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Porter's 5 forces analysis of Netflix-converted
supply chain mgt (scm 4012)
Institute of Business Administration
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ARMY INSTITUTE OF BUSINESS ADMINISTRATION (AIBA)
SAVAR, DHAKA
July-December, 2020
Quiz: 01
Course name: Strategic Management Course code: MGT 4802
Submitted by Md. Sakib Hasan Khan Srijon Id- B4170B Batch: BBA-
Submitted to
Murshida Rahman Lecturer Army IBA, Savar Cantonment
Date of Submission: 4th September, 2020
Question: Analyze any firm in a particular industry using Porter’s Five Forces model.
Answer:
Here I’ll analyze Netflix using Porter’s Five Forces model as a frame of reference. Porter’s five forces model would allow us to gain insight into the industry of Netflix, identifying the magnitude of each of the five forces which affect the company’s business strategy and profitability.
Threat of New Entrants
The presence of new entrants becomes a threat when the industry has dynamics that support the business to become well-established and profitable. Netflix is a part of media and entertainment industry, where the threat of new entrants is moderate. The moderate level of threat is created due to the evolving technology up gradation. Netflix has been able to adapt with the changing technology and trends in the media industry by shifting its’ focus from in store DVD rentals to online streaming and dispatching the rented DVDs through post, increasing the ease of gaining access of the customers. The business model is easier to replicate, but what provides an edge to Netflix is the range of content available at the company and convenience. Developing this competitive advantage requires capital investment, supplier contracts and networking in the industry which can be difficult to follow by any new entrant.
Bargaining power of Buyers
The media and entertainment industry dynamics allow the customers to have a high level of bargaining power over the service providers. The sales and revenue generated by the company is dependent on the subscribers who are located in different regions across the globe. Within the US, the company also caters to the need of the customers getting rented DVDs through mail, adding to the customer base. However, the low switching cost enables the customers with the option to cancel their subscription with Netflix and seek other media providers increasing the business threat to the company. Due to this pressure, Netflix can’t charge high prices from the customers and needs to keep the pricing strategy according to the demand of the customers, with minimal price increase. Moreover, high bargaining power from customers results in maintaining service quality that is in accordance to the customer needs and preference.
Porter's 5 forces analysis of Netflix-converted
Course: supply chain mgt (scm 4012)
University: Institute of Business Administration
