What Are the Effects on Netflix Innovation of the Value Chain?

In: Business and Management

Submitted By Lakolut
Words 3203
Pages 13
Media & Innovation
What are the Effects of Netflix’s
Innovation of the Value Chain?

Source: (Netflix, n.d.a)

WS 15/16

Current Issues in Media and Communication

1

Table of Contents
• Key Slides
• Getting to know Netflix
• Disruptive Innovation of the Value Chain
• Effects of the Innovation
• Outlook
• Bibliography

WS 15/16

Current Issues in Media and Communication

2

Key Slides 1/3
Netflix can be regarded as a service business model within the video-ondemand area. It is known for being the pioneer offering its users entertainment content for a subscription fee.
Since the foundation of Netflix in 1997 the new business concept turned into a success story with more than 70 million members around the world.
People in 190 countries have access to Netflix‘s wide range of media entertainment possibilities and Netflix plans to add more to its list.
The fact that their previous expansion meant 130 new countries in one go forecasts that Netflix will become a very important and influential global player in media entertainment industry. But how does all of it start?
Innovation was the key. Netflix’s success in the new video rental business was based on the idea to offer an online DVD mail service. Adding new technology to a breakthrough idea created a combination which was meant to succeed.
WS 15/16

Current Issues in Media and Communication

3

Key Slides 2/3
The users of the Netflix service are those who pay for it. In exchange to their subscription fee they receive legal access to Netflix’s media database.
Moreover every customer will be offered a personalized service with for instance media ratings or recommendation options. Another plus for Netflix is that they avoid advertisement to earn more money. Instead of that they plan to raise fees without destroying the original add-free value proposition.…...

Similar Documents

Netflix and Disruptive Innovation

...industry? Is it Blockbuster, Redbox or Netflix? Blockbuster was the king of VHS rental with their brick and mortar stores for more than 20 years. Netflix was the first to market with the idea of shipping DVDs directly to consumer’s homes but are now focusing their resources and attention to online streaming. Netflix is slowly getting out of the DVD and Blu-ray rental game by raising the prices of their DVDs and Blu-rays. Netflix is spending more money to increase the size of their online library for streaming. The two companies that are battling it out to be the king of the rental industry are Redbox, a company owned by Coinstar Inc., and Blockbuster. This paper will focus on how Redbox entered the market through Disruptive Innovation and what Redbox needs to do to better position themselves in a volatile market place. I will also look at the mistakes Blockbuster made and offer solutions on how Redbox can avoid the organizational decline that Blockbuster experienced. I use Wall Street Journal and peer-reviewed academic journals for my references. To understand the full scope of how Redbox entered the market I will look at the Disruptive Innovation Theory. Disruptive Innovation Theory is a term that was coined by Clayton Christiansen. Clayton Christiansen is a professor at Harvard Business School. He has written a number of books on the subject. In an interview done by Smith, Christensen defines disruptive Innovation Theory as, “a technology that brings a......

Words: 1988 - Pages: 8

Value Chain Analysis

...in terms of innovation as well as give the organization a competitive advantage (Hitt & Robert, 2011, p.10). Value chain analysis is a model that was developed by Michael Porter to help an organization develop a strategy for its organization. Michael porter suggested that organization activities can be grouped into two major categories which include the following; primary and support activities. Primary activities are those activities that are geared towards the creation and delivering of a product. Examples of primary activities include component assembly (Schmitz, 2005, p.20). Support activities on the other hand are not directly related to the production of a product or service. Such activities are those activities that can increase the efficiency or effectiveness within a business. For example, human resource management is an example of support activities. This essay is going to evaluate the process of value chain analysis and its application in the following two companies; Netflix and Redbox companies. 2.0 Background information. Netflix is an online movie streaming and email DVD Company. The company offers consumers a chance to stream live various movies over the internet. In order to use Netflix, consumers are required to register on the company’s website. The registration will involve paying a monthly subscription fee. Consumers are able to stream movies and watch live televisions show to their personal computers or even television sets. Netflix is only......

