Reed Hastings established Netflix in the year 1997 (Allen, Feils & Disbrow, 2014). The company the internet in Los Gatos, California. The multinational company offers customers with access to on-demand internet television and streaming media and DVD by mail. Precisely, Netflix allows customers to take advantage of the internet and watch unlimited TV shows and movies (Kazi, 2011). Moreover, the company has a separate library of movies and customers can subscribe and watch instantly on their computers. Netflix has over 93 million subscribers globally (Hallinan & Striphas, 2016). Currently, the company operates in approximately 193 countries and ranked as the world’s leading organization in the provision of internet television (Hallinan & Striphas, 2016). As an OPD professional at Netflix, I have the responsibility to provide a detailed a report that will help the organization determine whether they should expand more globally. The paper will provide information on the current globalization and technology use by the company and recommendation that the CEO and other leaders should consider.
Analysis of the Current Globalization of the Organization
Currently, Netflix operates in more than 193 countries globally (Steel, 2017). However, the company is still weighing the prospects of providing its services in China. In the recent years, Netflix has grown into a giant company in the entertainment industry (Allen, Feils & Disbrow, 2014). The company’s primary global objective is to employ a strategy that will be a force in the entertainment and communications markets. Netflix plans to enter the Asian, Australian, African and European markets where the intellectual property rights are firm. The company expanded to the United Kingdom and Spain because the regions offer high-speed internet services and they all speak English. In 2015, Netflix reported a net income of $6.78 billion (Hallinan & Striphas, 2016). The figure increased by 23.2% from the previous year. In the fourth quarter of 2016, the company’s free cash flow deficit increased to $639 million (Hallinan & Striphas, 2016). Netflix recorded a growth in the free cash flow deficit due to the timing of content payment. In the first quarter of 2017, the company anticipates adding approximately 3.7 million subscribers overseas.
Although Netflix entered into 130 new markets in January 2016, the country faces stumbling blocks in its quest to dominate the world (Hallinan & Striphas, 2016). Netflix experience the problem of the limited amount of local content. In developed markets, many regional competitors have been inspired by the success of Netflix to get their own products into the market before Netflix enters. Mostly, these rivals have more localized contents (Steel, 2017). Second, due to language barriers, Netflix will find it hard to enter certain markets such as Russia and Asia. Much of the content offered by Netflix is in English. Third, Netflix has made it a tradition not to reduce price point in developing countries significantly. The price offered by Netflix is higher compared to what the competitors offer.
Netflix as a Virtual Organization
The goal of a virtual organization is to offer innovative and high-quality products instantly on the demand of the customer. Netflix as a virtual organization has twisted the mean of communicating to the audience. The organization has offered an alternative to classic television (Allen, Feils & Disbrow, 2014). Regarding the data collection approach, the audiences are now the direct source of information encouraging the flow of knowledge within the virtual space. The virtual team within the organization have unlimited access to what audiences watch (Allen, Feils & Disbrow, 2014). Therefore, Netflix as a virtual organization has get priceless information concerning the content to deliver and actions to take. Netflix uses Web 2.0 application to help in collecting information about the customer and the services used. Similarly, the application helps in automatic collection of information regarding the customer’s interaction with the company and devices used to access the service such as computer, mobile device, and gaming system. Netflix uses Web 2.0 application since it allows connection of individuals to other individuals.
Netflix encourages virtual work by sharing knowledge internally and delivering service to the final customers. Devising and delivering a service that is virtually based requires skilled and experienced employees who are willing to work full-time (Hitt, Hoskisson & Ireland, 2013). Netflix has launched virtual reality application that is compatible with customers with Samsung mobile devices and Gear VR headset. The app has a virtual living room for users to relax (Steel, 2017). Previously, Netflix customers used to go to the video stores to buy DVDs but know the engineers have created a virtual video store. Customers will have to replace tedious trips to video stores and mailboxes with the virtual video store whereby they can step into at the comfort of their living room.
A Recommendation and Rationale for the extent of Globalization and Technology use
We recommend that Netflix should partner with linear TV providers and ISPs. While the company is striving to expand more globally, it will grow by penetrating into untouched markets since there would be plenty of consumers who are not subscribers of Netflix. Internet service providers IPS offer a variety of products and services such as internet, mobile, and TV in many countries (Allen, Feils & Disbrow, 2014). Therefore, it would be ideal if Netflix collaborates with IPS to access the global markets. Similarly, by partnering with linear TV providers, the company can penetrate the market and improve the content it offers by minimizing the cost involved in switching from linear TV to online streaming. Additionally, the company can reduce publicity cost. The previous deal that the company made with small cable operators such as TiVo enabled the availability of Netflix on TiVo’s set boxes.
