Key challenges facing Netflix Inc.

The primary challenge that Netflix Inc. faces is competition, how to keep subscribers and acquire new ones and how to remain relevant in the market. The company operates in a market that is highly competitive with main competitors being Redbox, HBO Now, Hulu and Amazon video among others who were heavily investing in the business. These companies pose a serious threat to the success of Netflix Inc. making it have a negative free cash flow which is a drawback to the company’s aim of being the world best producer in movies.

External analysis of Netflix Inc.

Even though the company can exploit the opportunities present for growth in the economy, it has to take some considerations to survive from the threats in the external business environment.

Political: the business operates in a politically stable environment that allows them to run their activities efficiently. The government put a limited restriction on the company’s operation as any company must acquire the necessary license for healthy competition.

Economical: the demand for video products increase every day in the global market. Most of the countries that Netflix operates in have a favorable economic environment that supports the company’s objectives. Their consumers especially from Britain and the United States are pleased with their products and purchase them highly hence leading to an increase in the profit margin.

Socio-cultural: people around the world enjoy watching video and television shows. This is important for the organization as they will be able to get increased sales thus much profit.

Technological: businesses can take advantage of the home based internet to connect to the customers. For example, Netflix Inc. can take advantage of the home-based internet to connect its website to increase the sale of the products.

Internal analysis of Netflix Inc.

Netflix dominance in the video production is as a result, of strong leadership by its executives such as Reed Hastings and Marc Randolph among other members. Through this, they were able to win the Golden Globes awards and their series “The Crown” also winning the award for the best television drama. The business was able to overcome the competition by introducing the streaming service allowing subscribers to view one thousand titles instantly in their computers hence dominating the market.

Secondly, Netflix Inc. is focused on producing high-quality videos that can make them attract new customers. Their earnings increase every year as in 2012; they had a revenue of 3, 609 million dollars. In 2013, their income had increased to 4, 375 which increased to 8,831 in 2016. Through this, the business can withstand any competition in the market. They also make their products unique in the market hence making them distinct from other company.

Mutually exclusive alternatives

Firstly, the company should tailor their products to meet the demographic and cultural differences of the people around the world. This will ensure that they can attract all customers across the globe hence increase the sale thus much profit. However, this is so costly to ensure that video production meets the cultural differences of the customers.

Lastly, the company should ensure that they can remain relevant in their production. This will enable them to have a high competitive advantage over their competitors. Despite the advantage, staying relevant requires constant research which might prove to be costly for the company.

Recommended alternative

The best alternative for Netflix is to ensure that they remain relevant in the market. This is achievable as the company is already connected to home-based internet that gives them the opportunity to do market research. As a result, they will be able to have a high competitive advantage over their competitors that enable them to survive in the market.

 
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