14 Aug You will complete an executive summary based on the information in the report. T

You will complete an executive summary based on the information in the report. The executive summary can be a maximum of 1.5 pages double space. I need the executive summary back within 2 hours. This project is for ARCHERDSJ. I promised to give him this work.External OpportunitiesThe primary factor that distinguishes Netflix is its online streaming library catalog withan enormous collection that exceeds 100,000 unique movies and television shows. The companyheavily relies on original content to set itself apart from its competitors like Hulu and Amazon.India is one of two countries with the largest population in the world and has a current populationof over 1.25 billion which is expected to cross 1.35 billion by 2020 and will include the world’shighest number of youth in the age group of 18 – 35 (worldbank.org). Penetration of the videostreaming industry is in its infancy stage; hence, this is an opportune time for Netflix to focus itsattention on expanding to India.Aggressive infrastructure development has modernized the mediums by which access andconsumption of media entertainment is available to consumers. Internet users as of August 2015in India grew to 350 million; of this number 159 million were accessing the Internet throughmobile devices (statista.com). The local media industry in India thrives on plurality, regulationssupport net neutrality and local broadcast regulations offer a level playing field for organizationsdoing business in the media infotainment and entertainment sectors – all these factors combinedwith the staggering number of Internet users in the age group of 18 – 35 in India provide anincredible opportunity for Netflix (TRAI.com).Netflix owns content that has gained immense popularity and significantly contributed tothe company’s stronghold in the video streaming industry. However, for Netflix to enticesubscribers and succeed in India the company will need to collaborate with local establishedmedia houses like Balaji Telefilms to sponsor original content dubbed in several regionallanguages; add a substantial collection of Bollywood movies and television shows to theircatalog, and offer a low subscription rate – at the very least in the introductory phase.Political FactorsA noted by Drucker P., & Maciarriello, J (2008) and Desai, Ashok V (1999):Government regulations or individuals more so politicians and government taxdevelopments; risky business environment with sudden hostile policies, tax proposalunveiled in a match that remove subsidies, and imposed huge taxes to foreign companiesEconomic FactorsAs noted by Desai, Ashok V, (1999):Indian consumer income, spending rates, tax rate, output growth to 7% per capita income;India having the world’s fastest growing economy, and investment-friendly economicpoliciesSocial FactorsAs noted by H. W., Barbarav (2003):India 102nd on social progress ranking, low score on shelter, and basic human needs;access to information and 21st century internt access use.Technological FactorsAs noted by H. W., Barbarav (2003):India is ranked second largest world-wide in mobile users 983.21 million subscribers, andrank third in internet base market of 300 million users with a 24% penetration rate.Environmental FactorsIndia in recent years suffered great loss attributed to environmental degradation and,therefore, decided to embrace the green economy policies, with regards to thissensitization.Legal FactorsAs Noted By Lee, David E (2006):Legal Procedures, Laws, And, Regulations Governing The Entry Of Foreign CompaniesInto The Indian Market Must Be Adhered To. The Managers And Directors Of TheCompany Must Be Legally Allowed To Operate And Stay In The Country. CompaniesDoing FDI Are Not Allowed To Invest Less Than $100 Million And Also 50% Of LocalIndians To Be Offered A Position In The Corporation. Netflix Should Have This In MindAs It Expands Operations To The Indian Market.Mitigation ThreatsPESTLE analysis normally give both favourable and unfavourable conditions that affectsor are likely to affect the organisation, thereafter it’s now the work of managers to take action onthe recommendations of the analysis. Lee, David E, (2006).Netflix analysis in India is favoured by most factors, with exceptions in legal facet thatrestricts its operations and inflow of its employees in India. Mitigation of this can be achievedthrough training of some Indian personnel to help to avoid extra costs of documentation whichalso consumes time. Merger is also an option to avoid the $ 100 million dollar restriction toGreenfield ventures by Indian laws. The rate at which the Indian economy is growing isalarming, hence soon competitors will join the market, to counter this Netflix needs tostrategically position, market, and segment the market so than even if competitors come they aredeeply rooted in the market with brand loyalty from consumers.Technologically, a customer base of 300 million users is not easy to serve, hence researchand development department are to work extra hard to innovate more powerful servers that arestrong enough to serve such magnitudes effectively. Similarly, the world technology is advancingat a rocket speed and Netflix as an organisation needs to exploit such markets to the maximum,and leaving nothing to chance.In India. the government has shown and proven their willingness to grow theirtechnology by introducing it to schools, Netflix can use their position as a big, trusted and knowncompany to strike a deal with the government to offer them a contract to supply Indian schoolswith internet. Once they have created a good working relationship then it can seek to enjoyreluctant regulations from the government.Indian social development is still facing difficulties in trying to attain the world’s averagepositioning, this happened because the government was so focused in developing economythrough promotion of businesses and enterprises. This