Additionally, collaboration of Netflix with TV providers allows subscribers of conventional TV to enjoy both Netflix and linear TV. The benefits that Netflix will gain is a cut from revenue due to subscription. Regarding consumers, they will be able to enjoy the content offerings from both Netflix and conventional TV. Although the linear TV has its own shows, we believe that Netflix will outclass them due to its originality and flexibility. The partnership is the best recommendation for Netflix since consumers will change preferences thus increasing the company’s number of subscribers. Besides, Netflix is expanding globally because of the need to increase subscribers. By the end of the year, the company anticipates operating in more than 200 countries.
Outline of the Interface between Social and Organizational Culture
Culture theory states that if managers and employees fully engage in collective principle, morals, and customs, the organization will achieve the desired outcome. The culture of Netflix focuses on freedom and responsibility. The company aims at achieving excellence (Allen, Feils & Disbrow, 2014). Regarding the interface between social and organizational culture, Netflix would need to address the following. First, the organization would emphasize the need to work with and within the current cultural situation. Netflix has deeply embedded culture, and it would be hard to replace it since it encompasses natural advantages to the company. For instance, Netflix has a culture to play outstanding employees. Our culture helps us achieve the highest level of excellence; therefore, by hiring A-players, the company will realize high performance.
Second, we will address the need to focus on critical behaviors. When something is not perfect, it is significant to change; however, as a company, we would be keen not to pick behaviors that do not align with the culture of the organization. For instance, we ay focus on ways employees should interact with customers since one of the company’s values is promotion and development. Third, we will address the need to link behaviors with objectives of the company. Motivations, feelings, and values are some of the values that an organization needs to succeed in the market (Allen, Feils & Disbrow, 2014). As leaders, we will demonstrate how cultural intervention improves the performance and financial outcome of the organization. Fourth, we will address the need to manage the cultural situation of the organization over time. For Netflix to continue to succeed, we should actively monitor and update our cultural forces. Moreover, when we align culture with strategic priorities, it can motivate and accelerate changes within the organization.
Outline of Leadership Considerations
Currently, many firms operate in the multinational environment. Individuals might assume that due to globalization, cultural differences may disappear. Conversely, the collapse in economic borders results in an increase in the cultural barrier, and this will present a new challenge to the business. The following are leadership considerations that the organization should keep in mind. First, a leader should think and act globally. An effective leader will only manage a multinational company if he demonstrates a global mindset (Hitt, Hoskisson & Ireland, 2013). The leader should have a global experience (Hallinan & Striphas, 2016). The increase in cultural and business complexity requires one to have an advanced global mindset. Moreover, a global mindset requires leaders to have a better understanding of the local and cultural differences.
The second leadership consideration is the ability to embrace diversity. Netflix is a company with a genuine global mindset; therefore, it has the right to holds its leaders accountable for inclusiveness. The company will ensure leaders get the opportunity to explore international issues and situations. They should understand other leaders and customers who act and think differently. To manage a global organization, leaders must be curious and willing to take risks (Hitt, Hoskisson & Ireland, 2013). Besides, global leaders must develop an understanding of how to work with diversity.
Third, we should leverage technology for collaboration. Demonstrating the ability to use technological tools and resources shows that leaders are competitive assets of the company (Allen, Feils & Disbrow, 2014). Leaders in Netflix demand more from technology than the benefits its offers such as cost reduction and process efficiency. With global collaboration, the company will link the right team to the right project. Similarly, the organization will benefit from the competitive advantage. Fourth, a leader should be a change agent. Leaders who would like to expand globally should consider their level of creativity and innovativeness. Leaders at Netflix should be innovative so that they create a complex business environment that would keep off competitors.
What the Organization should consider regarding the Use of Team
A team plays a significant role in the success of the organization. Through a team, an organization can gather information from its members and engage them in pursuing goals. Regarding the use of teams, the organization should consider the following. First, the organization should consider identifying the overall objectives of the team. Defining the objectives of the team allows the members to understand the goals to achieve. Second, the organization should consider the use of appropriate leadership. Accomplishing a task requires the organization to exercise flexibility and allow team members to demonstrate real leadership. Appropriate leadership entails using skills to build a team and ensure adequate allocation of time.
Third, the team should have a suitable membership. Teams in an organization will perform well if members portray a variety of skills, knowledge, and experience (Hallinan & Striphas, 2016). Netflix will value members of a team based on their contribution. However, the organization will also encourage them to work productively. Fourth, the organization should consider the working technique of the team. It is the responsibility of the team to invest time and effort in creating appropriate techniques and rules. Fifth, the organization should consider the arrival of new members. Netflix should encourage teams to integrate new members and identify their strengths quickly.
What to Address regarding Communication
Leaders consider winning the trust of employees or stakeholders as their greatest battle. A leader will gain the confidence of employees by communicating openly and enacting a well-defined communication policy (Allen, Feils & Disbrow, 2014). Netflix would like to address the following. First, the company would address communication barriers. The organization will address the filtering barrier whereby leaders withhold information to manage the reaction of a person. For instance, the manager can decide to keep the department’s poor sale from the seniors. Additionally, the company will address cultural barriers, which occurs among employees within the organization since they come from different backgrounds.
