iRobot in 2019: Can the Company Keep the Magic?
lacedjays
NetflixandTesla.docxNetflix in 2019: Striving to Solidify Its Position as the Global Leader
We feel that the Netflix in 2019: Striving to Solidify Its Position as the Global Leader case pairs particularly well with the material covered in Chapter 7, in which the five primary reasons that companies choose to enter foreign markets are identified:
1. To gain access to new customers.
2. To achieve lower costs through economies of scale, experience, and increased purchasing power.
3. To gain access to low-cost inputs of production.
4. To further exploit its core competencies.
5. To gain access to resources and capabilities located in foreign markets.
Before beginning this exercise, you will need to read the Netflix case.
What factors are acting to intensify/weaken rivalry in the subscription video-on-demand industry?
Select “yes” for those statements below that are accurate and choose “no” for those that are not.
a. Amazon Prime, YouTube, and Hulu are exerting tremendous competitive pressure on Netflix to maintain its pace as the creator of "must-watch" on-demand content.
b. Local providers in both developed and emerging markets are also rivals with possibly lower cost structures and more localized content.
c. Rivalry is centered on two main factors: price and breadth of selection; providers with the largest content library will most likely have the most subscribers.
d. The competitive pressures associated with rivalry among providers of subscription video on demand is intense due to price competition and price wars.
e. Rivalry among subscription-based providers of streamed video content is a moderate competitive force that is likely to intensify in the years ahead.
f. Deep-pocketed newer entrants such as Apple, Disney, and Warner Media will ratchet up that pressure.
What factors are acting to intensify/weaken the bargaining power and leverage of suppliers in the subscription video-on-demand industry?
Select “yes” for those statements below that are accurate and choose “no” for those that are not.
a. The cost of licensing studio-produced content involving top writers, location shooting, and actors with box-office appeal will rise as competitors emerge and bid for content and talent that Netflix desires.
b. The competitive pressures associated with the bargaining power of suppliers to providers of subscription video on demand is weak to moderate.
c. All streaming/VOD providers will undoubtedly have to compete on the basis of having a large library of titles available for streaming.
d. As technology improves and decreases in cost, more consumers will be able to create as well as download content quickly via the web and play it on their televisions or alternative devices.
e. The bargaining power and leverage of suppliers is a moderate to very strong competitive force, depending on the type of supplier.
f. The cost to deliver content over broadband and cellular networks provided by third parties could increase, and the need to pay for fast-lane network access could drag on margins.
What factors are acting to intensify/weaken the competitive pressures associated with substitutes in the subscription video-on-demand industry?
Select “yes” for those statements below that are accurate and choose “no” for those that are not.
a. Competition from substitutes is a moderate to strong competitive force, depending on the extent to which consumers prefer to watch content on demand versus watching movies at movie theaters or buying movie DVDs for their own personal library.
b. Other than labor-intensive work to create and stream personal videos via YouTube and other social media outlets such as Twitter, Facebook, Instagram, and Snapchat, there are few powerful substitutes for subscription video-on-demand services.
c. Acceptable substitutes are readily available and competitively priced (in some cases).
d. The slow demise of movie theaters as well as cable and broadcast television also exacerbate the decreasing power of substitutes.
e. The competitive pressures associated with the threat of substitutes in the market for subscription video on demand is weak.
What factors are acting to intensify/weaken the bargaining power of buyers in the subscription video-on-demand industry?
Select “yes” for those statements below that are accurate and choose “no” for those that are not.
a. Individual subscribers/viewers may opt to switch to a different provider and negotiate for a better rate at any time.
b. The competitive pressures associated with the bargaining power of buyers of subscription video on demand is moderate.
c. Buyers have a variety of streaming services from which to choose (Amazon, Apple TV, Hulu, Netflix, Roku, etc.).
d. Switching costs for buyers are moderately low compared to switching among cable and satellite TV providers.
e. Consumers in most markets have multiple ways to view archival and new content, either via traditional broadcast TV or via rentals of DVD/Blue-Ray media.
f. Most consumers already possess a tablet, mobile device, or smart TV, there is no need to purchase add-on boxes or purpose-specific viewing equipment.
