Netflix In India – The Way Ahead The case solution
Aggregation:
The aggregation involves standardization of the global operational strategy which will allow the business to utilize economies of scale across multiple locations. The organization will achieve economies of scale by centralizing the research and development and management for various regions in India at one central location i.e. Mumbai. The centralization of operations and management will enable the organization to operate at a lower cost, higher efficiency and enjoy quality control.
Arbitrage:
The economic arbitrage will be achieved by employing skilled laborers that have knowledge about the online platform market in India. In addition, economic arbitrage will be achieved by borrowing funds in the presentation currency that the USA as the interest rates in the USA is low as compared to India. In addition, instead of collaborating with local content delivery network providers in India, the organization will distribute content through Open Connect, its own content delivery network in order to achieve economies of scale. (Netflix, 2020)
AAS:
Adapt:
It will be advised to the business to offer services at competitive rates which is its generic strategy therefore, the business model for the organization will not be at risk. In addition, the current expansion strategy employed by the organization that includes providing local content in multi-regional languages aligns with the expansion strategy of the organization expanded its business to Poland and Turkey, it added local languages to its user interface and added subtitles and dubbed content to the local customers.
Moreover, the organization global strategy comprises responding to customer preferences for the provision of local content. This strategy appears to be a win-win strategy as Netflix enjoys the benefit of producing local content all over the world. Developing country-specific knowledge and producing local and original content has always been considered a critical factor for expansion in local markets. Therefore, offering services at competitive rates and adding local content ton the online platform will not put the existing business model at risk as it will allow the business to attract the target market and ensure its sustainability.
Avoid:
The organization should avoid offering services at premium prices and providing local content to the customers as the specified strategies appear to be incompatible with the preferences of the local consumers.
Shape:
The organization’s global expansion strategy involves, adding local content to its user interface which is compatible with the demand and preferences of the local customers as demand for Bollywood and South Indian movie sand content is high in the region. In addition, the expansion strategy of the organization involves shaping itself according to the cultural, political and economic conditions of the host country which is evident by its expansion in Poland as due to low disposable income of the people, the organization adopted its pricing strategy by setting pricing in the host country currency. (Brennan, 2020)
ADDING VALUE SCORECARD:
Adding volume of Growth:
It will be advised to the business to achieve growth by adding local original and existing Indian content considering, demand of Indian content is high. In addition, the organization is advised to reduce the subscription rates to achieve economies of scale considering, the disposable income of the consumer is low and price competition in the region is high.
Decreasing costs;
It will be advised to the business to reduce operating cost by employing the suggested aggregation strategy i.e. centralizing the research and development and management for various regions in India at one central location i.e. Mumbai. This will enable the organization to operate at lower cost, achieve operational efficiency and enjoy quality control.
Differentiating or increasing willingness—to—pay:
The organization can increase the customer’s willingness to pay by providing access to wide variety of existing Indian content i.e. movies in multi languages that includes Malayalam, Telugu, Tamil and Hindi. In addition, the customer’s willingness to subscribe for Netflix services can be increased by providing unique local content i.e. new movies or webs series in Hindi such as Sacred Games. This will allow the organization to differentiate itself from the competitors in the Indian market.
Improving industry attractiveness or bargaining power:
The industry attractiveness can be increased by targeting the cities that has higher internet penetration rate and high number of youngsters as the youth is the primary segment for Netflix considering, the young users prefers to watch movies on the online platforms. Expansion into the relevant market will enable the organization to seize high market share and create strong brand image and demand.
Normalizing (or optimizing) risk:
Expanding the business in International markets will reduce the overall risk faced by the organization as the macro environment factors pertaining to the particular country will only affect the profitability earned from that region. Thus, normalizing and optimizing the risks faced by the organization.
Generating and deploying knowledge (and other resources and capabilities):
The skills, capabilities and resources in existing market i.e. India matches the global capabilities of the firm considering, the organization has an image of entering the markets that has high demand of local content. In addition, the organization will be establishing a franchise in Mumbai that has higher literacy rate as compared to other posh cities of India. Therefore, adequate skilled employees will be hired easily.
Logic of Place: Growth Model
The growth of Netflix Inc. Corporation is based on the following factors:
Macroeconomic factors:
In order to achieve economic growth, the organization employs consumer led growth models i.e. the organization adopts a pricing model after incorporating the effects of interest and exchange rates. As both exchange rates and interest rates have significant effect on consumer’s income, the organization determines its pricing strategy based on these factors. Employing high rate subscription model in market where interest rates are high or the currency is weak, organization will not be able to create demand or seize adequate markets share in the market.
Legal factors:
The organization has to incorporate the legal consequences in the market strategy it employs considering, there are various laws and regulations pertaining to the production of content and distribution of content as the organization will need to approve the content from the regulatory authorities. In addition, the organization will need to provide censored content in India.
Co-coordinating mechanisms:
The firm coordinate with their workers by establishing effective communication and hierarchy between the executives and lower management. A positive work culture is provided, Effective HR practices area adopted which includes proper training's given provided by overseas senior executives who guides and trains them regarding the marketing techniques, sharing strategic approaches and more. The firm will be financed mostly by debt as it is the cheapest and quickest source of finance as compared to equity finance sources.
Logic of Firm: Business Model
Value Proposition:
The organization will create value proposition by targeting one tier and two tier cities of India as the literacy and penetration rate in these areas appears to be high. Moreover, the organization will create value proposition by targeting young segment as 50 percent of the country’s population is under 25 and prefers to watch movies on the go thus, indicating high demand of video consumption on mobile phones. The value proposition will be created for the young segment by providing access to a wide local and international content at affordable prices as the disposal income of young users appears to be low.
Value Creation/Chain:
The organization will create and capture value by employing a low subscription model, partnering with various telecom operators such as Airtel to ease the problem for payment by customers as consumers will pay for the services as part of the monthly bill. In addition, various payment options will be offered to the customers for their convenience along with one month free subscription and access to wide range of international and local content.
Value Capture:
The organization will capture value by adopting the minimization approach i.e. capturing sufficient value to sustain the business. The approach will allow the business to attract adequate customers and achieve long term success as when quality services will be provided at competitive rates and little value will be captured, the customers will become loyal to the customers and spread word about brand’s quality services to other potential customer.
Non-Market Strategy: Baron’s 4 I’s
Issues:
The issues faced by the organization in seizing adequate market share in the country involves piracy issues as the content is easily pirated in the country. This will reduce the demand for original content since the consumer income is already low in the region, they will prefer watching the content free of cost instead of paying monthly subscriptions.
Institutions:
In order to provide services in Indian market, license to operate will need to be obtained from the relevant regulatory authorities. In addition, the organization will need to obtain approval for the produced content from the Central Board of Film Certification and other relevant regulatory authorities.
Interests:
As Netflix is an international brand, various production houses will prefer broadcasting their content on the online platform. In addition, various production houses will want to be associated with the brand to increase their income and viewership as people around the world will be able to watch the content.........................
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