Netflix: Success to Disaster and How to Recover?

Abstract

Due to the entrepreneurial leadership of CEO and Founder Reed Hastings, Netflix successfully transitioned from a solely DVD-by-mail subscription model to a hybrid Internet streaming and DVD rental subscription model. Recently however, Netflix has made several unpopular decisions that damaged its brand after a change in strategy. Netflix is planning another major change in strategy to focus on TV and streaming with the intent of becoming a global Internet TV network. The company had a strategy that provided a competitive advantage in the past, but changes in strategy, technology, and the requirements of the customers have significantly altered the company s competitive position. In this case, Hastings needs to determine whether the company s new strategy is the best way to go, or whether to adopt alternative strategies. This case can be utilized as a tool to examine the industry and general environment. In addition, it can be utilized as a tool for students to examine an organization’s core competencies to determine how an organizations strategic decisions and actions risk eroding competitive advantages, but also potentially renew them.