lead to the neglect of one of the mostimportant building block of a nation, the social pillar, however, capturing markets just meansinfluencing the social matters of the consumers through good relationships and fantastic productand service delivery.Netflix should strategize through its R&D, Market intelligence and marketing departmentto come up with a way to best touch the hearts of target market like no other organisation hasever imagined. Example sponsoring young children and providing their schools with the internetservices, this will work since they are the next generation and once Netflix gains their loyalty at ayoung age, their loyalty will be unimaginable and they will defend the organisation for it openedbright future to them.Netflix success in this venture is projected since its PESTLE analysis offers a greatpathway for sustainability, survival, and rapid growth in the Indian market, therefore a reliableanalysis. In every market exists a challenge and therefore it is the role of the organisations’managers to roll up their sleeves, and sensitize humanity since success is not only measure on thebasis of running a successful businesses but also the impact it creates in its environment. Further,the company should properly plan disposal ways since India is very sensitive and determined toimprove its environment and sanitation.Operational Tactics to Mitigate Operational ThreatsAnytime that a company decides to enter a market, their operational tactics should befocused on when to enter the market and where to enter the market as well as how thosedecisions will produce the most profitable and desirable outcome. The success of Netflix’sentrance into India will rely heavily on entering first and then assuming a defensive position toretain market share as new competitors arrive.Due to the fact that no other company currently streams movies in India, Netflix is in aposition to execute a timing tactic of being a first mover in the market. “Some of the advantagesof being a first mover are that the company is able to establish a reputation as a leader in theindustry, move down the learning curve to assume the cost leader position, and earn temporarilyhigh profits from buyers who value the product or service very highly.” (Hunger, 2011). Theinfrastructure to host Netflix services is already in place and the barrier to entry for Netflix isreally easy to overcome. Netflix has the platform to deliver the services already with AmazonWeb Services as its hosts and simply has to stop blocking Indian internet protocol addresses toallow Indian users access to its services. By entering the market first, Netflix can build a brandreputation and enjoy the profits of a temporary monopoly on the market until entrants arrive.After Netflix has gained a large majority of market share from the “linear” televisioncompanies which the Netflix CEO Reed Hastings suggests is inevitable, Netflix will have todefend its position in the market as competitors like Amazon Prime, Apple iTunes, and Huluattempt to penetrate market niches that Netflix traditionally fails to occupy. One of the defensivetactics that Netflix can utilize is raising structural barriers by blocking, “channel access bysigning exclusive agreements with distributors” (Hunger, 2011) for content that it acquires andoffers in their content library for India. India offers a 100% foreign direct investment which canbe an extremely advantageous platform for Netflix to obtain exclusive rights to content viaacquisition of Indian companies rather than the content alone. By purchasing these companies,Netflix will eliminate one of its biggest threats which is content providers increasing the price ofcontent agreements and at the same time secure the content from entrants to the market andeliminating their ability to outbid Netflix for content. Since many of the Indian film productioncompanies are publicly traded on the national stock exchange of India, direct purchase of acontrolling interest in the companies can be done relatively cheap ($307 million for 100% ofAVM Productions) compared to what they pay for content licensing to current providers ($200million to Disney for 1 year alone). This concept is not new. In fact, Disney itself purchasedUTV Software Communications Ltd. (an Indian owned entertainment company) in 2011 as amechanism of entry to introduce their brand and all the products/revenues associated with it tothe Indian market.Lastly, another one of Netflix’s operational threats is the legal restrictions of foreigndirect investment. In order for Netflix to establish operations in the company, they have toemploy managers and directors that operate and live in India, invest no less than $100 millioninto the economy and/or business as well as employ a work force comprised of 50% localnatives. This will restrict the freedom of business operations to an extent because talent may ormay not be available and $100 million is a lot of money to commit to. The way that Netflix canmitigate this operation threat is to establish a business unit in India that is focused on marketingand content selection. The regulations do not specify a number of employees required to be ofIndian citizenship only that 50% of them are. Netflix does not have to employ a massive amountof people to accomplish its business objectives. Additionally, If Netflix utilizes the $100 millioncommitment to acquire a production company, the employees that work for the productioncompany will become employees of Netflix and the 50% ratio can be further mitigated allowingfor the best talent to be hired regardless of citizenship status.Strength’sAccording to (Netflix 10-K, 2014), Netflix’s total assets were $7.056 billion dollars ofwhich, the majority was in their current content library ($2.126 billion), their non-current contentlibrary ($2.773 billion) and cash equivalents ($1.114 billion). By utilizing the massive contentlibrary that Netflix has, they have been able to easily expand