What factors are acting to intensify/weaken the threat of new entrants into the subscription video-on-demand industry?
Select “yes” for those statements below that are accurate and choose “no” for those that are not.
a. The competitive pressures associated with the threat of new entry into the market for subscription video on demand is weak to moderate.
b. Some markets, such as China, Crimea, North Korea, and Syria, remain closed to external providers of streaming media services (or do not allow such services to exist).
c. The entry threat into the market for subscription video on demand should be viewed as moderate to strong.
d. The entry into the subscription video on demand has become prohibitively high and is rising.
What do you see as the key drivers impacting growth and key success factors for rivals competing in the market for subscription video on demand?
Select “yes” for those statements below that are accurate and choose “no” for those that are not.
a. Social/Demographic—global population growth and increasing urbanization, accompanied by rising standards of living and technology adoption
b. Economic—changes in per capita disposable income in emerging economies, some of which are located in the Southern Hemisphere, offsetting economic slowdowns in countries in the Northern Hemisphere
c. Increased competition—low barriers to entry will increase the number of competitors
d. Government/Political/Legal—absence or presence of subsidies, low-interest rates, barriers to trade, presence or absence of high-speed Internet, cellphone and tablet adoption rates, and currency exchange rates
e. Technology—increasing reliance on innovation and R&D to develop new programming content, increase video streaming throughput, differentiate products, and mine or analyze customer data
f. Industry growth—the mass entry of video-on-demand competitors has caused growth to slow down at least for a short period
Which of the following accurately characterize Netflix’s resource strengths and competitive capabilities?
Select “yes” for those statements below that are accurate and choose “no” for those that are not.
a. Netflix enjoys an international presence
b. Netflix was not a first mover but was certainly successful in following the strategy of other streaming providers
c. differentiated, cutting-edge, critically acclaimed content
d. Netflix has the capability to track and query customer analytical data
Which of the following accurately characterize Netflix’s resource weaknesses and competitive liabilities?
Select “yes” for the resource weaknesses that are accurate and choose “no” for those that are not.
a. the financial strains of producing a greater number of original, in-house produced content has left Netflix financially drained
b. inability to enter Chinese market
c. Netflix is vulnerable to the bargaining power of movie studios and other content suppliers to extract higher license fees from Netflix
d. diversion of cash flows to service debt
e. high financial leverage
Which of the following accurately characterize Netflix’s market opportunities?
Select “yes” for the market opportunities that are accurate and choose “no” for those that are not.
a. increasing global availability of broadband and high-speed cellular networks
b. increasing installed base of devices capable of showing streaming content
c. vast potential in world's second largest economy (China), and second most populous market (India and Southeast Asia)
d. partner with smaller streaming providers such as Redbox
e. partner with movie studios to negotiate lower license fees
Which of the following represent external threats to Netflix’s future well-being?
Select “yes” for the external threats that are accurate and choose “no” for those that are not.
a. hacking of consumer data and illegal reproduction of proprietary content
b. continued political and legal barriers to enter China and other emerging markets
c. continued jockeying for position among existing rivals plus entry of Apple, Disney, and Warner Media that will change the game for subscription services
d. government regulations that can prevent them from producing their own in-house content
Considering all four SWOT lists, which of the following accurately characterize the attractiveness of Netflix’s overall situation?
Select the best response from the options provided.
Top of Form
Multiple Choice
· Netflix should address its weaknesses very closely as it continues to lose subscribers to Amazon.
· Netflix’s overall situation is strong and its long-term outlook is promising.
· Netflix’s situation is threatened by movie studios with high licensing fees, adding to Netflix’s financial burden.
Bottom of Form
How have Netflix’s business strategy choices strengthened or weakened its competitive position in the streaming video on-demand industry? Discuss how the company’s senior management has chosen to increase the horizontal or vertical scope of the firm.
