Netflix Expansion into Overseas Markets

According to the article listed above, what were the most important strategic moves that propelled Netflix’s successful international expansion?
According to the article the most important strategic moves related to Netflix’s expansion were associated to its planning. First, Netflix did not attempt to enter all markets simultaneously. Instead, it elected to enter into markets that shared many of the same market characteristic of the United States. Namely, the company was looking for a strong rule of law as it relates to intellectual property, streaming rights and so forth. Next, the market needed a burgeoning middle class similar in to size and scope of the United States. The middle class needed a sufficient amount of discretionary income that was allocated to entertainment purchases. The middle class also needed to have strong employment figures throughout an economic cycle. The country itself needed to be innovative and have the streaming capabilities needed to deliver the Netflix service in a convenient manner. Aspects such as internet access, 5G implementation, and access to similar technologies was critical as it relates to the expansion plan of Netflix. As a result, the company quickly expanded into both Mexico and Canada. As immediate neighbors to the United States, both countries shared very similar economic characteristics and were therefore prime candidates for a seamless Netflix transition (Schechner, 2014).
Another important element with the expansion strategy of Netflix was related to how it worked cooperatively with foreign markets to deliver its services. To company formed strategic partnerships with local operators to distribute its products in foreign countries. The company also entered into strategic partnerships with cell phone and cable operators to make its content available as part of their existing video-on-demand offerings. This was important for many reasons. First, Netflix aligned itself with foreign operators to form mutually beneficial product offers. These partnerships benefited both Netflix and the local communities through high paying jobs, increased wealth, and a higher quality of life. Due to this, governments were less likely to impose restrictions on Netflix as it relates to its expansion efforts. The mutually beneficial arrangements also allowed Netflix to obtain market knowledge and consumer data that it can use to cater it’s offerings in the future. All of this is beneficial as it relates to future growth opportunities for the business (Segal, 2013).
The article mentions investments in big data and analytics as one of the elements accompanying the second phase of overseas expansion. Why was this investment important? What type of information did Netflix derive from the data collected?
According to many economic sources, data and its subsequent application will become one of the greatest resources for society to leverage. The applications of data and analytics will be vital to the future success of Netflix. The investment in data is important as it allows the company to leverage its product offerings in a manner that can drive future growth and subscribers. Analytics can allow the company to determine which shows are successful, when subscribers view them, how subscribers view them, and how often they use the service. Netflix can then leverage this information to change its pricing, product offerings or both within a particular market. The company has recently announced price increases for many subscribers in the local market. According to the company’s latest annual report or form 10-k, the subscriber churn was lower than anticipated. Now admittedly some of this was due to COVID-19 and the need for consumers to watch shows online, but this also speaks to overall value proposition of the Netflix platform. Consumers use it heavily and therefore are willing to pay more for it. This information would only be available to Netflix through proper data and analytics platforms.
According to the article, what is exponential globalization?
The idea of exponential globalization is the ability for a company to expand at a faster pace, to more markets, will greater frequency. This is accomplished due to the learnings the company had obtained in transitioning into prior markets. The company can then leverage these learnings conjunction with data and analytics, to increase the speed in which it expands to other countries. The company then takes these learnings and continues the process until it moves much faster throughout the world. This form of globalization allows the company to expand at a much faster rate than competitors with offerings that are much more robust. Consumers then elect to use the products offered by Netflix as they are much more familiar with the product offering. Competitors following Netflix have a much harder experience making inroads with consumers as they must first dislodge Netflix from the consumers mind as it relates to entertainment. The ability for Netflix to grow at an exponential pace is due primarily to the worlds incessant need for innovation. Here, the world has quickly adopted the use of the internet, smart phones, tablets and other peripheral items that strengthen the value proposition of Netflix. Due to these tailwinds the company was able to quickly expand to over 190 countries in less than one decade (Spangler, 2014).
Not all international expansion strategies are a resounding success, however. Research an article or video that discusses an instance in which an American company’s expansion efforts in another country failed. According to the article/video you selected, what were the main reasons for this failure? Do you agree with this assessment?
Auto industry expansion has been very difficult for the more traditional U.S. automakers. Although the need for transportation has not abated, the need for American make use cars has not come fruition. The failure of U.S. auto manufactures overseas has to do primarily with a lack of understanding of the local market. Unlike Netflix, the manufacturing of cars requires a very large and substantial capital investment. Even more alarming this investment may earn an adequate rate of return as car sales are predicated on very unpredictable Marco economic factors. These factors include disposable income, household income, employment rates, interest rates, exchange rates and much more. Unlike Netflix, a vehicle purchase is a very large capital commitment on the part of the consumer and as such a thorough understanding of the market is required. Unfortunately, many US auto manufactures failed in this regard. They believed the large, gas guzzling, SUVs that are so popular in American would be appealing to overseas markets. What they found were that consumers were much more environmentally conscious. They demanded smaller calls, that had high fuel efficiency, and were environmentally friendly. The fast, sleek, and sexy mustang, Camaro, or corvette found little traction in Europe or China. Instead consumers wanted small more efficient cars. This revelation resulted in the loss of billions of dollars for many US auto manufactures. So much so, that General Motors pulled out of the European region completely in 2017.
Explain some of the reasons why certain companies’ expansion plans have failed in the past.
Many companies’ expansion plans have failed due primary to hubris and a lack of local market knowledge. Many American companies believe their products are high quality and should therefore be demanded throughout the world. Although this true for certain companies such as Hershey, Coca-Cola, and Apple, many others such the US auto manufactures fail. Countries simply have different market dynamics, consumer tastes, regulations and values relative to the United States. Asian countries for example are more collectivistic by nature. They support the group over the individual. As such products that are more individualistic, such as Ford Mustang, will not do well as it focuses on entirely different value. Likewise many Middle Eastern countries, for religious reasons, do not eat hamburgers. McDonalds must therefore adjust its menu in order to properly serve the Middle Eastern market. Companies who fail to adjust, adapt, and learn tend to fail as it relates to their expansion efforts.
Part 2 Conclusions
From the date presented the company should allocated more resources to TiQ. The data indicates that the company is still above the industry standard of 2.5 minutes at a significances level of .05. A it relates to the correlation between PE and PT, it appears that the new protocols are working. In this instance, new protocols are much more effective than the traditional protocols at both a significance level of .05 and .025. This indicates that not only are the customer services reps more knowledgeable but they are also delivering a much more robust and streamlined solution to the customer.
References
1. Schechner, S. (2014, Sept. 7). Netflix tries charm in France to smooth expansion; Online media firm also moves into Germany, Austria, Belgium, and Luxembourg. Wall Street Journal. Retrieved from www.wsj.com
2. Segal, D. (2013, Feb. 8). The Netflix fix. The New York Times. Retrieved from www.magazine.blogs.nytimes.com
3. Spangler, T. (2014b, Apr. 8). Amazon streams more video than Hulu or Apple, but it’s still miles behind Netflix. Variety. Retrieved from www.variety.com