Words: 1651 - Pages: 7

Moving Up the Value Chain

...n© 2008 International Institute for Sustainable Development (IISD) Moving up the Value Chain: Published by the International Institute for Sustainable Development The International Institute for Sustainable Development contributes to sustainable development by advancing policy recommendations on international trade and investment, economic policy, climate change, measurement and assessment, and natural resources management. Through the Internet, we report on international negotiations and share knowledge gained through collaborative projects with global partners, resulting in more rigorous research, capacity building in developing countries and better dialogue between North and South. Upgrading China’s Manufacturing Sector Pan Yue Party School of the Central Committee of the Communist Party of China Simon J. Evenett University of St. Gallen and Centre for Economic Policy Research IISD’s vision is better living for all— sustainably; its mission is to champion innovation, enabling societies to live sustainably. IISD is registered as a charitable organization in Canada and has 501(c)(3) status in the United States. IISD receives core operating support from the Government of Canada, provided through the Canadian International Development Agency (CIDA), the International Development Research Centre (IDRC) and Environment Canada; and from the Province of Manitoba. The institute receives project funding from numerous governments inside and outside Canada, United......

Words: 27804 - Pages: 112

Value Chain

...Value Chain Can be understand how goods and services move through an organization and value is added to them. We can see above the horizontal line activity center they´re called support activities. Below the horizontal line are primary activities. Inbound Logistics which have to do with the getting raw materials into the company. Raw materials are not only one of the company´s success factors, its largest input. Suits&Co doesn´t use the fabric of domestic manufacture – because they don´t offer right products. In Portugal there are few vendors which offer quality raw materials which mostly coming from suppliers from Italy, Spain and Germany. Operations which performs operations on those raw materials. The quality of the raw materials is key factor to success. But also important part is technological level in the production process. Suits&Co invests 4 million euro per year in fabric. Outbound Logistics is the process of moving finished goods in to the hands of customers. It is distribution of finished goods. Only 25% of its sales coming from Portugal, Suits & Co are mostly focusing on American and European market. Company is planning to open new factory and office in US because of increasing demand in this market. It can help to avoid transportation costs and also be closer to Americans. Within increasing of scale Suits&Co developed ready to wear suit, shirts and ties – these accessories product are outsourcing by partners from the textiles......

Words: 580 - Pages: 3

Value Chain

...Value chain analysis at air asia Air Asia is the second Malaysian national airline which provides a totally different types of service called low cost no frills. Their vision is to provide affordable price to all worldwide travellers with minimum in-flight service.thier price is slightly lower than to any other full service airlines. Before 2001 Air Asia fails to capture market or attract new customer due to its poor operation against the full fledge service given by Malaysian airlines which was supported by Malaysian government. Turning point of Air Asia was in 2001 when this loss making company bought by Tony Fernandez. Air Asia re-launched in Malaysia in late Air Asia re-launched in Malaysia in late 2001, with low cost domestic airlines. Value Chain Analysis: PRIMARY ACTIVITIES: The primary activities in Porter’s Value Chain are as follows INBOUND LOGISTICS: As inbound logistics involves different categories in air line industry for example how to schedule flights, keeping an eye on their competitors that what strategy they are adopting how to sustain in market, and how to cut off their price as they manage fuel efficiency by purchasing it advance when prices are low, and how to plan routes as they mostly plan short routes so that their costs are low. OUTBOUND LOGISTICS: As air Asia mostly uses their operations through online as their ticketing process is totally online and customer can get their tickets book online and they can also print their boarding card from......

Words: 3546 - Pages: 15

Value Chain

...Int. J. Technological Learning, Innovation and Development, Vol. 2, Nos. 1/2, 2009 7 Globalisation of the automotive industry: main features and trends Timothy J. Sturgeon Industrial Performance Center (IPC), MIT, 292 Main Street (E38-104), Cambridge, MA 02139, USA E-mail: sturgeon@mit.edu Olga Memedovic* United Nations Industrial Development Organization, Vienna International Centre, A-1440 Vienna, Austria E-mail: O.Memedovic@unido.org *Corresponding Author Johannes Van Biesebroeck Department of Economics, University of Toronto, 150 St. George Street, Toronto, Ontario M5S 3G7,Canada E-mail: jovb@chass.utoronto.ca Gary Gereffi Department of Sociology, Duke University, Durham, NC 27708-0088, USA E-mail: ggere@soc.duke.edu Abstract: This paper lays out the main features of the global automotive industry and identifies several important trends. A boom in developing country sales and production has not yet overshadowed the importance of existing markets in developed regions. Regional integration is very strong at an operational level, yet the industry has recently developed a set of global-scale value chain linkages, and retains national and local elements as well. The paper highlights how global, regional, national and local value chains are nested to create a pattern of global integration that is distinctive to the industry. We use global value chain analysis to help explain the limits of build-to-order in the industry, the role of regional and global......