into English speaking countries andhave over $1.1 billion in cash to purchase licensing agreements in new countries to build theirinternational content libraries.Netflix is currently the only company that has gone international with this type of servicewhich gives the company a huge geographic advantage with respect to brand value. Their biggestcompetitor is Hulu which is a joint venture and provides their services to the USA and Japan. Asof October 14th, 2015, “Netflix operated in 43 countries and had over 69 million members aroundthe world” (Netflix Q3, 2015). Netflix is rapidly expanding its international operations and isenjoying a monopoly in the worldwide entertainment streaming services industry as its pioneer.Netflix enjoys several competitive advantages over its competition. Netflix is very goodat choosing content based on a very large user database to mine data from. They are also seekingto pursue global licensing agreements for their original content that will cut costs furthermore.Lastly Netflix is a disrupter for what their CEO calls “Linear” TV networks due to their ability toprovide niche content. This allows Netflix to give customers the entertainment they want, whenthey want it and creates huge value for the company.Netflix has very simple business operations with regards to how it generates revenue andeconomies of scale. The primary means of revenue is subscription services and to provide thisservice Netflix produces just under $3 million per employee working for the company comparedto the S&P 500 average of $428 thousand per employee. This is a six times greater operationalefficiency per employee than the 500 best performing publicly traded companies making it hardto compete with.Mitigating WeaknessesBrandingSince Netflix is a relative unknown in India, they will need to establish a strong andreliable brand in order to compete with some of the other players in that marketplace who arehousehold names and have been doing business for many years. If they are able to select theappropriate content for the Indian market they are targeting, and then deliver it the right way,they should be able to effectively mitigate the risk of entering the market with an unknownbrand.Outsourced Distribution & HostingThrough use of Amazon Web Services (AWS), Netflix doesn’t have to worry aboutmaintaining the massive data library, bandwidth, electricity cost due to powering the servers andrequired HVAC systems, maintaining staffing for the systems, and all other necessities forhosting in-house (Netflix AWS, 2010). The inherent problem is that Amazon is a competitor inthe streaming content market, and if they decide to renegotiate the contract Netflix currently has,it could cause problems for Netflix. By ensuring a valid Memorandum of Understanding (MOU)is in place, guaranteeing a certain amount of revenue for AWS, or negotiating licensing terms toallow AWS to offer some of the housed content through their service, Netflix can help to mitigatethis weakness.Fiscal & LicensingNetflix’s $3.3B in off- balance sheet liabilities and commitments are held in such a wayto reduce risk and possibly allow avoidance of regulatory costs or taxes. A side effect andweakness of the organization is the possibility that this may affect the picture of Netflix’s true networth (Saunders & Cornett, 2008). There is no legal reason for Netflix to reallocate theliabilities, as it is in direct compliance with the SEC and Section 13(j) of the Sarbanes-Oxley Actof 2002 (SEC, 2015). While the appearance of a company trying to manipulate financialholdings and incomes to look more favorable is a concern, Kanter argues that in foreign marketsthis is less of a concern due to the differences in market, investor and corporate strategy alongwith governmental regulations (2011).As of the 3rd quarter 2015 Netflix had a debt ratio of 3.58, which was higher than othercompanies in the industry (Nasdaq, 2015). In order to mitigate this weakness, Netflix wouldneed to work on lowering the amount of their liabilities and increasing their total assets. Thiswould cause the ratio to lower, showing investors and other industry insiders that Netflix is lessdependent on leverage and in a stronger fiscal situation.The primary way for Netflix to accomplish this with the streaming media content serviceis to focus on licensing. In 2014 Netflix spent $3 Billion on licensing for film and televisioncontent (Sweney, 2014), and reported $5.1 Billion total liabilities on their 2014 balance sheet(Yahoo, 2014). The fact that their licensing itself accounts for 62% of the entire company’sliabilities is indicative of how critical optimizing this aspect of their business model is. Netflix’stop investor questions FAQ reports that their original content is not only the most lucrativeproperties, but also is the least expensive to carry for their customers (2015).The struggling DVD mailing service is another aspect which will need to be evaluated.Netflix has been losing customers of this service steadily since 2011, reaching an all-time low in2015 (Fox, 2015). By not offering the struggling DVD mail-order service in India, and focusingmore on streaming original content that will be well received by the Indian target demographic,Netflix has a good chance of mitigating this risk.By reworking existing license deals with Indian content providers who have exclusiverights to broadcast Netflix original programming such as Orange is the New Black and House ofCards, they have a chance of bringing their flagship products back in-house for the launch in theIndian market. If these deals cannot be renegotiated, short of pursuing lengthy and likely costlylegal recourse to regain legal rights to their own content, Netflix will likely need to wait for theexisting licenses to expire (Scott, 2014). Once they have done so, Netflix will once again be ableto provide their original content exclusively in this market.

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