i need only to summary this case by own word . read it and do summary

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In the case, you learned that just a decade and a half after startup, Netflix had pushed Wal-Mart, Amazon, and Blockbuster Video, who once dominated the industry, out of the DVD rental business. Netflixs expertise in shipping and distributing DVDs, however, provides no competitive advantage when streaming files over the internet. And, with competition from Amazons Video on Demand, Apples iTunes, HuluPlus at Hulu.com, Time-Warner Cables TV Everywhere, and DirectTV Cinema, theres no guarantee that Netflixs success will continue. Let's find out what really happened by seeing what steps Netflix and its founder, Reed Hastings, took to be competitive under different circumstances and to successfully manage the companys growth.

Planning involves determining organizational goals and a means for achieving them. So, how can Netflix generate the cash it needs to pay the studios? How can it convince them its not a competitor so they will agree to license their content?

Planning, which is one of the functions of management, involves determining organizational goals and a means for achieving them. As students will learn in Chapter 5, planning is one of the best ways to improve performance. It encourages people to work harder, to work hard for extended periods, to engage in behaviors directly related to goal accomplishment, and to think of better ways to do their jobs. But most importantly, companies that plan have larger profits and faster growth than companies that dont plan. Likewise, the question What business are we in? is at the heart of strategic planning which students will learn about in Chapter 6. If you can answer the question What business are you in? in two sentences or less, chances are you have a very clear plan for your business. But getting a clear plan is not so easy. Sometimes even very successful companies, like Netflix, have difficulty answering this question.

Netflix had been spending about $240 million a year to buy the DVDs that it rented to its subscribers. But, unlike DVDs which can be bought and then rented without studio approval, U.S. copyright laws require streaming rights to be purchased from TV and movie studios before downloading content into peoples homes. That means that Netflix not only has to come up with more money to stream video content, it also means they have to come up with more money than their competitors, such as Apple, Amazon, Hulu, Time-Warner Cable, and DirecTV. So, where can Netflix come up with the extra money without cutting into its profits? Well, consider that it costs roughly $1 dollar to ship and return a DVD to a customer. The first time that Netflix tried streaming video in 2000, it took 16 hours and cost $10 to download videos to customers. However, said CEO Reed Hastings, We started investing 1% to 2% of revenue every year in downloading, and I think it's tremendously exciting because it will fundamentally lower our mailing costs. Because of that investment and advances in technology, today it only costs Netflix 5 cents to stream the video content of a full-length film. And since Netflix spends $600 million a year mailing DVDs back and forth from its distribution centers to its customers, it can take the money it puts toward mailing costs and put nearly all of it remember it only costs a nickel to stream a movie - toward buying streaming rights from the studios. And, the more movies that customers stream, the more money that Netflix will have on hand. And with double the revenues, profits, and subscriber base since starting video streaming in 2007, cash certainly wont be an issue as it works with the studios to obtain streaming rights.

The key question, however, is whether Netflix can convince the studios that its not a competitor. And, that may depend on the strategy Netflix uses and the kind of business it wants to be. Netflixs strategy hasnt changed. Its still all about growth. According to CEO Reed Hastings, Our focus is on getting to five million, 10 million, 20 million subscribers and becoming a company like HBO that transforms the entertainment industry. Before streaming, Netflix was a DVD rental and distribution company. But, thats no longer the case. Ted Sarandos, Netflixs chief content officer, says that its destiny is to become a streaming company, but, for now, You could say we are in DVD maintenance mode at this time.

