Abstract Science Construction’s business is in planning, developing and building road projects. The major of its clients are municipalities, city governments, and other public sector entities. While the bankruptcy rates for these clients is very low, when economic downturns happen, their ability to pay in a timely fashion also suffers. This leads to businesses such as Science Construction needing to take on additional debt and to find creative methods in order to stay afloat during times of recession. Methods such as selling accounts receivables at discounted rates and taking larger lines of credit through banks and other lending institutions are some of the ways organizations can remain viable when their cash inflows have turned into a trickle. Science Construction is asking the Turkish Courts to postpone their bankruptcy proceedings for a year while they attempt to restructure. Through this, suggestions such as forcing shareholders to pay their debt to the organization, gaining credi
Netflix was able to gain a competitive advantage over its chief rival Blockbuster. Discuss the Netflix value proposition and how it successfully gained and advantage over Blockbuster.
Netflix has grown from a video service with seven million U.S. subscribers to one that reaches 93 million people worldwide. They started as a DVD rentals-by-mail service, and business has been booming ever since they introduced a streaming subscription service as well (O'Neill. M.,2011). According to (Newman. Rick., 2010), the reason that Netflix successfully gained power over Blockbuster was creating a unique value proposition through;
Subscriber-Funded services; through Netflix, viewers can choose what and when to watch instead of watching “what’s on.” So instead of having a traditional channel with a developed schedule, the value of the portal is cultivating a library of programs. Unlike blockbuster, Netflix CEO Reed Hastings decided to change the business to a subscription model that allowed customers to pay a flat monthly fee and rent as many movies as they wanted with no late payments. Blockbuster struggled to get more revenue from fees without alienating consumers. The recession sealed the deal, the business declined and was finally unable to make its debt payments, resulting in bankruptcy.
Inventory; having a massive list of top-picked movies and ensuring prompt delivery means stocking thousands of titles and having plenty of copies of the most popular films. A slim list that leaves customers waiting for movies would drive business away.
Delivery and Distribution; in its early days Netflix suffered from many complaints about slow delivery. However, Netflix perfectly managed its distribution layout. Long waiting blockbuster lines had ended with Netflix business coming to light. Netflix model prevented the company from competing on the idea of a last-minute movie night, but it did present an opportunity to have a movie in the customer’s home at all times.
Customer's experience; Netflix's secret sauce was the algorithms used to allow users to rate movies and even receive recommendations for others that they might like and want to watch. Customer loyalty is always a priority. Unlike Blockbuster Netflix focused on delighting the customer.
Innovation; having Redbox on the scene, Netflix has been aggressively developing its on-demand offerings for subscribers, including converters that allow streaming straight to the TV. If Blockbuster ever planned to compete in that game, it had better come up with a fresh plot twist, fast. Otherwise, this story seems headed for a conventional ending.
Netflix is among the largest sources of Internet traffic in the US, consuming 29.7% of peak downstream traffic (www.sandvine.com). Netflix is the most successful of these Blockbuster-replacement services and has been steadily gaining traction over the years and no.2 video subscription service behind Comcast. According to (www.sandvine.com), Netflix architecture consists of four key components:
Netflix data center; Netflix uses its own IP address space for the hostname www.netflix.com. This server primarily handles two essential functions: (a) registration of new user accounts and the capture of payment information then redirect users to netflix.com or to sign in.
Amazon cloud; Except for www.netflix.com which is hosted by Netflix, most of the other Netflix servers such as agmoviecontrol.netflix.com and movies.netflix.com are served off the Amazon cloud (aws.amazon.com)
Content Distribution Networks CDNs; The encoded and DRM protected videos are sourced in Amazon cloud and copied to CDNs. Netflix employs three CDN: Akamai, LimeLight, and Level-3.
Players; Netflix uses Silverlight to download, decode and play Netflix movies on desktop web browsers.
The words ambitious and visionary have been used to describe Netflix’s entrance into the media industry, but the company could effectively decode consumer trends and timely enter markets before the competition that continues to drive its success.
