Risk Assessment Case Study: Netflix

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Executive Summary The main problem facing Netflix is the pending conflict with its content providers. Netflix has low bargaining power both over suppliers and buyers, and this represents an existential threat to the business. Netflix has proven to be a popular service, but despite the successes of its first ten years, there is now evidence that it has not fostered much brand loyalty, and that its customers are quite price sensitive. Combine this with the fact that its content suppliers are becoming direct competitors in the online streaming business and Netflix is in significant danger of having its growth trajectory derailed. There are basically three main alternatives for Netflix. The company can continue with business as usual, because it has been successful. This strategy ignores the warning signals, but Netflix is doing well so perhaps those signals are overblown. The company also must make a decision about international expansion. It is in some markets, but with new contracts pending for many content providers Netflix needs to have a sense of what markets it wants to pursue in the future. Another alternative that Netflix must mull over is whether or not it needs to make changes to enhance brand loyalty and mitigate the apparent price sensitivity. It is recommended that Netflix tackles all of these issues. The company needs new deals with its suppliers, as content is essential to customer satisfaction, and Netflix needs customers for bargaining power. Netflix also

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