In 1997, two software engineers, Reed Hastings and Netflix compete with a service that offers what they Marc Rudolph founded Netflix. The plan: use the inter- have plus more for around the same price? Amazon net to rent movies on DVD. By 1999, Netflix was offer- Prime has also begun offering original programing Netflix and the four functions of Management (100 points) ing unlimited DVD rentals for a single monthly rate. available through their streaming service. Apply the four functions of Management to the Netflix case study. Break your answer down in to fou But the plan didn't stop there. By 2007, Netflix Unlike other streaming sites, Hulu features ads. This parts: Planning, Organizing, Leading and Controlling. Use the information in the textbook, the case moved into online movie streaming. With the rise in may deter some customers because they do not want study and other sources in your response to the questions. popularity of streaming, Netflix separated their DVD to watch programming with ads for the same price as rental and streaming services in 2011. The next move ad-free content. However, Hulu is able to generate rev- for the company was big: original content. In 2012, enue from subscription fees and ad revenue. With over Consider the following questions as you formulate your answer: Netflix aired its first original show with "Lilyhammer," 1,000 brands using Hulu for advertisement, including followed in 2013 by "House of Cards." As of 2016, some major brands such as Mcdonald's, Pepsi, and Mi- Netflix has over 50 series of original programming and crosoft, advertising cannot be discredited as a revenue Planning: What does Netflix need to do be competitive and grow its business? countless other specials and documentaries available generator for streaming services. exclusively for their customers. HBO Now is HBO's standalone streaming service Think about strategies they might employ: With its lost-cost, robust content library and award- featuring the network's library of original series, mov- winning original programming, Netflix is an appealing ies, specials, and documentaries. At $15/month, this option to many customers over the high cost of cable. service is more expensive than Netflix and offers a But even with over 50 million viewers, Hastings cannot limited content selection. But for fans of HBO program- depend on past success to guarantee future success. ming, this option allows them access to the content Netflix is currently facing two threats: programming without a cable subscription. costs and increasing competition from other streaming Hastings and his executive team will have many o Is it time to drop the DVD-rental option and move forward exclusively as a streaming services. factors to consider as they prepare for the future. They service? A main selling features for Netflix is their large will need to complete all four functions of manage- collection of content. Licensing fees for content is a ment: planning, organizing, leading, and controlling. . Should advertisements be added to the programming? major expense. The company spent over $1 million As they plan, they will determine the organiza- per episode for streaming rights for The Walking Dead. tional goals and means for achieving them. What are . It is a better use of money to pay licensing fees or production costs? As more streaming services enter and gain strength in company expectations for the future? Is it time to drop the market, this could lead to bidding wars for the best the DVD-rental option and move forward exclusively as content. One way to combat programming fees is with a streaming service? Should advertisements be added Organizing - Once you have developed a plan, what steps need to be taken to organize and execute the plan? original content. Netflix invested $100 million for the to the programming? It is a better use of money to pay first two 13-episode seasons of "House of Cards," a very licensing fees or production costs? As they organize, Leading - What does management need to motivate or what type of vision does it need to put large investment. So producing original content comes they will first have to determine what decisions need to forth for its organization? with its own set of expenses. be made. Then, they will delegate who will do what and In addition to making sure expenses do not exceed who will they report to. Who decides how much of the Controlling - Why type of controls must be put in place? Do they need to constrain production revenue, Hastings must also worry about threats from content library will be purchased versus created? If new budgets or set aside a budget for the acquisition of new content? competitors. Amazon Prime, Hulu, HBO Now, and genre content needs to be acquired, who will do it? If original I have attached a grading rubric so that you will understand how I am evaluating this specific services such as Chiller (for horror movies), all content needs to be created, who will do it? assignment. offer services similar to Netflix. After decisions have been made and work as- Amazon Prime is a membership for $99/year that signed, management will be there to lead. They need to includes two-day shipping on eligible products, instant inspire and motivate employees to achieve the decided video streaming of Prime movies and TV shows, unlim- upon goals. Netflix original programming has been ited Prime music streaming, unlimited Prime reading, nominated for 117 Emmy Awards, winning 24. What and more. While the video streaming is the only part needs to be done to continue creating content of that of Amazon Prime that directly competes with Netflix, quality? How can employees be motivated to create the other services offer a unique challenge. How does the best programming or provide the best customer