve it using their own formulated strategy

References

https://www.rancord.org/netflix-swot-analysis-internal-external-strategic-factors
https://www.rancord.org/netflix-business-model-generic-strategy-intensive-growth-
strategies-competitive-advantage
https://www.netflixinvestor.com/ir-overview/long-term-view/default.aspx
https://theconversation.com/netflix-has-capitalized-on-social-isolation-but-will-its-
success-continue-in-a-post-coronavirus-world-133414
https://www.businessinsider.com/netflix-q1-2020-earnings-analysis-subscribers-
revenue-eps-2020-4
https://variety.com/2020/digital/news/netflix-2020-content-spending-17-billion-
1203469237/