Words: 7992 - Pages: 32

Value Chain

...Value chain analysis Value chain From Wikipedia, the free encyclopedia Jump to: navigation, search Popular Visualization The value chain, also known as value chain analysis, is a concept from business management that was first described and popularized by Michael Porter in his 1985 best-seller, Competitive Advantage: Creating and Sustaining Superior Performance.[1] Contents[hide] * 1 Concept * 1.1 Activities * 2 Significance * 3 SCOR * 4 Value Reference Model * 5 References * 6 See also | [edit] Concept A value chain is a chain of activities for a firm operating in a specific industry. The business unit is the appropriate level for construction of a value chain, not the divisional level or corporate level. Products pass through all activities of the chain in order, and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of added values of all activities. It is important not to mix the concept of the value chain with the costs occurring throughout the activities. A diamond cutter can be used as an example of the difference. The cutting activity may have a low cost, but the activity adds much of the value to the end product, since a rough diamond is significantly less valuable than a cut diamond. Typically, the described value chain and the documentation of processes, assessment and auditing of adherence to the process routines are at the core of the quality certification of the......

Words: 1126 - Pages: 5

Value Chain

...IT and the Executive: Value Chain Analysis Question: What is a Strategy(1) ? The Oxford English Dictionary defines a strategy as follows: 1: The art of war. 2a: The management of an army or armies in a campaign. 2b: the art of moving troops, ships, aircraft, etc into favourable positions 3: A plan of action or policy in business or politics So let us now ask this question again, and this time attempt to answer it using a more information systems and business oriented language. “Strategy is a rule for making decisions under conditions of partial ignorance, whereas policy is a contingent decision. Business strategy is the broad collection of decision rules and guidelines that define a business’s scope and growth direction.” [1] “Strategy is the pattern of objectives, purposes or goals and major policies and plans for achieving those goals stated in such a way as to define what business the company is in or to be in and what kind of company it is or is to be.” [2] “Strategy formulation involves the interpretation of the environment and the development of consistent patterns in streams of organisational decisions.” [3] “Strategy is a broad based formula for how business is going to compete, what its goals should be, and what policies will be needed to carry out those goals. The essence of formulating competitive strategy is relating a company to its environment.” [4] “ Strategic decisions are......

Words: 1554 - Pages: 7

Value Chain

...According to the M. Porter Value chain is the chain of activities that a firm operating in specific industry performs in order to deliver a valuable product or service for the market. He introduced concept of value chain in his book "The Competitive Advantage" in 1985. Now this concept is one of the best known and widely applied. Value chain analysis helps to identify a firm's core competencies and distinguish those activities that drive competitive advantage. According to Porter: “Competitive advantage cannot be understood by looking at a firm as a whole. It stems from the many discrete activities a firm performs in designing, producing, marketing, delivering and supporting its product. Each of these activities can contribute to a firm’s relative cost position and create a basis for differentiation” (Porter, 1985:33) A view of these activities is given in the following figure. This is simplistic representation of company's value chain. In this figure you can see that activities fall in two categories: Primary and Secondary. Firstly, companies should identify core (primary) activities that would give them sustainable competitive advantage and secondly, identify the assets needed to achieve this advantage. Value chain activities are interrelated and represent value creation. The next figure exhibits Porter's framework of Value Chain Activities Primary Activities: relate directly to the physical creation, sale, maintenance and support of a product or service.......

