Netflix Is the Leader in Renting Dvds Case Study

Netflix is the leader in renting DVDs to its customers. When the customer returns one DVD, another is issued. Netflix gained a remarkable success but, on the other, it is facing some of the problems nowadays. Netflix charge a monthly fee from its customers and it has an agreement with the film studios. Due to this agreement, it pays the studios a specific amount from its revenue and this amount is paid on per issue rather than on monthly basis. Since film studios are observing dynamic growth of Netflix, it is likely that they will increase their share rate on per issue and since Netflix charge its customers on monthly basis, it is likely that a decline in its revenue will occur. For this, it should make an agreement of monthly profit sharing with the studios. Due to increase in technology, people do not prefer to rent a DVD; therefore, Netflix should introduce a buying option. Besides this, Netflix is also facing a problem of handling its inventory.

As far as strengths of Netflix are concerned, the most dynamic and firm strength is of availability of a vast collection which other competitors do not have. Netflix just not only focuses on popular releases but in addition to this, it also focuses on less renowned films of the past as well as of the future while its competitors only focus on the popular releases. Besides this, the SWOT analysis reveals that fast delivery is also strength of Netflix. Once the customers' orders a DVD, he receives it within twenty-four hours and just in case if the customer complains that the DVD is not received, Netflix sends another and cancels the previous one. In addition to this, CineMatch software is also a remarkable strength of Netflix, which recommends different titles to the customers in accordance with their former rental patterns and choice.Besides, the browsing facilities of this software, it also provides the customers an opportunity to give feedback and recommendations. Not, only is this, but the vast distribution of Netflix is also regarded as one of its main strength.

Besides having several strengths, Netflix also have a number of weaknesses. These weaknesses are the internal weakness of Netflix. According to its SWOT analysis, one of the weaknesses of Netflix is related to its patents. At present, Netflix do not have plans regarding the enforcement of its patents. If Netflix had enforced these patents in the past, its competitors like Amazon.com and Wal-Mart would not have evolved. Another weakness of Netflix was its throttling practice, it is because of the fact that a number of customers were involved with it and Netflix seems to be mismanaged in terms of its inventory. Due to this mismanagement, Netflix sometimes faced scarcity in its stock. Additionally, Netflix do not focused on the customers who want to buy the DVD and it kept its focus in limited line that is renting. Like its competitors, Netflix do not give the buying option to its customers. This option is available with Amazon, who is the competitor of Netflix. Besides this, Netflix do not give family editing option to its customers and some researches regard the high price of Netflix as its weakness.

A deeper analysis of Netflix can reveal that there are a number of opportunities available in the external environment of Netflix. It is commonly observed that….....