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Improvement Project of Science Construction CS

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...
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How Netflix drove Blockbuster out of business?


Netflix had started the business by the end of the 90s. At the beginning, Netflix had two huge competitors: Wal-Mart and Blockbuster in the DVD rentals, however by 2004 Wal-Mart decided to leave this business since it was not one of its core businesses. Netflix, then, had to deal with the US largest video-rental chain, Blockbuster, for which video rentals was its sole business (Newman, 2010). In the following, a discussion will be carried out in order to emphasize how Netflix succeeded in gaining a sustainable competitive advantage, getting Blockbuster out of the market, and utilizing advanced technology to fortify its market position.

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’s success was mainly about identifying the weaknesses exist in Blockbuster’s business model. Identifying these weaknesses, along with the futuristic insight towards the market changes, technological innovations, and consumer behavior, paved the way to gain a competitive advantage over Blockbuster. Blockbuster adopted what is called the “landlord” business model in which a company sells the temporary use of its assets (Hamlett, n.d.). According to Noren (2013), Netflix had showed two weaknesses in the traditional video rental business model as follow:

Customer Convenience – since convenience factor is considered a common concern with the landlord business model, Blockbuster tried to beat this concern by locating many stores in every major town all over the country. Nevertheless, the company could not cope with the convenience of the mailbox.
Late Fees – another concern with the landlord business model is the late fees penalty. Netflix exploited the inconvenience in Blockbuster forcing its customers to pay penalty for late collecting of the video rentals. Thus, Netflix stressed on the advantage of offering unlimited rentals with no late penalties.

Identify and describe some of the technology innovations that Netflix was able to exploit and how these innovations contributed to competitive advantage.

Netflix succeeded in eliminating the first concern regarding the landlord business model “mailbox inconvenience”. Mailing and returning a VHS tape through postal services cost a lot of money. Netflix had utilized the new technology of DVD videos at that time. Consequently, the costs of postal mailing had been significantly cut due to the lower weight of the DVDs.

Second, Netflix managed to develop an online engine by which customers can find recommendations, reviews, ads about new movies and TV shows. The company thrived in creating a database of different genres which enables the users to search through 76,897 unique ways to describe types of movies (Madrigal, 2014).

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.

 Professor Clay Christensen concluded the theory of disruptive innovation in that any successful and established firm can be overtaken and threatened by a revolutionary newcomer. Those newcomers penetrate the market targeting the unattractive customers (to the established companies) and starting with low performance, but enhancing their performance in order to get bigger market share of the other attractive customers (Itonics, 2018).

Applying this theory on Netflix, unlike Blockbuster which targeted the segment of customers who care about “new releases”, Netflix targeted the segmented of customers who do not care and were first users of the DVDs or shop online. Thus, Netflix took advantage of being an early bird to the customers willing to use the technology available at that time, and hence gaining a competitive advantage.

 References:

Hamlett, K. (n.d.). Different Business Models. In Chron. Retrieved from: https://smallbusiness.chron.com/different-business-models-2316.html
Itonics. (2018). Why Uber isn’t disruptive but Netflix is - Disruptive Innovation explained. Retrieved from: https://medium.com/datadriveninvestor/why-uber-isnt-disruptive-but-netflix-is-disruptive-innovation-explained-198d250f4db0
Madrigal, A. C. (2014). How Netflix Reverse-Engineered Hollywood. Retrieved from: https://www.theatlantic.com/technology/archive/2014/01/how-netflix-reverse-engineered-hollywood/282679/
Newman, R. (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
Noren, E. (2013). Digital Business Models: Analysis of the Netflix Business Model. Retrieved May 22, 2016, from: https://web.archive.org/web/20170407030229

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