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Table of content:
- Introduction……………………………………………………………………………………… 3
- Systems thinking……………………………………………………………………… ……… 3
- The General Environment and The Task Environment ……………………… 3
- Conclusion……………………………………………………………………………………….. 4
- Bibliography…………………………………………………………………………………….. 5
Introduction
Netflix is currently the leading company in the TV / Movie on demand market, but Netflix is dealing with growing competition in the US market because of competitors such as HBO Now, Amazon Video, Hulu and Showtime. This is a problem because the growing competition is taking away both existing Netflix subscribers and potential ones, which results in a slower increase in Netflix’s revenue. This will then lead to difficulties when investing internationally because of less revenue than predicted. What can Netflix do to combat the growing competition?
Systems thinking
Systems Thinking with its circles of causality is an important management perspective to Netflix because without following this system they cannot function efficiently. For example, Netflix decides to advertise more because of the growing competition, they decide to raise their budget for advertising. This eventually increases sales, which increases profits. Their next decision is then to invest more globally to obtain a larger market share worldwide. This will cost a significant amount of money because they need to obtain global rights for blockbuster content, invest in new Data Storage units in other countries to store the required data. They will also need to hire new personnel and invest in headquarters in new countries to manage the global investment profoundly. All of these factors cost a noteworthy amount of money, which will have a negative influence on their profit. So, without proper planning with the use of Systems Thinking, it is difficult to manage an organization as a coordinated whole.
The General Environment and The Task Environment
The change in general environment for Netflix is the international dimension. Netflix is already accessible in many countries all over the world and they are still launching their service in new countries. The company in January launched its service in 130 new countries, reaching 190 overall. (The Guardian 2016, June 18). Thus, they are growing in the worldwide market and is also making sales from countries outside of U.S. Netflix is not yet available in China, though the company continues to explore options for providing the service. It also is not available in Crimea, North Korea, or Syria due to U.S. government restrictions on American companies. (Netflix, 2017)
As for task environment, there are changes in the competitor sector, since the competition against Netflix in the TV / Movie on demand market is growing. Competitors are constantly battling for loyalty from the same group of customers. (Daft, R.L. 2015, p. 77). Luckily Netflix’s concern for competition lies only domestically. There are also changes in the labor market sector, due to them having to hire new employees because of their investments and expansion in new countries. It is also wise to hire new employees, because if they are helping to accomplish the organization’s goals, they can be seen as a competitive advantage.