Name: Maricela Cobos
1. What is Netflix’s strategy for success in the marketplace? Does the company rely primarily on a customer intimacy, operational excellence, or product leadership customer value proportion? What evidence supports your conclusion?
Netflix’s strategy for success in the marketplace is that they have great plans of online services to their customers such as subscription plan with no due dates, late fees or shipping charges. It is a convenience Web site where subscribers choose any movie title and then it can be easily returned using Netflix’s prepares mailing. Netflix is the largest online movie rental service with ...view middle of the document...
Unfortunately, stockholders are exposed to lose some of their benefits for being part of this organization and as their expectation to get any reward like dividends. One of Netflix risk is their competitors, which is hard to compete effectively if the other companies offer much better services compare to Netflix. Depending on what the other companies are providing to their customer it becomes an uncontrollable situation. This will affect the company and its stockholders because it will stop the company from increasing or maintaining the market share, revenues and profit margin. Another risk is that if the popularity of DVD decreases due to the technology advance. In the near future all their sales may decline but it can be controllable because by the time go by the company can adapt new strategies to beat this new outcome for not just them but for other business as well. Netflix believe that if they are unable to continue with their current marketing channels they may lose customers because they can promote their services throughout the advertising market. It is a controllable situation because channels are not the only way to reach people. There are other ways like radio, post cards and announcements by having people dressing with the name of the company. Finally, if Netflix is unable to renew or renegotiate their revenue sharing agreements, the gross margin would be affected. Unfortunately, it can be uncontrollable business matter because by the time of renew disadvantageous term may come along of the negotiation. This risk would be uncontrollable because the company cannot tell what is going to happen with their future cost of purchasing titles and its stockholders benefits from being part of this organization. Every time a company gets through a terrible decrease on their products the probability of losing profit; as a result the lost for stockholders’ would be inevitable.
3. Prepare a comparative balance sheet similar to the one shown in Exhibit 15-4 (Use Netflix’s data from 2004 and 2005). For each account shown on Netflix’s balance sheet, calculate the change in the balance and whether the change represents a source or use of cash.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
| | | | | | | | |
| | As of December 31, | |
| | 2004 | | | 2005 | |
Assets | | | | | | CHANGE | | |
Current assets: | | | | | | | | |
Cash and cash equivalents | | Outflow | $ 174,461 | | | +37,795 | $ 212,256 | |
Prepaid expenses | | Outflow | 2,741 | | | + 5,107 | 7,848 | |
Prepaid revenue sharing expenses | | Outflow | 4,695 | | | + 557 | 5,252...