Netflix is often used as an example of disruptive innovation. Using the LIRC and the internet, research the concept of “disruptive innovation” and then discuss how Netflix fits the model of disruptive innovation. Consider what role technology played in achieving the disruptive innovation that provided Netflix with a competitive advantage.
An innovation that does not significantly affect existing markets. In business theory, "disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances." In simple words, The process of developing new products or services to replace existing technologies and gain a competitive advantage (www.businessdictionary.com)
According to (Mui. C.,2011), Netflix illustrates a design principle that any company aspiring to succeed in disruptive innovation must adopt. It has four parts:
Think Big; unlike traditional companies that think small, Hastings pursued his big idea, streaming video, even though it would render obsolete his wonderfully successful, highly tuned,mail-based system for distributing DVDs.
Start Small; although Netflix is a successful excellent big idea, it all started with small thoughts also, small projects.
Fail Quickly; When early efforts at streaming video looked iffy, Hastings adopted the poker player’s mantra that most money is lost early in hand when the tendency is to hope that something good will materialize even though reason suggests otherwise. Hastings folded his hands, saving his money for the day when he finally got a right hand.
Scale Fast; Dream Big! It’s worth noting that Netflix is still very much a work in progress. Newspapers are reporting that the company is in talks to buy the rights to a television program.
Netflix is a different model, with a different strategy. "Legacy investments create a legacy mindset," says Vijay Govindarajan, a professor at Dartmouth's Tuck School of Business and co-author of The Other Side of Innovation. "Blockbuster got stuck in the box. They never changed their business model."
References
“Amazon Web Services,” http://aws.amazon.com.
Disruptive innovation. BusinessDictionary.com. Retrieved April 25, 2019, from BusinessDictionary.com website: http://www.businessdictionary.com/definition/disruptive-innovation.html
O'Neill. M. (2011). How Netflix Bankrupted And Destroyed Blockbuster. Retrieved from https://www.businessinsider.com/how-netflix-bankrupted-and-destroyed-blockbuster-infographic-2011-3
Mui. c. (2011).How Netflix Innovates and Wins. Retrieved from https://www.forbes.com/sites/chunkamui/2011/03/17/how-netflix-innovates-and-wins/#7243846561f3
Newman. Rick. (2010). How Netflix (and Blockbuster) Killed Blockbuster. Retrieved from https://money.usnews.com/money/blogs/flowchart/2010/09/23/how-netflix-and-blockbuster-killed-blockbuster
Sandvine, “Global Internet Phenomena Report, Spring 2011,” https: //www.sandvine.com/news/global broadband trends.asp, 2011.
Netflix has grown from a video service with seven million U.S. subscribers to one that reaches 93 million people worldwide. They started as a DVD rentals-by-mail service, and business has been booming ever since they introduced a streaming subscription service as well (O'Neill. M.,2011). According to (Newman. Rick., 2010), the reason that Netflix successfully gained power over Blockbuster was creating a unique value proposition through;
Subscriber-Funded services; through Netflix, viewers can choose what and when to watch instead of watching “what’s on.” So instead of having a traditional channel with a developed schedule, the value of the portal is cultivating a library of programs. Unlike blockbuster, Netflix CEO Reed Hastings decided to change the business to a subscription model that allowed customers to pay a flat monthly fee and rent as many movies as they wanted with no late payments. Blockbuster struggled to get more revenue from fees without alienating consumers. The recession sealed the deal, the business declined and was finally unable to make its debt payments, resulting in bankruptcy.
Inventory; having a massive list of top-picked movies and ensuring prompt delivery means stocking thousands of titles and having plenty of copies of the most popular films. A slim list that leaves customers waiting for movies would drive business away.
Delivery and Distribution; in its early days Netflix suffered from many complaints about slow delivery. However, Netflix perfectly managed its distribution layout. Long waiting blockbuster lines had ended with Netflix business coming to light. Netflix model prevented the company from competing on the idea of a last-minute movie night, but it did present an opportunity to have a movie in the customer’s home at all times.
Customer's experience; Netflix's secret sauce was the algorithms used to allow users to rate movies and even receive recommendations for others that they might like and want to watch. Customer loyalty is always a priority. Unlike Blockbuster Netflix focused on delighting the customer.