How is Netflix enticing the studios to give it streaming rights? Well, besides huge payouts, nearly every deal includes delayed access to movie content. Typically, Netflix cant stream video content until its been available for consumer purchase for at least 28 days, and sometimes as long as 3 months. That way, the studios can still harvest consumer DVD sales, which are the most profitable part of movie sales, and then pickup additional revenue through Netflix. How persuasive has Netflix been? Well, Warner Brothers movie studio, which is owned by Time-Warner Cable, wanted to force Netflix to take the same deal that it gives to cable- and satellite-TV providers, namely, charge consumers $4 for each movie download, and then give 65% to 70% of that $4 to the studio. But, since 75% of DVD sales come in the first month that the movies DVD is released, Warner Brothers was willing to agree to Netflixs 28 day delay for new releases. Furthermore, it agreed to give Netflix the streaming rights to most of the DVD and Blu-ray movies in its catalog. Netflixs Ted Sarandos said, Were able to help an important business partner [i.e., Warner Brothers] meet its objectives while improving service levels for our members by acquiring substantially more units than in the past after a relatively short sell-through window. At the same time, were able to extend the range of choices available to be streamed to our members. Netflix has signed similar deals with all of the major film studios, with all of the major TV studios (NBC, CBS, Fox, ABC), and with many of the major cable television studios (Showtime, Starz, and HBO).

In the end, says chief content officer Ted Sarandos, We see ourselves as complementary [to the studios]. If someone loves [the cable TV show] Weeds on Showtime, theyll watch it on Showtime and go find the older episodes from us.

With blazing growth on one hand and the strategic challenge of obtaining studio content on the other, how much time should he and his executive team devote directly to hiring? Deciding where decisions will be made is a key part of the management function of organizing. So, should he and his executive team be directly involved, or is this something that he should delegate?

Management, at its essence, is getting work done through others. When you're promoted from employee to manager, you stop being a doer and start helping doers succeed at their jobs. Indeed, as we learned in the chapter, most derailed managers are unable to make the most basic transition to managerial work: to quit being hands-on doers and get work done through others. Two things go wrong when managers make these mistakes. First, when managers meddle in decisions that their subordinates should be makingwhen they cant stop being doersthey alienate the people who work for them. Second, because they are trying to do their subordinates jobs in addition to their own, managers who fail to delegate will not have enough time to do much of anything well.

With this knowledge, its no triviality to ask whether CEO Reed Hastings and his top executive team should be directly involved in hiring, or whether he should delegate this task to others.

Because of its blazing growth, hiring top talent is a top priority at Netflix. But, it doesnt hire the same people that other leading edge Silicon Valley companies do. Patricia McCord, Netflixs chief talent officer, says, Google, for example, wants to reorganize the world's information. You do that by hiring as many smart, young people as fast as you can, put them in a petri dish, feed and water them, make it a place like home where they can live and collaborate all hours of the day. By contrast, Netflix hires people with 7 to 15 years of experience. Says McCord, They're accomplished deliverers. You need to know your craft so you can make a contribution when you walk in. You need to be mature, with enough experience to be able to make independent decisions.

So, should Netflixs top executives spend significant direct time hiring employees or should they delegate that responsibility. From the perspective of managers not being doers, it seems that except for the people who report directly to top managers, hiring should be done by managers at lower levels in the company. And, for a more mature company thats been in business for much longer, that makes perfect sense.

Netflix, however, despite being the industry leader, is only a decade and a half old, so its culture, that is, the beliefs and attitudes held by those in the company, is still malleable and changeable. Moreover, rapid growth is one of the best ways to destroy a culture. With so many new people coming into the company at the same time, its becomes even more difficult to pass on the informal rules and norms that guide every day behavior. Likewise, top managers are responsible for developing attitudes of commitment and ownership and for creating a positive organizational culture through words and actions.

For those critical reasons, Netflixs top executives devote two to three hours a day to making sure that they hire the right people who fit into its mature adults culture (see more below). Allison Hopkins, vice president for human resources, said, Most people at our levels don't do it, but for us it's a priority; we have absolute veto. For example, a guy I interviewed recently expressed surprise at our open approach to vacation time. He said, I'm a workaholic and never take time off; I need someone to make sure I take my time or I won't use it. I told him, We hire adults, and if you don't know how to manage your vacation, you won't fit in.