Select “yes” for those statements below that are accurate and choose “no” for those that are not.
a. CEO Reed Hastings has, over time, successfully transitioned Netflix from a DVD rental service to the premier streaming video on demand service.
b. Netflix's internal recommendation software and large subscriber base have afforded the company an edge when deciding which content to acquire in future years.
c. Netflix is not the current market leader; this increases the bargaining power of suppliers.
d. Netflix has built a substantial content library that will benefit the firm over the long term.
e. Rivalry has been moderate between Amazon Prime, Hulu, YouTube, and Netflix.
f. Netflix incurs a cost to localize content and production of content to sustain access to global markets and grow subscriber base in those markets.
g. Netflix is highly dependent on favorable reception from foreign governments and consumers' acceptance of content as well as access to high-speed Internet services for streaming that content.
Has Netflix’s increase in scope also been a part of its international strategy? Is the international strategy best characterized as a multidomestic strategy, global strategy, or transnational strategy? Which strategy for entering international markets should be selected for China?
Select “yes” for those statements below that are accurate and choose “no” for those that are not.
a. It is expected that Netflix will expand further into local-language programming to offset the weakness of its relatively more modest offerings in many countries.
b. Netflix's expansion outside the United States could continue to drag on cash flow due to different tastes and lower video consumption.
c. It is expected that Netflix will successfully enter international markets with a multidomestic strategy.
d. A transnational strategy allows Netflix the ability to exploit experience-curve effects and location economies and to customize product offerings in accordance with local response.
e. It is highly probable that Netflix's international expansion will disappoint, particularly in terms of the speed of margin expansion and compounded by its current inability to enter the Chinese market.
f. A global/international strategy allows Netflix the opportunity to customize product offerings and marketing in accordance with local responsiveness.
g. The disadvantages of a multidomestic strategy for Netflix are the inability to realize location economies, experience-curve effects, and be able to transfer distinctive competencies to foreign markets.
What do the data in case Exhibits 1, 2, and 5 reveal about Netflix’s financial and operating performance?
Select “yes” for those statements below that are accurate and choose “no” for those that are not.
a. Netflix's year-on-year and Compound Annual Growth Rates (CAGR) are extremely robust.
b. Total operating expenses have remained steady between 2016 and 2018.
c. Operating income declined dramatically between 2017 and 2018.
d. Net income has almost doubled year after year from 2016 to 2018.
e. Netflix's improved profitability and phenomenal growth rates have come at the cost of high debt leverage.
What three to four top priority issues do CEO Reed Hastings and Netflix management need to address?
There are spaces for up to six top priority issues that should be addressed by CEO Reed Hastings and Netflix Management. Draw conclusions from your analyses of the case and the industry. Each top priority issue must be supported with convincing justifications using relevant concepts and tools and set the stage for what actions/recommendations need to be taken.
a. Action Recommendation:
Supporting Justification:
b. Action Recommendation:
Supporting Justification:
c. Action Recommendation:
Supporting Justification:
d. Action Recommendation:
Supporting Justification:
e. Action Recommendation:
Supporting Justification:
f. Action Recommendation:
Supporting Justification:
What recommendations would you make to Netflix CEO Reed Hastings? At a minimum, your recommendations should cover what to do about each of the top priority issues identified in question 7.
There are spaces for up to six action recommendations and supporting justifications. Each recommended action must be supported with convincing, analysis-based justifications founded on the relevant concepts and tools that apply to this case.
a. Action Recommendation:
Supporting Justification:
b. Action Recommendation:
Supporting Justification:
c. Action Recommendation:
Supporting Justification:
d. Action Recommendation:
Supporting Justification:
e. Action Recommendation:
Supporting Justification:
f. Action Recommendation:
Supporting Justification:
Tesla in 2019: Is Sustained Profitability a Realistic Prospect?
We feel that the Tesla in 2019: Is Sustained Profitability a Realistic Prospect? case pairs particularly well with the material covered in all chapters of the textbook. The case can be used with the chapters covering environmental and industry analysis, competitive positioning, diversification, corporate social responsibility, and leadership.
Before beginning this exercise, you will need to read the Tesla case.
What are the chief elements of Elon Musk’s overall leadership and managerial style? How well is it working? Is his style evolving?
