Business Strategy Analysis for Netflix

CAPSTONE PAPER

Paper Outline:

The following is a guideline to assist you in getting started. Try and cover all of the items listed. Any additional items/concepts that we cover in class (or that I discuss with your group) should also be covered in your analyses. Also, concepts covered in other courses could contribute to your analysis.

1. Business Press Article and an Executive Summary

 

1. Page 1 of the paper = a copy of the Business Press Article

 

1. Executive Summary (2-3 pages)
2. Strategic move
3. Major issues
4. Key analysis
5. Final recommendation
6. External Analysis

 

1. Industry Definition: a one-sentence definition of the industry the firm is competing in. You should also provide a diagram of your industry.

 

1. Five Forces Analysis
2. Conduct a detailed analysis for each force. Discuss the analysis in an
   exhibit and summarize your analysis in the text of the paper.
3. Threat of Rivalry
4. Barriers to Entry
5. Supplier Power
6. Buyer Power
7. Threat of Substitutes
8. Assess the overall attractiveness of the industry based on the 5-forces
   analysis. Discuss the analysis in an exhibit and summarize your analysis
   in the text of the paper.

 

1. General Environment (PESTEL) Analysis

Analyze how each of the following forces impact your industry(s). Discuss how changes in the forces will affect the firms competing in the industry that you are analyzing, now and in the future. Use data and statistics to support your analysis.

1. Political/Legal
2. Economic (macroeconomic trends)
3. Social/Demographic
4. Technological
5. Environmental
6. Global

 

What implications can you draw from this regarding the strategic move that the firm is contemplating?

 

1. Competitor Analysis

***The comparative competitor analysis should include the firm that is the focus of your analysis as well as the competitors. In other words, do not leave out the focal firm.

1. Identify your firm’s competitors. Define each firm’s market share as well as the market shares of the top 3-5 firms. If your company competes in several markets or industries, the competitors in each market or industry you are analyzing should be identified.
2. Using your list in item 1 above, identify your firm’s primary competitors (emerging and existing). Justify why these firms are the primary competitors.
3. Define each primary competitor’s business level and corporate level strategies. The business level strategies should be classified according to Porter’s generic (business level) strategies. The corporate level should be classified according to the different types of corporate level strategies reviewed in class (such as related constrained, related linked, unrelated, dominant business, etc.).
4. How does each competitor achieve their strategic position? Identify each firm’s key resources, capabilities, products and markets served. Compare and contrast the competitors on these factors.
5. What are the implications of the above elements for: a) the industry?
6. b) rivalry? c) your firm’s strategy?

 

1. Intra-Industry Analysis: Analyze Competitive Dynamics – stage of industry evolution, key strategic moves, strategic groups, disruptive technologies, etc.

***The Intra-Industry Analysis should include the firm that is the focus of your analysis as well as the competitors. In other words, do not leave out the focal firm.

Discuss the competitive dynamics unfolding between groups/individual firms within the industry (such as, the role of disruptive technologies, nature of competitive advantage, coopetition, evolution of competition, etc.).

 

1. Summary of External Analysis
2. Summarize the conclusions of the external analysis (items A-E).

 

III. Internal Analysis

 

1. Strategy statement: Based on company documents, develop a concise strategy statement for your firm. Include the firm’s objective (be specific), scope and advantage in this account.

 

1. Corporate Level
2. Define the firm’s business portfolio
3. Given the firm’s business portfolio, define the firm’s corporate level strategy using Rumelt’s classification.
4. What are the firm’s core competencies that are present across its various businesses?
5. Identify any recent acquisitions, mergers or divestments and apply course frameworks to analyze the effectiveness of these moves.
6. Identify any recent alliances, partnerships, joint ventures, etc. and analyze them using concepts/frameworks discussed in the course

Note: Use various tools discussed in class / in other courses to support your analysis.

 

1. Business Level
2. Define the generic business level strategy for each business that the firm is operating in. Include market scope and how the firm serves the market. Also include a short historical analysis on how the firm got to its current business level strategy.
3. Define how the business level strategy fits with or supports the corporate level strategy.

 

1. Resources & Capability Level
2. Identify the firm’s resources and capabilities. Summarize your analysis of the resources and capabilities in a value chain exhibit. Be sure to identify interactions across support activities, across primary activities and across support and primary activities.
3. Conduct a VRIO analysis and include an exhibit that summarizes your analysis. Identify processes/organization/technology of the firm that represent core competencies (and liabilities).
4. Analyze how the firm is retaining customers.
5. Apply frameworks from other classes where appropriate. For instance, you could include a product/service portfolio analysis, 4Ps analysis, Product Life Cycle Analysis, Customer Relationship Management analysis and an evaluation of the firm’s products or services, etc. However, do not limit your analysis to just the 4 Ps or the Product Life Cycle. Think carefully about frameworks, concepts and tools you have learned in other courses and apply relevant items here.

 

**Items A-D should collectively define the strengths and weaknesses of the firm and how they support the firm’s strategy.

***This section should be tightly integrated – items A-D are related to each other and inform each other. A common error is a lack of integration across these sections. To avoid this, verify that 1) the analysis is well integrated, 2) the analysis is consistent.

 

1. Financial Analysis (requirement: at least 3 years of financial data)
2. Analyze the firm’s performance and operating ratios over 3 years. Analyze the firm’s position based on its financial performance. Also, if possible, compare the firm to the industry average. Try and incorporate financial or performance metrics that are industry specific.
3. (Optional) Conduct a valuation of the firm using NPV, EVA or an alternative valuation method that you have learned in your finance or accounting courses.

 

1. Analysis of the strategic move and its effectiveness

 

In this section, you will analyze in-depth the strategic move that your firm is contemplating. This is one of the areas where you will integrate all the pieces (internal and external analysis) together. This includes doing the following:

1. Designing/Evaluating the strategic move: Here you will use your imagination
   and deep understanding of the firm’s external/internal position to craft the
   contours of the strategic move.
2. Indicate how the business/corporate level strategy of the firm will change
   based on the strategic move.
3. If the strategic move is an acquisition, analyze the firm with the acquired
   target. If the strategic move is a partnership, analyze the ramifications for all
   firms in the partnership.
   4. Highlight the competitive dynamics that are unlikely to unfold as a
   consequence of the strategic move. .

 

Now that you have analyzed the implications of the strategic move, you will:

1. Indicate whether the strategic move will allow the firm to address or change industry conditions.
2. Discuss whether the firm has sufficient resources to implement the strategic move. Also, discuss whether the strategic move satisfies the firm’s objectives.
3. Establish the overall effectiveness of the firm’s strategic move. Briefly summarize the conclusions from your strategic analysis – for instance, if your analysis suggests that the firm is better off by the strategic move summarize why this is the case.
4. Highlight any other critical issues.

 

1. Recommendations (Don’t skimp here)
2. Define 2 short term and 2 long term recommendations
3. Use your analyses to design/justify the recommendations (make a tight
   link to sections I – IV).

 

1. Strategy Implementation
2. Select 1 short term recommendation and 1 long term recommendation
   and define how they should be implemented. For instance: What actions
   will management need to take to successfully execute the
   recommendations? How should it deal with any issues or problems?
   What are the costs/benefits/financial implications of the
   recommendations? What is the timeline? What changes are required in
   the firm’s organizational structure, infrastructure, reward systems,
   culture, leadership, etc.? What barriers to imitation must be built? What
   actions must be taken to retain customers? etc.

 

1. Highlight how 1 short term and long term recommendation that you have made will support/incorporate the creation of shared value and ethical decision making practices within the firm (employ ideas from the Porter and Kramer article in an appropriate manner here).

 

1. Conclusions (brief)
2. Building on your recommendations and analyses, state any additional conclusions concerning the future of the firm.

 

VII. Bibliography

 

VIII. Appendix – Exhibits/Tables

 

 

 

 

Bibliography Format

 

Step 1: All Team Members are required to review:

http://www.turnitin.com/research_site/e_home.html

Click on “Plagiarism Defined” and review the other web pages associated with plagiarism (What is Plagiarism?, Types of Plagiarism, Plagiarism and the Internet, Did you Know?, etc.)

 

Step 2: All Team Members are required to review the bibliography guidelines section below and the following website: http://www.turnitin.com/research_site/e_citation.html

 

Proper Citations and Bibliography guidelines

For many of you this will probably be self-evident, but to make sure everyone has the same understanding: Copying sentences, paragraphs or any text fragment from sources (periodicals, websites, journals, books, analysts’ reports etc.) without properly citing them is a violation of University policies and a serious offense! Properly citing means: if you copy word-by-word, you have to enclose the copied text with quotation marks “ “ and cite the source (including the page number of the quoted text). If you do not copy word by word but take someone else’s idea then you must indicate the source of the idea by citing the source. The citation must directly follow the idea. It is not enough to merely provide a list of sources in a bibliography at the end of the paper; sources must be cited in the text of the paper. Sources must also be cited in exhibits where appropriate. All direct quotes must be in quotes and the page number of the source must be identified.

 

Examples of the reference format for books or journal articles in bibliography:

1) Articles

Last name of author, first initial, second initial, year. “Title of Article in quotes.” Journal or periodical name. Volume, number, issue, page numbers for article. Example: Alchian, A. 1950. “Uncertainty, evolution, and economic theory.” Journal of Political Economy. Vol. 58, pp. 211-222.

 

2) Books

Last name of author, first initial, second initial year. Title of Book. State or Province, Country: Publisher.

Example: Barney, J. B. 1997. Gaining and Sustaining Competitive Advantage. MA: Addison-Wesley.

 

Parenthetical Referencing: Example of how to reference a book or journal article in the text of the paper: “Alchian (1950) suggests that…” or “Researchers use natural selection to …(Alchian, 1950; Weick, 1979)”. Format is (last name of author, year of publication). For quoted text, the format is: (last name of author, year of publication: page number of quoted text).

 

Web pages:

See the following for online documents and online periodicals:

http://www.apastyle.org/elecgeneral.html

Refer to the “Related Topics” section for Examples, Electronic media & URLs, and Citations in text of Electronic Material. Full web page address, name of the author and date accessed.

When the author and date of publication is available, follow the preceding example for referencing the article in the text. When this information is not available, indicate the web address. Avoid using general web addresses for evidence to support your analysis.

 

Note: per the style guides referenced in the above web pages: for materials with multiple authors, the bibliography should include the names and initials of all authors in the order listed on the article.

 

All team members are urged to read the University regulations on plagiarism and to keep in mind that if one team member plagiarizes material, the plagiarism is credited to all team members. Plagiarism will result in a “F” grade for all team members.

 

Tips: Former capstone students have commented that integrating citations/footnotes/endnotes at the end of the project during final formatting can be exhaustive when team members use different approaches. For instance, one team member may use footnotes, another may use endnotes, yet another may use a standard bibliography reference approach. Agree on a method/format for the bibliography at the beginning of the project. Allot sufficient time for the formatting to ensure that every item listed in your bibliography is referenced in the text and the bibliography is formatted correctly.

Several students have also commented that integrating documents with footnotes into one document using Word is somewhat problematic. They also indicated that they encountered formatting problems in Word when the number of footnotes grows large. Given this, the bibliographic format is recommended instead of the footnote/endnote approach.