Finally, located near Silicon Valley which is home to Google, EBay, Apple, Hewlett-Packard, and Face Book, some of the most attractive employers in the world, what can Netflix provide in the way of pay, perks, and company culture that will attract, inspire, and motivate top talent to achieve organizational goals?

Leading, which is the third management function, involves inspiring and motivating workers to work hard to achieve organizational goals. But since Netflix is in a phase of rapid growth, and because Netflixs top executives devote 2-3 hours a day to hiring, leading at Netflix also includes attracting and hiring top talent. The challenge for Netflix is figuring out how to do that with some of the most attractive employers in the world in its back yard. Their solution has three parts, aggressive market-based pay, development of a mature adults culture, and an incredible amount of freedom combined with strict accountability.

In terms of pay, unlike the rest of Silicon Valley, Netflix does not pay bonuses, but its salaries, which are adjusted each year, are pegged to the top of the market. Each year, Netflixs human resource department adjusts salaries by asking three questions:

What could this person get elsewhere?

What would we pay for a replacement?

What would we pay to keep this person if they had a more lucrative offer elsewhere?

Then, once the salary is determined, the person can take it in salary, or in salary plus stock options.

While its aggressive salaries help attract top talent, Netflix believes that its mature adults culture helps keep them at the company. Theres no dress code, no security badges or checkpoints, no required hours, and no tracking of vacation time, save for anything beyond 30 days which requires approval. Patricia McCord, Netflixs chief talent officer, says: We focus on what people get done, not how many hours or days they worked. Have I ever fired a $100,000 employee for being tardy or late? Creative people come up with ideas outside of work. Allison Hopkins, vice president for human resources, said, [company] policies are written for the lowest common denominator. Here, we don't have to do that. You don't have to write things down. When someone does something wrong, we tell them it was wrong. After that, either they get it or they're out.

Finally, Netflix gives its employees a tremendous amount of freedom. For example, the travel and entertainment spending policy has five words, Act in Netflixs best interests. No lengthy rules. No spelling out what the company will and wont pay for. Just, act in Netflixs best interests. CEO Reed Hastings says, that the creative employee we compete for thrives on freedom. We're more focused on the absence of procedure--managing through talented people rather than a rule book.

But, the aggressive pay, the mature adult culture, and the freedom come with strict accountability. CEO Hastings summarizes the company attitude this way, We are a performance culture based on intellectual prowess. We try to be fair, but [the length of an employee's Netflix career] is not our primary concern. If someone is not extraordinary, we let them go. It sounds harsh, but Allison Hopkins, vice president for human resources, believes that, Keeping the house clean is essential to who we are. Too often, really good workers are frustrated at having to work with others who they perceive as average or worse performers. When we ask people why they chose us, they tell us it's not for the money. It's the other stuff. [It's] the places we worked didn't fire people they should have fired.

Patricia McCord, Netflixs chief talent officer, says Netflix managers use the keeper test when conducting annual performance reviews. Managers, she says, are expected to ask themselves, Which of my people, if they told me they were leaving in two months for a similar job at a peer company, would I fight hard to keep at Netflix? If youre not a keeper, and typically 3-5% are not, youre asked to leave. But says McCord, We want them to keep their dignity. In many companies, once I want you to leave, my job is to prove you're incompetent. I have to give you all the documentation and fire you for poor performance. It can take months. Here, I write a check. We exchange severance for a release. To make Netflix a great company, people have to be able to leverage it when they leave" by subsequently getting good jobs. She says, Usually, people find new jobs quickly. No one has sued.

How well is this approach working? Well, the latest report as of this writing showed Netflix with a 52% increase in quarterly profit, a 34% increase in quarterly revenue, and a 3.1 million more subscribers, for a total membership of over 20 million subscribers, 7.7 million who signed on in the last year. Those totals now exceed the number of subscribers held by subscription movie channels Showtime and Starz, but are still below HBO, which has 28.3 million subscribers. Where did the growth come from? Internet video. CEO Hastings said, the growth and acceptance of on-demand, click-and-watch Internet video as embodied by Netflix, Hulu and YouTube has been pheno