Words: 573 - Pages: 3

Value Chain

...competitive advantage. Defy convention and explore the next evolutionary step in supply chain management] [Value chains] falseJones, Allen. Canadian Transportation Logistics104. 5 (May 2001): 22. I searched by IS and Value Chain and found this interesting article. The article basically is saying that no matter how good your mouse trap is you must have a good supply/value chain in place to make your product successful. There are several steps: “Find a killer purchasing manager to beat up on materials and service providers so that you can get your costs right.” Next find a great marketing manager to help market the product. “Success hinges on outwitting, outmanoeuvring, and outperforming everyone perceived as competition.” What this means is that the old idea of the supply chain has morphed into the value chain which is much more. It is not putting the focus on the “better” mouse trap but the entire picture. The fact that if the client needs a customized color that your company can accommodate it is part of the “value” chain. Your company forms good relationships with the vendors. Ultimately all of this translates into better relationships, more satisfied customers. cost savings and improved logistics management. Further more the internet is continuing to help shape the value chain. Current studies show that 47% of companies share data of all kinds with their value chain partners. Additionally another 14% say that plans to do so aren’t finalized but......

Words: 321 - Pages: 2

Value Chain

...ARTICLE: Value chain analysis in interfirm relationships: a field study and Interorganizational cost management and relational context. Introduction A value chain is a chain of activities for a firm operating in a specific industry. The business unit is the appropriate level for construction of a value chain, not the divisional level or corporate level. Products pass through all activities of the chain in order, and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of the independent activity's value. It is important not to mix the concept of the value chain with the costs occurring throughout the activities. A diamond cutter, as a profession, can be used to illustrate the difference of cost and the value chain. The cutting activity may have a low cost, but the activity adds much of the value to the end product, since a rough diamond is significantly less valuable than a cut diamond. Typically, the described value chain and the documentation of processes, assessment and auditing of adherence to the process routines are at the core of the quality certification of the business, e.g. ISO 9001. Diagram 1 The goal of these activities is to create value that exceeds the costs of providing the product or service and next generating a profit margin. A Value Chain Analysis (VCA) has five parts including: a) inbound logistics; include the receiving, warehousing, and inventory control of input materials. b)......

Words: 1448 - Pages: 6

Netflix Innovation

...inShare In the past 12 months, Netflix has gone from Wall Street (and PR) dunce to darling. After announcing they had signed up more than 2 million new U.S. streaming subscribers in the first quarter, the stock surged 25% (at press time). As the CEO of a video compression company, I've enjoyed watching this company develop and am very excited by the opportunities they've uncovered in streaming and original programming. Success has not come easy for Netflix but it never does for disruptive companies. Past: A Disruptive Start Anne Marie Knott, a professor of strategy at Washington University and director at Berkeley Research Group, wrote a great piece detailing the company's original strategy. From her post "Netflix aimed to kill Blockbuster and started with a simple mission of targeting people who found Blockbuster inconvenient, both because they had to drive there twice within a 24 hour period, and because they had to scan a good portion of the stacks to find movies of interest. Formerly, Blockbuster had an important resource (the store network) that formed an entry barrier. Any firm considering a national chain would find the investment in stores unattractive—they would at best get half the market at lower margins (because the two chains would compete on price). Netflix executed an end run around the entry barrier through an online sales/mail distribution system. Just as Blockbuster's store network served as an entry barrier, Netflix' end run became an adaptation......