Innovation; having Redbox on the scene, Netflix has been aggressively developing its on-demand offerings for subscribers, including converters that allow streaming straight to the TV. If Blockbuster ever planned to compete in that game, it had better come up with a fresh plot twist, fast. Otherwise, this story seems headed for a conventional ending.
Netflix is among the largest sources of Internet traffic in the US, consuming 29.7% of peak downstream traffic (www.sandvine.com). Netflix is the most successful of these Blockbuster-replacement services and has been steadily gaining traction over the years and no.2 video subscription service behind Comcast. According to (www.sandvine.com), Netflix architecture consists of four key components:
Netflix data center; Netflix uses its own IP address space for the hostname www.netflix.com. This server primarily handles two essential functions: (a) registration of new user accounts and the capture of payment information then redirect users to netflix.com or to sign in.
Amazon cloud; Except for www.netflix.com which is hosted by Netflix, most of the other Netflix servers such as agmoviecontrol.netflix.com and movies.netflix.com are served off the Amazon cloud (aws.amazon.com)
Content Distribution Networks CDNs; The encoded and DRM protected videos are sourced in Amazon cloud and copied to CDNs. Netflix employs three CDN: Akamai, LimeLight, and Level-3.
Players; Netflix uses Silverlight to download, decode and play Netflix movies on desktop web browsers.
The words ambitious and visionary have been used to describe Netflix’s entrance into the media industry, but the company could effectively decode consumer trends and timely enter markets before the competition that continues to drive its success.
Netflix is often used as an example of disruptive innovation. Using the LIRC and the internet, research the concept of “disruptive innovation” and then discuss how Netflix fits the model of disruptive innovation. Consider what role technology played in achieving the disruptive innovation that provided Netflix with a competitive advantage.
An innovation that does not significantly affect existing markets. In business theory, "disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances." In simple words, The process of developing new products or services to replace existing technologies and gain a competitive advantage (www.businessdictionary.com)
According to (Mui. C.,2011), Netflix illustrates a design principle that any company aspiring to succeed in disruptive innovation must adopt. It has four parts:
Think Big; unlike traditional companies that think small, Hastings pursued his big idea, streaming video, even though it would render obsolete his wonderfully successful, highly tuned,mail-based system for distributing DVDs.
Start Small; although Netflix is a successful excellent big idea, it all started with small thoughts also, small projects.
Fail Quickly; When early efforts at streaming video looked iffy, Hastings adopted the poker player’s mantra that most money is lost early in hand when the tendency is to hope that something good will materialize even though reason suggests otherwise. Hastings folded his hands, saving his money for the day when he finally got a right hand.
Scale Fast; Dream Big! It’s worth noting that Netflix is still very much a work in progress. Newspapers are reporting that the company is in talks to buy the rights to a television program.
Netflix is a different model, with a different strategy. "Legacy investments create a legacy mindset," says Vijay Govindarajan, a professor at Dartmouth's Tuck School of Business and co-author of The Other Side of Innovation. "Blockbuster got stuck in the box. They never changed their business model."
References
“Amazon Web Services,” http://aws.amazon.com.
Disruptive innovation. BusinessDictionary.com. Retrieved April 25, 2019, from BusinessDictionary.com website: http://www.businessdictionary.com/definition/disruptive-innovation.html
O'Neill. M. (2011). How Netflix Bankrupted And Destroyed Blockbuster. Retrieved from https://www.businessinsider.com/how-netflix-bankrupted-and-destroyed-blockbuster-infographic-2011-3
Mui. c. (2011).How Netflix Innovates and Wins. Retrieved from https://www.forbes.com/sites/chunkamui/2011/03/17/how-netflix-innovates-and-wins/#7243846561f3
Newman. Rick. (2010). How Netflix (and Blockbuster) Killed Blockbuster. Retrieved from https://money.usnews.com/money/blogs/flowchart/2010/09/23/how-netflix-and-blockbuster-killed-blockbuster
Sandvine, “Global Internet Phenomena Report, Spring 2011,” https: //www.sandvine.com/news/global broadband trends.asp, 2011.
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