Second, the organization would address the internal communication of the organization. With internal communication, employees would get insights into jobs and environment (Kazi, 2011). Communication would motivate employee and build their trust with the management. Third, the organization would address a communication strategy that would help the employee to communicate effectively. Besides, with a communication strategy, the organization can meet its goal of expanding more globally. Effective communication methods that the organization would address include listening, speaking and preparations.
What to Address with Respect to Talent Management and Development
Netflix needs to have the best talent in the industry to succeed in the competitive and complex global economy. Talents management entails a critical process of ensuring firm has the quality and quantity of individuals to meet the current and future goals of the organization (Hallinan & Striphas, 2016). Netflix would need to address the following. First, the organization would provide a clear understanding of the current and future strategies of the business. Second, the organization would identify key gaps that exist between the talent it has and that required prospering the business. Third, the organization would develop a sound talent management plan that will help to fix the gap. Moreover, the organization should integrate it with the strategic and business plan. Fourth, the organization would address on engaging in accurate recruiting and promotion decisions.
Fifth, the organization would address the development of talents to improve the current market performance in addition to preparing for the transition to the next level. Sixth, Netflix would address on designing an effective compensation system that would reward employees for their excellent performance. Similarly, the organization would provide employees with promotional and career development opportunities.
A Synopsis of most important insights from this Course
In recent years, technology has flourished, and it is one of the reasons for globalization. Regarding the information and communication technology, companies have changed their creativity by reducing the size of their innovativeness and made them more efficient and affordable to customers. Whether one uses technology for business or personal consumption, the ever-growing level of innovation has contributed to the rise of globalization (Kazi, 2011). The internet and computer-based technology have had a significant effect on information and communication technology. People can now use the internet and stream videos or download movies and music.
Netflix uses the video streaming technology to provide services to customers. The company has changed content consumption to the extent that competitors such as mainstream video rental store were adversely affected. Regarding the communication technology, the internet has enabled people to connect with one another. Moreover, the main channels that Netflix use to communicate with customers include Television commercials, internet, and Billboards (Hallinan & Striphas, 2016). Customers can use their Netflix accounts to share and interact with friends. Moreover, the company collects feedbacks from social media platforms to improve its services and meet the needs of customers.
A Synopsis of Three to Six Areas to Investigate further
The following three areas need further investigation to help Netflix to compete. First, we should investigate on sustainability and social responsibility. The investigation entails exploring the products and services that the company offers and what can be done to minimize its impact on the environment. Larger and heavier products from Netflix would require shipping; therefore, emission of carbon print will affect the environment. Second, we should investigate on the supply chain analysis to determine the changes developed due to the growth of the company and find areas of improvement. The supply chain entails using distributors, customer relationship management, and communication system. It is possible to track the company’s products using the mobile phones, telematics, and GPS. Collecting real-time data allows Netflix to optimize the supply chain network and view shipments at any given time.
Third, we should investigate on content regulation and open internet. Netflix has experienced controversies regarding its success. Since Netflix uses the network provided by another firm; discussions on web content has ignited controversy over network neutrality.
Netflix has potential global markets in Africa, Asia, and Europe. The company has managed to compete with other internet television, and streaming media and DVD providers to position the brand as affordable and convenient. Moreover, if Netflix continues with its strategies and improves on services delivery, it will soon have no real competitors. The use of market penetration strategy and low prices gives Netflix a competitive advantage over rival firms. Diversification is appropriate for Netflix since it will allow the company to widen the content offerings and generate additional revenue. Some of the challenges that Netflix faces include poor payment systems for customers in some markets. Also, the company faces slower than anticipated number of subscribers in the European market. The company has the human capital, expertise, and finance to grow through innovation.
Allen, G., Feils, D., & Disbrow, H. (2014). The rise and fall of Netflix: what happened and where will it go from here? Journal of the International Academy for Case Studies, 20(1), 135.
Hallinan, B., & Striphas, T. (2016). Recommended for you: The Netflix Prize and the production of algorithmic culture. New media & society, 18(1), 117-137.
Hitt, M. A., Hoskisson, R. E., & Ireland, R. D. (2013). Strategic management: Competitiveness & globalization: cases. Mason, OH: South-Western, Cengage Learning.
Kazi, T. B. (2011). Effects of Globalization on Work and Organizations: Exploring Post-Industrialism, Post-Fordism, Work and Management in the Global Era. Inquiries Journal, 3(12). 1-2.
Steel, E. (2017, Jan. 18). Netflix go global and its profit soars. The New York Times. Retrieved from https://www.nytimes.com/2017/01/18/business/netflix-profit-rises-56-percent-to-67-million.html?rref=collection%2Ftimestopic%2FNetflix%20Inc.&_r=0
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