Running head: NETFLIX PROBLEM STATEMENT AFTER THE STRATEGIC AUDIT ANALYSIS
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NETFLIX PROBLEM STATEMENT AFTER THE STRATEGIC AUDIT ANALYSIS
Netflix Problem Statement After The Strategic Audit Analysis
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Despite Netflix dominating the market by 2020, there are some untouched areas that they should revisit to improve their services and stability. With the company already offering its services in over 190 countries worldwide, it should consider its approach to unifying its services. One of the prime challenges they face is the legal factors that interfere with their services. The co-operate is obligated to adhere to local laws affecting the unification and, in other cases, censorship. Thus the company should find an approach to help foreigners have a workable alternative. However, due to the differences in the laws and local film obligations, the company has not established ways to unify its services.
Further, the company has stiff competition from existing companies, with the prime competitor being Amazon. This forces Netflix to produce unique content to increase their market and subscription. However, the company’s cost of creating new and unique content is high, with some shows requiring the acquire copyrights to air these shows, thus more cost. This will force the company to increase its service subscription fee, which levers the new entrant to the market to capitalize on this weakness to increase its profits. Optionally, the company could consider merging with its competitors to dominate the market, but that also has rules against monopoly hence restricted.
After considering the challenges depicted in the Strategic Audit analysis, the main problem Netflix is facing is the legal factors. The legal aspects contribute to higher cost of production, low subscribers in certain countries due to uneven payment systems, and censorship. These factors lead to low profits after expenditure, unreliable licensing and copyrights, pricing power, bargaining power, and increased competition. The problem is not likely to be solved soon, but they will meet the legal obligation and find models favoring all of their customers through proper strategic planning.