Select “yes” for those statements below that are accurate and choose “no” for those that are not.
a. Musk has been gradually but firmly expanding Tesla's repertoire to include environmental responsibility, walking the talk to support his belief that "the world needed an environmentally clean method of transportation."
b. Musk's ability to retain the strengths of Tesla's prior business model while making incremental adjustments to improve and broaden that model has maintained the culture of innovation while empowering employees and pushing authority down to teams.
c. Musk has failed at overseeing the building and strengthening of Tesla's competitively valuable resources and capabilities.
d. Tesla has achieved its success through R&D, while the impact of acquisitions and partnerships, particularly in China, remains to be seen.
e. On a market creation and share basis, there are preliminary indications of very slow progress as compared to other auto manufacturers.
f. Tesla's vision is to disrupt and transform existing industries.
Explain Tesla’s business model. How—if at all—has it changed under Musk’s leadership?
Select “yes” for those statements below that are accurate and choose “no” for those that are not.
a. Tesla is pursuing a focused differentiation generic strategy, that is, one that aims to differentiate a company's product or service from that of rivals in ways that will appeal to a high-growth niche composed of sophisticated buyers.
b. Customers are characterized as, "wealthy individuals anxious to be a part of the migration from gasoline-powered vehicles to electric-powered vehicles and to publicly display support for a cleaner environment."
c. There is some evidence that Tesla is already moving toward a broad differentiation generic strategy via more affordable EV, the Model Y, pickup trucks, and delivery vehicles (semis), autonomous vehicles, and a mobile ride sharing service.
d. Tesla has established a very limited number of recharging stations in a few locations to convey the selling point that Tesla cars rarely need to be charged.
e. Tesla is looking to appeal to a wider range of mass-market buyers through a best-cost strategy.
f. Tesla customers are characterized as young, educated, technologically-inclined customers focused on a clean environment.
How would you rate Elon Musk in terms of the three main managerial areas used to build an organization, as shown in Figure 10.1? Which are strengths, and which are areas for improvement? What grade does Musk deserve for his efforts thus far?
Select “yes” for those statements below that are accurate and choose “no” for those that are not.
a. Tesla's strategy-supportive resources and capabilities are its strengths but are clearly in need of immediate and continuous improvement.
b. Production line employees interviewed by reporters indicated long shift hours and poor leadership leading to problems with quality control.
c. Elon Musk is known for setting stretch performance targets and high product quality standards and pushing hard for their achievement.
d. Musk exhibits perseverance, dedication, and an exceptionally strong work ethic—he typically worked 85 to 90 hours a week. Most weeks, Musk split his time between SpaceX and Tesla.
e. Tesla's strategy-supportive resources and capabilities are its weaknesses and in need of immediate and continuous improvement.
f. On balance, Musk would earn an "A" for vision and a "C+" for execution, which averages out to about a "B+" composite grade for his leadership.
What is your assessment of Tesla’s recent financial performance under Musk’s leadership? (Use the financial ratios in the Appendix of the text or in Figure 4.1 as a guide when doing your financial analysis.)
Select “yes” for those statements below that are accurate and choose “no” for those that are not.
a. high growth in automotive sales, three-year CAGR about 73 percent and most recent year-on-year growth at over 100 percent
b. major investments in innovative technologies (R&D investments as a percentage of sales have ranged from 7 to 17 percent of revenues)
c. selling, general, and administrative expenses had a slight increase between 2015 and 2018
d. company gross margins have declined slightly from 2015 to 2018, from 23 percent to 19 percent
e. Tesla's loss from operations has increased from 2015 to 2018
f. high financial leverage and high operating costs
What recommendations would you make to Elon Musk to allow Tesla to strengthen its position in its most important markets?
There are spaces for up to six action recommendations and supporting justifications. Each recommended action must be supported with convincing, analysis-based justifications founded on the relevant concepts and tools that apply to this case.
a. Action Recommendation:
Supporting Justification:
b. Action Recommendation:
Supporting Justification:
c. Action Recommendation:
Supporting Justification:
d. Action Recommendation:
Supporting Justification:
e. Action Recommendation:
