Solved by verified expert:For this assessment, create an abstract, annotated outline, and
annotated bibliography. Compile your assessment into a single,
well-organized file that includes the following three pieces:Abstract: Begin with a 200–300 word preliminary
abstract of your capstone project. Remember that an abstract should
summarize the main points in your paper, not just introduce it. Your
abstract may change as you finalize your project, but for this
assessment you should have a well-written draft of your abstract. Refer
to the Abstracts document, linked in the Resources, for more information
on writing an abstract.Annotated Outline: An annotated outline is a
document that outlines the main sections your paper will have. Your
outline must include an introduction and conclusion and at least four
other headings in between. In addition, each of those four headings must
have at least two sub-points and one quotation from a source that you
might use for support, in full APA format. Refer to the Developing an
Annotated Outline document, linked in the Resources, for more
information on annotated outlines.Annotated Bibliography: An annotated bibliography
is a way of collecting a list of sources that you intend to use in your
paper and summarizing them. List each source in full APA format, and
provide a summary (written in your own words, not a quotation) of 2–4
sentences. Then, for each source explain in an additional 2–4 sentences
why the source is important and how you might use it to support your
project. You must have at least 10 annotated references, including
annotations for all sources that you used in the annotated outline.
Refer to the Annotated Bibliography presentation, linked in the
Resources, for more information on creating an annotated bibliography.Additional RequirementsWritten communication: Written communication is free of errors that detract from the overall message.APA formatting: Resources and citations are formatted according to APA (6th edition) style and formatting.Number of resources: Minimum of 10 resources.Length of paper: 3–6 typed, double-spaced pages.Font and font size: Times New Roman, 12 point.
abstract__annotated_outline__annotated_bibliography_scoring_guide_2018_03_13_14_58_29.png
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20180313181454netflix_proposal.docx
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Assessment 3
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Abstract
This Capstone Project is on Netflix. Netflix is a publicly traded company that provides both
online television and movie streaming along with a DVD by mail rental subscription. This
project will focus on business strategies to enable Netflix to bring in more revenue, since their
spending is outpacing the money coming in. This is partly due to their original programming,
which has popular series such as Orange is the New Black and Daredevil. Netflix recently
moved into the global marketplace and started offering their streaming services around the
world, but they are having issues with implementing their services worldwide. This paper will
delve into those issues. This paper will also look at the original programming, because this is an
area that is overspending, though it is because of the original programming that has consumers
staying with Netflix. This paper will also provide a detailed SWOT analysis of Netflix.
Communication methods will also be discussed to see which ones Netflix is currently using and
which ones should be added. Amazon Prime and Hulu Plus are both big competitors of Netflix
and Netflix will need to look at what these providers have to offer their customers and decide
which of their strategies would be the best to use with their own business model.
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Annotated Outline
I. Introduction
Netflix is an internet television provider that has different plans to either stream through the
internet or to also include DVD’s through the mail. Netflix is a publicly traded company with a
total asset value of $13,586,610 as of the end of 2016. Netflix has been around since 1997 and
some say it is the reason that brick and mortar video rental stores are now pretty much obsolete.
The subscription package enables a person to stream their services on their television, phone, or
tablet. Netflix is undoubtedly a leader in this industry with the main competitors being Amazon
Prime and Hulu Plus. They also offer a service to receive DVD’s through the mail. The DVD’s
through the mail and internet streaming services are available for different monthly rates that are
very affordable.
In the past few years, Netflix has expanded to provide original programming. Some of
these series are Daredevil, Orange is the New Black, and Luke Cage. These series are bringing
more customers to Netflix, but the competition is still fierce. Netflix needs to look at their
business model and make sure that they are weighing the benefits versus the risks. “Changes of
this magnitude are rare. Radio was the dominant home entertainment media for nearly 50 years
until linear TV took over in the 1950’s and 1960’s. Linear video in the home was a huge
advance over radio, and very large firms emerged to meet consumer desires over the last 60
years. The new era of internet TV, which began a decade ago, is likely to be very big and
enduring also, given the flexibility and ubiquity of the internet around the world. We hope to
continue being one of the leading firms of the internet TV era” (Netflix’s View: Internet TV is
replacing linear TV).
History
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II. Mission Statement and Vision
This section will go over the history of Netflix, along with the current mission statement. A
mission statement is what communicates the purpose of an organization. “Our core strategy is to
grow our streaming subscription business domestically and globally. We are continuously
improving the customer experience, with a focus on expanding our streaming content, enhancing
our user interface and extending our streaming service to even more Internet-connected devices,
while staying within the parameters of our consolidated net income and operating segment
contribution profit targets” (Netflix Inc.).
Business Strategies
III. SWOT Analysis
The SWOT analysis compares strengths, weaknesses, opportunities, and threats. “Netflix has
distributed a number of exclusive programs. This includes original series such as Lilyhammer,
House of Cards, and Orange is the New Black. Original programming also includes
continuations of previously cancelled series from cable channels, such as Arrested Development,
The Killing, and Longmire. Netflix distributes a large number of stand-up comedy specials and
documentary films” (Napoli, 2014).
IV. Balanced Scorecard
The balanced scorecard looks at financial goals, customer goals, process goals, and people goals.
“In 1992, Drs. David P. Norton and Robert S. Kaplan started a working group to examine the
challenge of reporting only on financial measures. In for-profit organizations, financial measures
provided a lagging report (i.e. they told you what happened last month, quarter, or year), but they
were not able to look forward. Norton and Kaplan wanted to specifically look at what measures
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that look forward in time and act as leading indicators might look like and how that could affect
an organization’s strategy” (Jackson, 2016, p. 1).
Communication
V. Communication Plan
This section will detail the ways that Netflix communicates within the company itself plus the
way that Netflix communicates with its customers. A communication plan is essential to any
successful business. Netflix had to use their communication plan when they announced that they
were going to split up their DVD and streaming service along with raise the price of their
subscription service. This was not a good idea in the business sense, and the communication
during this time was not on target. This was a lesson learned experience for Netflix. “Though
Levick predicts the stock and the brand will recover, he says Netflix got its communications
strategy backward. Before raising prices or making any statements about splitting streaming
from DVD rental, the company should have announced its new streaming content” (Adams,
2011, p. 1).
VI. Corporate Structure
Netflix’s corporate structure is set up to take advantage of each officers particular set of skills.
This is good leadership on the part of the CEO. He makes sure that he looks at the skills that
each officer has and makes sure that they are properly utilizing their officers correctly. It is then
up to these officers to make sure that they are staffing their sections accordingly.
VII. Cultural Diversity
Netflix currently employs a force comprised of 60% men and 40% female. Of those, 47% are
white, 26% are Asian, 5% are Hispanic, 3% are black, and 19% are unspecified or other. When
looking at the leadership culture, 61% of leaders are men and 39% are woman. Of this number,
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64% are white, 14% are Asian, 14% are unspecified or other, 5% are Hispanic, and 3% are black.
The tech numbers are almost the same, with 76% being male and 24% being female. The
numbers do change around when looking at the creative and corporate side, where only 42% are
male and 58% are female. What these numbers tell me that Netflix is comprised mostly of men
and that most of these men are in the tech or leadership roles. There is also a big gap in diversity
when it comes to the different races. There is overwhelmingly more white people working for
Netflix than there is of any other race. Netflix wants to have a diverse culture but their numbers
show that they are not there yet. Netflix needs to work on bringing in more women onto the tech
side and to bring more minority races and women into leadership roles. A lot of this has to do
with the fact that there are not a lot of women going into the tech field, which this needs to be
addressed at the high school and college level or else there will never be enough diversity in
these types of companies.
Financial
VIII. Financial Estimates
Netflix provides financial data for their company as recently as April 2017. In the Q117 Letter
to Shareholders, Netflix provides all of the relevant financial information needed to complete this
product. All of the necessary calculations have been made to show cash flow, free cash flow,
revenue, and paid memberships for both the US and global customer base. “In, Q1, we
surpassed $2.5 billion in quarterly streaming revenue and added 5 million members. The
opportunity provided to us by the growth of the global internet is gigantic and our plan is to keep
investing as we increase membership, revenue and operating margins” (Q117 Letter to
Shareholders).
Data Gathering
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IX. Global Market
Netflix has recently moved into the global market, and while this is bringing in a lot of new
customers, they have run into problems with this expansion. There are a few reasons that Netflix
is not as popular in the global market as they are in the US market. Netflix does not offer a lot of
local content that is relevant to the global market, there are language barriers, Netflix is
expensive in other countries when compared to the average wage, and Netflix requires a credit
card which is harder to get in some global economies. “But the logistical pieces of Netflix’s
system, which US customers can take for granted, can present bigger problems in developing
markets. “Management has acknowledged that in the early stage of its global launch the
company will need to adapt to local traditions related to payments, as consumers in many
markets do not own credit / debit cards, or are resistant to entering payment information online,”
the analysts write. “So far, the company has leveraged prepaid / gift cards, phone billing
solutions, and is working with local partners. However, we expect the company will wait to see
which markets gain the most traction before making long term investments in local payment
services” (McAlone, 2016, p. 1).
Netflix needs to make sure when they are bringing their services to the global market that they
are abiding by the local customs of the countries that they are trying to bring their business to.
Different countries around the world have different customs and cultures and if you are not
careful, then you can accidentally offend someone in a leadership capacity. For instance, tipping
is looked down upon in Japan, where they very much have a culture of respect. In some
countries if you give a thumbs up it’s the equivalent of throwing the middle finger up in
America. Another big faux pas in other countries is if you are late, whereas some countries have
a custom of having meaningful conversations before getting down to business. These issues are
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something that Netflix needs to think about when conducting business in the global market.
They must make sure that they are following all of the local customs so as not to offend anyone.
X. Competitors
Netflix is definitely a powerhouse when it comes to online streaming, but they have some stiff
competition such as Amazon Prime and Hulu Plus. Both of these subscription services offer the
same online streaming as Netflix does, but Hulu Plus allows the subscriber to see content the day
after it has aired, though they do not do this for all shows. This gives Hulu Plus an advantage
over Netflix, because the US public have been cutting the cord on their cable subscriptions at an
alarming rate. “According to Nielsen there were 116.4 million homes in the US were expected
to watch TV during the 2015-16 season. Doing the math, that means about 9.5 million of those
homes have switched over to free OTA TV. That number is very close to the number that Statista
has for Pay-TV subscribers in 2016. Statista estimates that there will only be 96.4 million PayTV households by 2019” (Cable TV: Cord Cutting Statistics-2016).
XI. Cutting the Cord
XII. Netflix Statistics
XIII. Ethics and Integrity
“Netflix Parties are expected to act and perform their duties ethically and honestly and with the
utmost integrity. Honest conduct is considered to be conduct that is free from fraud or deception.
Ethical conduct is considered to be conduct conforming to accepted professional standards of
conduct. Ethical conduct includes the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships as discussed in below” (Netflix: Code of Ethics).
Recommendations
XIV. Recommendations
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Netflix needs to look at their global market and make sure that they are taking full advantage of
the global market to enhance their customer base. Netflix should also expand the content for
their streaming services. One of the main complaints is that there isn’t enough content. “I’m
sure, like me, many of you who use the service, have found yourselves often exasperated while
searching for films you really want to watch (whether old or recent), only to find out that they
aren’t available to stream on Netflix. And so you go elsewhere, like Amazon, or look for the film
on DVD instead, assuming your Netflix account allows for DVD rentals as well” (Obenson,
2013, p. 1).
Netflix should use the technology that they already have, to make it possible to buy single
episodes or whole seasons of popular television shows, just the way that Hulu Plus and Amazon
already does. Netflix would need to set up permissions with the major television networks to be
able to use this content, but more major television networks would be grateful for this
opportunity because Netflix is a household name that inspires trust for their customers. This add
on for Netflix would bring in more money to bring down the expected deficit of $2 billion.
The first step Netflix will need to do in order to implement this strategy would be to contact the
major television networks such as Fox, NBC, ABC, CBS, and AMC to get permission from them
to air their programming the day after they air. This step will more than likely include signing a
contract that details what kind of compensation that Netflix will pay to these networks to their
permission to air these shows. The next step should be the easiest one for Netflix, and this is
where they will use the programming that they already have to add these shows to their line-up.
The step after that will be to set up their webpage to accept payments for these shows. Amazon
and Hulu already use this technology, so it should be easy for Netflix to get their hands on the
information needed to implement this step. Once they have everything up and running, Netflix
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needs to run commercials through television shows, online, and through e-mail to their current
customers. A good marketing campaign will be needed to mark sure that the market is saturated
with this new feature. This should bring in new customers as well as let old customers know of
the changes.
Conclusion
XV. Conclusion
Netflix has great potential and they could possibly take over the internet streaming industry, but
they face their competitors streaming services which are the same or better, plus the global
economy, which is hard to break in to. Original programming is something that Netflix will need
to rely on for bringing in customers. Netflix should focus on the global market and original
programming for increased revenue.
According to Here’s What Netflix Needs to Succeed in International Markets, 2016:
“According to a recent report by market research firm IHS Markit, Netflix will reach 100
million streaming video subscribers by 2018 and, in the subsequent two years, its
international subscribers will overtake the number of subscribers in the U.S. The firm
estimates that by 2020 Netflix will have 75 million international subscribers. While our
estimates for Netflix expect refelct similar growth in international markets, this segment
accounts for only 30% of the company’s valuation according to our projections. We
expect Netflix’s international segment will be profitable by 2018, but we do not expect
these margins to reach the domestic contribution margin levels till the end of our forecast
period. A lack of operating leverage, and huge content and marketing costs, will keep
international margins lower for the immediate future. And while this segment holds
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strong growth potential for the company over the long term, the domestic market will
drive Netflix’s profitability over the next five years, in our view.”
Annotated Bibliography
Adams, S. (2011, October 11). Netflix did the Right Thing. Retrieved on May 21, 2017, from
https://www.forbes.com/sites/susanadams/2011/10/11/netflix-did-the-rightthing/#76fee98043d7
This Forbes article talks about what happened when Netflix decided to try and split their
DVD by mail and online streaming into two separate companies. It talks about the
backlash that Netflix received from their customer base because of this announcement. I
believe this website shows some of the communication errors that Netflix made and also
what Netflix should have done in the first place. This will help my paper by providing
some necessary background on the communication plan that I want to use.
Cable TV: Cord Cutting Statistics – 2016. (n.d.). Retrieved May 23, 2017, from
https://nocable.org/learn/cable-tv-cord-cutting-statistics
This website shows the statistics for US subscribers that are cutting cable. It also
provides a theory on how many subscribers will have cut cable by the year 2019. I
believe this webpage will support my theory that more and more US subscribers will be
cutting the cable cord and will need to rely on over the internet streaming services to
provide them with television. This proves my theory that Netflix needs to work more on
what content they need to stream and what they need to do in order to lure in more
customers.
Here’s What Netflix Needs to Succeed In International Markets. (2016, August 26). Retrieved
May 23, 2017, from
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https://www.forbes.com/sites/greatspeculations/2016/08/26/heres-what-netflix-needs-tosucceed-in-international-markets/#33fe37786df0
This Forbes article outlines a strategy for Netflix to move into the international market. It
shows statistics on Netflix’s projected growth and what investors can expect from
Netflix. It also outlines some of the areas in the global market which are restricting how
big Netflix can grow. This article supports my theory that Netflix should concentrate on
moving into the global market. It also supports my theory on which obstacles are
standing in the way of Netflix’s growth.
Jackson, T. (2016, June 8). What is a Balanced Scorecard? Retrieved on May 21, 2017, from
https://www.clearpointstrategy.com/what-is-a-balanced-scorecard-definition/
This website details what a balanced scorecard is and gives the criteria for having a
balanced scorecard. It details the origin of the scorecard, and provides examples of what
a scorecard should have. This website will show that I have the criteria to detail a
balanced scorecard for Netflix. It will also show the business strategies used to come up
with the information needed for the scorecard.
McAlone, N. (2016, July 6). 4 Things That Could Hurt Netflix in its Quest to Take Over the
World. Retrieved on May 21, 2017, from
http://www.businessinsider.com/4-challenges-to-netflixs-international-expansion-2016-7
This website details some of the reasons that Netflix is having a hard time moving into
the global economy. It shows four potential shortcomings of Netflix moving into the
global market and the reasoning behind their opinion for these reasons. This website will
help my project because it details some of the theories on what Netflix needs to do in
order to bring in more revenue. I believe that this website backs up my theories.
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Napoli, M. (2014, December 10). Netflix: A Short SWOT Analysis. Retrieved on May 21, 2017,
from
http://www.valueline.com/Stocks/Highlights/Netflix__A_Short_SWOT_Analysis.aspx#.
WSG45evyupo
This website provides an insight into a good SWOT analysis for Netflix. The strengths,
weaknesses, opportunities, and threats are all done in total detail. This website is useful
because it gives information that I was already thinking in a detailed SWOT …
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