Table of Content
Executive Summary 3
The Target Country 4
Competitors 5
America Movil 5
Amazon Prime 7
Netflix Strength & Weaknesses 8
Porter Generic Strategy 10
Recommended Competitive Strategy 10
Conclusion 11
Summary 11
Reference 12
Executive Summary
The Walt Disney Company has a generic strategy for competitive advantage that capitalizes on the uniqueness of products offered in the entertainment, mass media, and amusement park industries. The company grows through innovation and creativity, which enable the business to compete against large firms (Panmore). By pairing up with Netflix will make Disney one of the most powerful companies in Mexico. Disney has a popular and strong brand, which is among the most easily recognizable in the world. Through this strength, the company presents itself as a decent and family-oriented business suitable for all customers. This internal factor helps manage customers’ expectations, which tend to be positive relative to the reputation of the Walt Disney brand.
Walt Disney Company is expanding its company by going to new ideas that will keep them on the competitive edge with their competitors. New direct to consumer service where the company will stream Disney based movies and television programs. The Disney brand will be streaming services do to the high demand of video on demand services. In 1954, with Disneyland, an anthology series hosted by Walt Disney himself, it became the first movie studio to strike out for the wild west of television. Since then, Disney’s dominance has only grown.
Walt Disney and Netflix, a media provider based in California and a world’s major player of video streaming services industry. It is a multibillion dollar company with annual earnings of 15.79 billion dollars. It is also a global company with 137.1 million subscribers around the world. It offers TV series, movie series, features films and documentaries which subscribers can view in the internet. In the video streaming industry is a 124 billion dollar industry and it is expected to grow at an annual rate of 19.6 percent (Grandview Research 2019). The Rapid Growth Rate is attributed to extensive usage of online video. Netflix holds a significant portion of the global market segment. Netflix and Walt Disney will be merging and targeting Mexico to become the biggest streaming company in Mexico. The Walt Disney Company positions itself as one of the leading firms in the entertainment, mass media, and amusement park industries. This position is achieved through business strengths that address weaknesses, opportunities and threats (the SWOT factors) in the global market. The Walt Disney Company must possess the strengths to withstand the negative effects of weaknesses and threats in its industry environment.
The Target Country
Mexico is a country in located out the southern portion of North America, with over 126 million people and an economy that is 15th largest in the world. Its telecommunication industry is well established and it is among the largest in Latin America that poeses and great area to target the communities with internet connections. Its mobile technology and internet infrastructure are well developed and people across the country have access to internet. Internet infrastructure is well developed with more than 120 domestic earth satellite stations and extensive microwave radio relay network. Internet is very accessible in this country which makes it a good target for a live streaming company like Netflix. Consumers have access to mobile and internet technology. Mexicans are the most connected to the internet, in 2017 alone, about 79 million Mexicans are connected to the internet in a single day, they have smart phones by the age of six and males between 18-34 are the most connected to the web more than anyone else in any country (mexico.mx, 2019). The country also holds fourth place in the world for users that spend more time on social media. They could easily be reached out by Netflix marketing activities such as social media marketing and internet marketing and promotions. Mexico is therefore a very huge market and it will bring enormous profit to Netflix.
Competitors
The primary competitors of Netflix in Mexico are America Movil and Amazon Prime. America Movil is a Mexican based telecommunication company that has recently decided to enter the video streaming business with its segment Claro Video. Amazon Prime is a live streaming service offered by the Amazon.com Inc. It is a global company and a primary competitor of Netflix in the global Arena. Amazon prime enter the Mexican Market through Amazon.com.mx. Prueba prime.
America Movil
Strengths
America Movil has a high brand recognition as it is a local company. It has also enormous resources with an annual net income of 2.2 billion dollars capable of investing enormous amount on marketing and advertising to gain strategic position (Annual Report 2019). Its video streaming segment –Claro video – has over 1 million subscribers in the Mexico (Dela Fuente, 2015). Its first original content production is a psycho-thriller series La hermanidad (the Brother Hood) acquire a huge number of followers, allowing the company to produce original content production from other genre such as Drama and comedy. Claro is able to do this because it is familiar with the culture of the people and knew their language. It knows the likes and dislikes of the people when it comes to films and movies of various genre. Also as a local business, the company knows how to explore the legal and political environment of the country, knows the loopholes and everything that one needs to do in the legal and political arena. It will not have problem with tax laws of the country and know when to and when not to conduct business during heightened political atmosphere. Its knowledge of the country’s political and legal environment makes American Movil capable of mitigating threat. It also utilize cost advantage strategy as it offers subscribers 5 dollars a month compared with Amazon Prime 13 dollars and Netflix 12.99 dollars (Harrison & Edwards, 2012). If economy of the country slows down American Movil/Claro Video competitors will have a hard time reaching out to its customers as they will prefer low cost streaming. Claro video, with its product differentiation strategies can deal with economic slowdown mitigate the threat and survive while foreign competitors will not.