Words: 863 - Pages: 4

Value Chain

...分析了低碳经济中各国参与全球价值链分工的比较优势。结果显示, 在 低碳经济的发展模式下,低碳技术进步、低碳需求的培育以及碳排放权、碳金融市场的完善是各国充分发挥竞争优 势、 实现全球价值链分工体系中价值链升级的基本条件。 [ 关键词 ] 低碳经济; 全球价值链; 成本收益分析法 [ 中图分类号 ] F061. 3 [ 作者简介 ] 廖 [ 文献标识码 ] A [ 文章编号 ] 1006 - 5024 ( 2012 ) 07 - 0005 - 06 涵, 中南财经政法大学教务部副部长、 博士生导师, 研究方向为西方经济学、 外贸、 就业与经济增长、 经济发展 战略。 ( 湖北 武汉 430074 ) Abstract: While the global value chain for the global division of labor sustained economic growth has injected a new power, it has brought about the environment pollution such as the tremendous increase of greenhouse gases emission like carbon dioxide. This paper applied the cost - benefit analysis of economics to analyze the comparative advantages of all nations participating in the global value chain division in the low - carbon economy. Under the development of low - carbon economy, the progress of low - carbon technology, the cultivation of low - carbon demand, and improvement of carbon emission rights and carbon financial market are primary conditions for all countries to give full play to competitive advantages and realize the upgrade of value chain in the system of global value chain division. Key words: low - carbon economy; global value chain; cost - benefit analysis 对于发展中国家而言, 嵌入全球价值链的过程在为 其带来经济快速增长新动力的同时, 也引起了二氧化碳 等温室气体排放量的剧增, 环境污染不断加剧。为应对 日益严峻的环境问题, 各国政府不断强化了对生产过程 主要因素,为此,本文在低碳经济全球价值链的经济学 分析模型中, 加入了能源使用因素。 一、 低碳经济中一国独立生产的价值链分析 中碳排放的规制, 这给参与全球价值链分工的企业带来 ( 一 ) 一国价值链的成本分析 了巨大的低碳发展的成本压力。因此, 在低碳经济发展 借鉴 Feensta, Hanson ( 1995 ) 以及 Dixit,......

Words: 2197 - Pages: 9

Value Chain

...VALUE CHAIN – CRITIQUE/FIRM LEVEL ANALYSIS INDIVIDUAL ASSIGNMENT – UNIVERSITY OF BALLARAT CHINTHAKA ARIYAPALA – ID 30100162   Brief Content Topic Page 1. INTRODUCTION...………………………………………………………………………….. 3 2. VALUE CHAIN FRAMEWORK-CRITIQUE…………………………………………………….. 3 3. MAIN ASPECT OF VALUE CHAIN ANALYSIS…………………………………………………. 3 4. PRIMARY ACTIVITIES…………………………………………………………………………………. 4 5. SUPPORT ACTIVITIES………………………………………………………………….…………. 5 6. LIMITATION OF VALUE CHAIN ANALYSIS………………………………………………………. 7 7. COMPETENCIES……………………………………………………………………………… 8 8. INTERNAL ANALYSIS THROUGH SWOT ANALYSIS……………………………………… 8 9. VALUE CHAIN ANALYSIS……………………………………………………………………….. 9 10. CONCLUTION…………………………………………………………………………………….……. 11 11. REFERENCES……………………………………………………………………………….…………. 13 Introduction The value chain approach was introduced by Michael Porter in the 1980s in his book “Competitive Advantage: Creating and Sustaining Superior Performance” (Porter, 1985). The concept of value added, in the form of the value chain, can be utilized to develop an organization’s sustainable competitive advantage in the business arena of the 21st C. All organizations consist of activities that link together to develop the value of the business, and together these activities form the organization’s value chain. Such activities may include purchasing activities, manufacturing the products, distribution and marketing of the company’s products and activities......

Words: 2797 - Pages: 12

Dell Value Chain

...To meet the demands of their customers, Dell Computer’s has aggressively developed a business model to expand their coverage worldwide. The business problem facing Dell Computers is to ensure that consumer demand is being met and that their competitive advantage and value chain are being maintained. Having multiple manufacturing plants is an example how their competitive advantage is maintained and the value chain is operating successfully. Maintaining a lean production practice and providing a high level of Internet based sales in the personal and business sector are two sources of pride for Dell Computers. Knowing their customer needs and thoughts enables Dell to be on the cutting edge of product design and innovations; delivering their products quickly to their customers and at high level of mass customization. Dell Computers has established a strong relationship with all suppliers, which allows the company to maintain only the needed supplies. Having such a strong relationship with its suppliers, allows the company to focus their research budget on the best way to reach the consumer. The desktop, notebook and other production items are not produced until the order is received from the consumer. Corporations have access to a website that has been tailored specifically to their needs and that allows them complete access to all previous orders with ease. The streamlined production process also has significant accounting benefits. The materials are received as needed...

Words: 897 - Pages: 4

EasyJet Porters Five Forces Analysis 2018 Premium Last updated on: 2018-10-30 | Playback Hàn | 第48集