Business Research Report



174371030956250032715208571230Presented by: Siham Abubekerthe nature of businessresearch report / weighting = 30% 471000Presented by: Siham Abubekerthe nature of businessresearch report / weighting = 30% 13220703086100Business Research Reportnetflix’s expansion into australia036300Business Research Reportnetflix’s expansion into .auMarch 21, .auMarch 21, 20184500349250center290090900EXECUTIVE SUMMARY Netflix is a large, publicly traded, online company which offers a media streaming service, that allows consumers to access a wide range of movies, TV shows and documentaries for entertainment purposes. Consumers subscribe and pay a specific amount on a monthly basis to access this service.This report has been commissioned to elaborate on the nature of the chosen business (Netflix). It will identify:The business’s activities: providing entertainment.Operation of the industry: tertiary industry.The chosen legal structure and its reasons: publicly traded, incorporated company: becoming its own legal structure set apart from the owners as a separate entity, to gain liability protection.The stage of the business lifecycle: Maturity. It will also inspect and discuss when, why and how the business has expanded into Australia: March 2015 to meet demands and increase customer base and generate profit. And to elaborate on the chosen external influences: competitive situation and social, and the internal influences: management and business culture. This report also evaluates the challenges that can be faced in the Australian market and the strategies for responding and overcoming them. It will then provide a final judgement on the success of the business’s expansion.BACKGROUND INFORMATION. Netflix is an American online company that was founded by Reed Hastings and Marc Randolph in 1997. It specialises in and provides online streaming services that allow users to access a wide range of movies, TV shows and documentaries for entertainment. (in text citation) . Netflix is a large, publicly traded company that operates on a global scale and employs around 5,500 thousand people (intext citation). It operates in the tertiary sector as it involves providing a service to its consumers. Netflix is a public, incorporated company, which is the legal process used to form a corporate entity, meaning that it becomes its own legal business structure set apart from the individuals who founded the business. This offers many benefits over an unincorporated company such as liability protection so that if the business falls into debt, shareholders do not have to sell or lose personal assets. (intext citation) Also, this enhances the company’s image as it adds credibility to its operations as consumers are more likely to trust and deal with a business with a positive image and if the business chooses to seek out external finances from banks or investors it is more likely to qualify for loans because the success rate is relatively high, hence debts are repaid. This also means that the business has perpetual succession, which indefinitely means that the business will continue to exist even when the owners change.. Netflix is a business which has gradually succeeded in becoming one of the most well-established businesses during this time, however, it is currently in the post-maturity; steady state and renewal stage of the business lifecycle. This is because the business is soon to progressively reach its market saturation, since consumers who have demanded for its services have already subscribed and the influx of new subscribers has decreased significantly. Also, there is a rise in competition in the current online streaming services, such as Stan, Apple, HBO and Foxtel etc. This leads the sales to slow down and eventually flatten out and plateau to a steady state, hence the business is not generating any new sales, which results in a decrease in profits. However, with product development and expansion strategies the business renews its self to increase sales and profits due to new growth areas. EXPANSION INTO AUSTRALIA After conducting in depth market research Netflix responded to the customer demand and expanded into Australia in March 2015 and completely dominated this industry with erratic cash inflow and an accumulating customer base. Ultimately, Netflix decided to expand:To increase sales (demand) and desire to increase profits by entering new markets, to increase market share and capture global consumers: Netflix became more widely known through extensive advertising to create awareness about its brand and the services they offer, hence sales gradually increased. By conducting market research Netflix established that consumers in the South Pacific Region were aware of its services and that there was a high demand. By expanding into a new market, it satisfied the increase in customer demand as Netflix’s objective was to serve a wider market, as it results in further sales and the growth leads further to business profits in the long run. As an online company based in the US, Netflix faced fierce competition with existing competitors or new competitors entering the market. This then leads to an ultimate battle of acquiring the most market share. Hence, the more competition a business has in a market the less market share it has. In this case, the expansion of Netflix into Australia stimulated new global consumers which facilitated the generation of revenue. Another reason Netflix decided to expand globally was to capture global consumers because its domestic market had become saturated, this implies that the business had reached the optimum (maximum) number of sales and to renew sales expanding was its route to renewal.INFLUENCES: EXTERNAL For Netflix to respond positively to the changes that take place and to prepare for the impact such changes will have on its business it must be aware of its business environment. The business environment refers to the surrounding conditions in which the business operates. These are divided into two categories:External Influences: which includes factors over which the business had minimal control petitive Situation Influences: Once Netflix entered the Australian market it faced intense competition with businesses like Stan and Presto which share the same customer base and provide the same or similar products. Sure, this provides the consumer with more choice and a range of qualities and prices, however, it motivates the business to stimulate greater efficiency in the product and in result better quality of products or services than those of competitors by developing a competitive edge. As Netflix initially expanded into Australia, it strategically offered its services at a lower price, which captured the majority of the market share. Later, Netflix then slightly increased the price along with new additions of features. Netflix also started its own ‘Netflix Original Series’, which gave it its own personal competitive edge as no business has yet established this. This enabled Netflix to dominate and stay in control of the market. Social Influences: By distinguishing and responding to the changes of taste and culture. It does this by providing services that accommodate for the rising demand of foreign or non-English movies and TV shows. Netflix now offers titles with over 20 languages. This targets a smaller segment (niche) of the market, ranging from Bollywood to Korean Drama. To maximize the number of the customer base, Netflix avoids the failure to respond to social changes which can threaten business stability and viability.INFLUENCES: INTERNALInternal Influences: includes factors which the business has somewhat of a degree of control.Management Influences: Through the use of a flatter management structure Netflix makes an effort to work with employees collectively to achieve business goals. It does this by taking a democratic approach, meaning that there is an expression of opinions and ideas. Although this lengthens the decision-making process, it can lead to a more vast choice of innovative ideas to choose from. Also by being, ‘people centered’ by implementing policies like “take vacation” which allows employees to take time off work and spend time enjoying a holiday with friends and family. This allows employees to return with new innovative ideas, with a positive attitude that encourages colleagues to do the same. Netflix has also implemented a “parental leave policy” which outlines to “take care of your baby and yourself”. This allows new parents to temporarily leave work at any time they want and ease back into the work force as they want. By making the employees feel valued and important in the business environment, it motivated them to return back to work in a positive manner.Business (Corporate) Culture: Netflix’s philosophy “people over process” intends to shape the motivation and productivity of employees collaboratively as a team. It invokes the values and expectations shared by managers and staff. For instance, Netflix promotes a communicative, passionate, selfless, innovative and inclusive working environment, which stimulates an open environment where freedom and responsibility work as a check in balance.CONCLUSIONTherefore, Netflix is a business which has progressively succeeded in becoming one of the most well-established businesses, that has definitely generated a substantial amount of sales, hence revenue. This is shown by the revenue increasing from 6 779.51 million (USD) in 2015 to an astounding 11 692.71 million (USD) in 2017. Thus, if Netflix continues to conduct extensive market research, meet consumer demand, extend its product/services range and manifest funds to implement strategies to overcome internal and external influences, then it will succeed in accomplishing its ultimate objective of gaining optimum market share and revenue. ................
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