Running head- NETFLIX 1 Case Study Number One- Netflix Organizational

Running head: NETFLIX 1 Case Study Number One: Netflix Organizational Change University of the Incarnate Word Dr. Garza Presented by: Student 23 January 2022 NETFLIX 2 Case Study: Netflix Netflix is a popular subscription-based streaming service with hubs and subscribers across continents. However, Netflix is also a company that has successfully shifted its business model over the years. This is evident when it went from DVD-based distribution to solely streaming. As of 2019, Netflix faced several challenges, ranging from internal decisions to other streaming competitors. Though environmental factors, internal drivers, competition, and organizational culture all affected Netflix, it remains steadfast in its product delivery and organizational values. Environmental Factors Founded in 1997 by Reed Hastings because of a fine from Blockbuster, the original intent of Netflix was a DVD rental service conducted by mail, fueled by the desire to be an “Amazon of something†(Rodriguez, 2017). It soon evolved into a subscription-based service, with price points dependent on DVDs rented per month. Eventually, just before 2010, streaming became a popular modality of video consumption, and Netflix moved away from the DVD model to
become a streaming service. Each of these swerves in their business model highlights various environmental factors, particularly in social, technological, and political realms (Palmer et al., 2022, p. 42). Netflix’s shift from DVDs to streaming came when household internet became more readily available, with faster connection speeds, the dawn of “Smart†technology, and DVDs became increasingly obsolete. This rapid shift in technological factors presented an opportunity for Netflix to shift its product delivery to its customer base. NETFLIX 3 In addition to technology shifts, social and political factors have influenced Netflix (Palmer et al., 2022, p. 42). As recently as 2020, the Protecting Lawful Streaming Act was enacted to provide legal coverage to legitimate streaming companies or those that distribute media online. This law helps target platforms that steal content to profit from it. The political shifts in streaming regulation, global and national Internet regulation, and telecommunications are all factors driving Netflix and its decisions. Additionally, socially, Netflix was utilized during the initial lockdown phases of COVID as a popular refuge while also introducing social viewing with friends, where groups could collaborate and watch Netflix shows together. The social factors of need for connectivity during an isolating event drove this feature. Finally, Netflix was affected by an extreme example of Environmental pressures from the COVID-19 pandemic (Palmer et al., 2022, p. 67). Just as Netflix was shifting to focus more on its production rather than restreaming shows it had gathered rights to, production was more difficult due to public health concerns, shifting local and national government regulations and lockdown mandates. This impacted the current internal driver of Netflix’s goals to develop its own content, like similar competitors like Amazon Prime or Disney+. Collectively these factors
highlight disruption, or “critical foundations of industry structure â€" the economic fundamentals, the power balance between buys and sellers, the role of assets, the types of competitors, even the borders of industries- are rapidly shifting†(Palmer et al., 2022, p 67). Internal Drivers There are many internal factors that affect Netflix and its current state. Specifically, these internal factors include new product and service delivery, accidents, scandals, and internal organizational politics. At Netflix, an internal driver was their shift from DVD delivery to streaming (Palmer et al., 2022, p 65). In addition to new delivery methods, Netflix also decided NETFLIX 4 to create content - a new product - for its subscribers. Recent hits have included “You†and “The Squid Game,†garnering international acclaim and buzz. However, there have also been some shifts in the relocation of key offices and facilities, with production hubs in London, Marid, and Toronto (Palmer et al., 2022, p 64). Another internal driver unique to Netflix is its flat organizational structure. While pay is above the standard and there is no dress code, the CEO of Netflix claims he makes fewer and fewer decisions, focusing instead on empowering his employees, remnant of a coaching role while encouraging shifting mindsets for employees to embrace and think about change. This unique culture may provide a different decision-making process than a traditional hierarchical structure is used to. With four hundred content employees worldwide, that can provide a challenge to ensure each employee has the space to provide input and insight into a decision-making process. Without
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