Weakness
It is new in the business; hence it has little expertise in the industry including marketing and technological knowhow. With its relative short experience in the business, it will have a hard time competing with Netflix as the latter, had the knowledge and technical expertise to reach to tech savvy customers. American Movil has enormous resources but these resources are invested on the Telecommunication and Wireless industry and only allocate small budget for the live streaming segment. Thus compared to its competitors, the Claro Video segment is a small player. It has no separate research and development department which is crucial in live streaming industry. The internet is not designed to stream high quality video to millions of people. Netflix and Amazon has spent years and millions of dollars building out their streaming infrastructure to support beaming on-demand content across the internet (Marvin, 2019). These companies have spent years and money figuring out how to distribute video to an increasingly connected landscape of various screens and devices. Being new in the business, Claro Video need years of experience and research to catch up with established competitors. If a new technology for streaming emerge, Claro Video may not be able to deal with the disruption and may end up losing a portion of its market share.
Amazon Prime
Strength
Amazon Prime is a business segment of online retailer giant Amazon.com Inc. (Johnson, 2018). It has enormous resources and it operates globally. Its business strategies were known to be very effective. It derives its advantage from its IT technology which is one of the best in the world. It has been in the business for a long time and have spent millions of dollars and time to develop a live streaming infrastructure capable of mitigating the threat of technology innovation. It has also enormous logistic networks and marketing resources capable of reaching out to every people around the world. It has the technology, the resources and the technical knowhow. It has the manpower and staffs to operate the video streaming segment. With its technology and enormous resources it is capable of providing high quality video streaming service to customers. Another strength of Amazon is its ability to innovate technology. Thus, it has no problem mitigating the threat of disruptive technology. When new technology in live streaming emerged it is most likely that it came from Amazon or it has the ability to modify it services accordingly. There is no treat of technology disruption.
The Website of Amazon prime Mexico is Spanish and the services it offered to its customers have Mexican subtitles, hence there is little problem with the language barrier, Allowing Amazon Prime Mitigate the Threat related to social factors.
Weakness
Amazon Prime is just a segment of the Amazon.com Inc. The company is more focus on on-line retailing, thus may not exert tremendous amount of effort just to topple the competitor. Its single minded focus on online retailing may “come in the way” of its video streaming expansion.
It is also a US based company and unlike Claro Video, is not able to mitigate the threat of legal and political environment. It is also offers the costliest service. This makes it a weakness if a company that offer lower cost but the same quality arrives. Amazon Prime will not be able to deal with the threat of capable new entrants.
Netflix strength and weaknesses against competitors
Netflix is the first and the leader in the industry. It has a large network of logistics and marketing capable of reaching out to any person who use Facebook twitter and you tube (Poulos, 2019). It has a high level of brand recognition and brand awareness and customers in Mexico will readily recognize the company and its services when it is advertised in social media.
Being the leader and the first, it knows the do’s and don’ts in the business plus unlike its competitors, in which live streaming is just a business segment, Netflix core business and sole business is live streaming. This allow it to focus on live streaming related initiatives and will not have the problem Claro Video or Amazon are experiencing (in which the single minded focus on telecommunication and online retailer respectively come in the way of video streaming expansions. It has been building, innovating and developing its lives streaming infrastructure capable of supporting beaming on-demand content across the internet delivering its services to a variety to a variety of screens and devices (Marvin, 2019). Netflix technological capabilities in the live streaming business is unmatched even Amazon, with all its technological advantage in online business, cannot topple Netflix technological advantage. Amazon is diverting its resources to on-line retailing, Netflix on the other throw all is resources to video streaming, thus when it comes to technological disruption, Netflix will no problem because it is a precursor of it. Claro Video will not stand a chance competing with Netflix technology knowhow. It is Netflix competitive advantage. Netflix is a giant in live streaming and world renowned for live streaming. Amazon is globally recognized as on online retailer but is not at par with Netflix in terms of video streaming. Claro Video on the other hand is not known globally. Claro Video operates locally hence, can mitigate the threat cause by political and legal issues.
Netflix is based in the US and operates globally, it may not be able to mitigate the political threat and the legal threat, the same way as that of Claro Video, but it operates in the virtual world with no geographical boundaries and jurisdiction. It does not offer tangible products but video services accessible in the internet. Hence, political turmoil and legal issues in Mexico may not impact Netflix business strategy as people can always access the net. The only way to adversely affect Netflix entry in Mexico is to ban the internet.
The sociocultural impact which provide Claro video a competitive advantage can be seen as a weakness of Netflix. Netflix is an American company and may not know the culture and preference of the Mexican people. But, Netflix has the technology and knowledge to modify its videos and put Mexican subtitles. Thereby reducing the impact of sociocultural barriers. Netflix is price is lower than Amazon but a lot expensive compare to Claro. The price is a weakness as when economic slowdown occurs, people may choose Claro instead over expensive American based video streaming companies. The weakness of limited innovation is associated with Disney’s business strategies. The company does innovate through continuous product improvement. However, rapid innovation involving advanced technologies is limited in the company’s operations.
Porter Generic Strategy
Netflix ultra-high tech live streaming service and technical knowhow are its competitive advantage. Using this competitive advantage, Netflix may pursue differentiation strategy of the Porters Generic Strategy. Differentiation strategy means making one’s product or services different and more attractive than competitors (David, 2011). Netflix ultramodern and high tech live streaming infrastructure provide quality video services unmatched by competitors. High quality video, sound graphics and clear subtitle, capable of being played in every scree and devices (smartphone, tables, and computers), make Netflix different from competitors. It has been producing original content over the years, while its competitors are on infancy stage.
Recommended competitive Strategy
The company may focus on its differentiation strategy to reach out to its market. It may emphasize these advantages when advertising to its customers. Focus on differentiation, will be effective as people will chose quality over price especially the target customers are internet lovers and tech savvy. The focus differentiation strategy should be combined with social media marketing. This is another competitive advantage of Netflix is its social media marketing. It is almost everywhere in the internet, when one opens a viral video, the video will not yet start until the Netflix commercial is done.
When Netflix advertise in social media and YouTube, it should emphasize this competitive advantage to be able to reach out to Mexican customers. Netflix may use integrated marketing communication strategy (Bormane, 2018). In integrating marketing communication all of its marketing strategy should feature its competitive advantage and the marketing message should be focus on the differentiation (quality and ultrahigh tech services). When it advertises in YouTube, Twitter, Facebook and TV, it must always mention its competitive advantage. Some of the advantages are Technological innovation, Growth in various industries and Growth of developing markets.
Conclusion
Netflix and Walt Disney will thrive in Mexico and will dominate the live streaming business here. It has the competitive advantage that cannot be matched by competitors. Making the necessary changes to language barriers to better accommodate the buyers. It is targeting customers whose needs and profile (tech savvy and internet users) exact fits that of Netflix. Netflix and Walt Disney should focus on its differentiation strategy to successfully enter the country to continue to be a super power company that will control all of streamlines in Mexico.
Summary
This paper is about Netflix entry to country of Mexico and pairing up with Walt Disney Company. The purpose is to find the best strategy entering the country. This is done by analyzing the strength and weaknesses of its competitors. The local competitors is Claro Video which has the advantage of low price, legal and political know how, and cultural advantage. It is speaks the same language. Yet, it is new in the business and does not have the technology to match that of Netflix. The second competitor is Amazon prime. It has enormous resources and has the technology that Claro Video does not have, but it is still inferior to Netflix despite of its global status because it is more focus on on-line retailing which hinders any video streaming expansion initiatives. Netflix is superior to its competitors’ because it is the leader in the industry and has the competitive advantage that competitors cannot match. It has a well-established live streaming infrastructure.
References
Annual Report (2019) America Movil. Retrieved June 23, 2019 from https://s22.q4cdn.com/604986553/files/doc_financials/annual/2018/AMX-FY2018-20- F.pdf
Bormane, S. (2018) Digital promotion as solution for integrated marketing communication in business. Economic Science for Rural Development Conference Proceedings. 48: 338- 347.
David, F. (2011). Strategic Management. NJ Prentice Hall.
Del La Fuente, A. (2015) Mexico’s ClaroVideo Ups Original Content Production (Exclusive) Retrieved June 23, 2019 from https://variety.com/2015/tv/news/clarovideo-original- content-production-1201612789/
Grandview Research (2019) Video Streaming Market Worth $124.57 Billion By 2025 Retrieved June 24, 2019 from https://www.grandviewresearch.com/press-release/global- video-streaming-market
Harrison, C. & Edwards, C. (2012) Netflix Faces Fresh Competition in Mexico Retrieved June 23, 2019 from https://www.bloomberg.com/news/articles/2012-11-29/netflix-faces- fresh-competition-in-mexico
Johnson, D. (2018) Reluctant Retailing: Amazon Prime Video and the Non-Merchandising of Kids' Television. Film Criticism. 42 (2) p104-116
Mexico.mix.com (2019) Retrieved June 23, 2019 from https://www.mexico.mx/en/articles/mexicans-internet-social-media
Marvin, R. (2019) The tech beneath the video streaming world. PC Magazine. April Issue 134-47
Disney's Generic Competitive Strategy & Intensive Growth Strategies
panmore.com/disney-generic-competitive-strategy-intensive-growth-strategies
Poulus, J. (2019) Netflix and Nil. New Atlantis: A Journal of Technology & Society 57: 91-97
Igotyou
Harris_CompetitiveAnalysisandStrategy.docx
0
