Netflix Organizational Change & Structure Case Study

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Assignment due by June 18th, 2023.

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 Netflix is an online video streaming platform that allows users to watch movies, TV shows, documentaries online. The user can watch all these videos through a subscription service. Netflix adds new movies, series, and TV shows regularly to the chart so that subscribers can watch them instantly. It has managed to secure its position within the top 50 websites, following Google, YouTube, Yahoo, Facebook, Twitter, etc. So, Netflix is the most popular video streaming site or web portal in the world now.

•  Netflix Organizational Change

Technology has changed the world in many ways, including education, business, sports, entertainment, etc. Many renowned companies have been closed due to new technology such as computers, smartphones, and social media. Some have managed to cope with the force of change by applying sophisticated strategies and accepting organizational change. Netflix is one of the best examples that has changed its business model and strategy to survive. It has handled the force of organizational change to achieve a competitive advantage. Hence, it has become one of the most popular video streaming platforms for netizens.

Netflix was founded in 1997 in California, USA. However, In 1998, Netflix started its business by selling DVDs and rentals by mail. The product was a rent-by-mail DVD, and the payment system was the pay-per-rental model.

The following year, in 1999, Netflix launched its new subscription feature for customers to rent DVDs at a monthly rate. This service allowed the subscribers to enjoy unlimited DVD rental with monthly payments. So, the change was the pay-for-use model into a monthly subscription model. The subscribers choose the movie and video titles from Netflix's officialwebsite. After that, the distributors send the shows in the form of DVDs to the subscribers. In 2007, Netflix introduced a new video streaming feature for films and television series. The proper utilizing of the force of change has helped to achieve success. However, it is believed that Netflix is one of the most popular platforms for watching new movies, drama series, TV shows, and so more. They have achieved competitive advantages for adopting new features as per audience demand.

Netflix Organizational Change & Structure Case Study

Netflix Organizational Change- Netflix change management case study.

Additional Change Management at Netflix

In 2011, Netflix introduced its mobile apps and ios service for smartphone users. Smartphone users can download the apps free from Google as well as the Apple play store.Recently, Netflix changed from HTTP to HTTPS encryption to ensure viewers' privacy. In 2016, Netflix launched its offline playback feature to cache the contents. Therefore, Netflix mobile apps users can watch high-quality cache content without an internet connection. In 2018, Netflix added "the Skip Intro" option for customers to avoid intros of the shows. So, the users can skip the video if they want. In 2022, Netflix started alerting customers for sharing their account IDs and passwords with others. In 2022, Netflix intends to extend its business into the video gaming industry. The 200 million subscribers of Netflix can reach with a bundle of games like Apple Arcade. The video game contributes a significant role to attracts potential customers.

Netflix History Timeline

Netflix has become one of the most famous American production companies all over the world. It was established in 1997 byReed Hastings and Marc Randolphin California. However,Marc Randolphleaves Netflix in 2002. In 1998, Netflix introduced its official website with 925 items available to rent for a pay-per-month approach and only 35 employees.

Netflix launched its operation with the first and largest online DVD rental store. Since 2012, Netflix has produced and distributed its original content, including film and television series that entertain many viewers. This variety of contents has been stored at the online library for viewing by the subscribers. Since 2016, it has been providing services in around 190 countries. This company has established its office globally, including Brazil, the Netherlands, France, the United Kingdom, Japan, India, and South Korea. In 2022, Netflix owned more than 200 million subscribers globally who were involved in a pay-per-month payment.

However, Netflix is available worldwide except in China, Syria, and North Korea. According to a report in 2020, Netflix has achieved $1.2 billion operating income for its outstanding performance with sophisticated features.

Netflix Organizational Structure

Netflix has a flat organizational structure that provides ample freedom for employees. It is also known as a decentralized organizational structure that allows the respective person to make quick decisions. Netflix maintains the unitary organizational structure also known as the U-form organizational structure. It influences the employees to be more responsive totheir duties. Netflix's organizational structure avoids top-down decision-making strategies to create a conducive working environment for employees. It also focuses on creating afavourable environment to promote employees' work performance. Netflix has a labour division that works to improve performances. The authority review the performance regularly. They opt for a multi-rater feedback system that is also known as a 360-degreereview method. Netflix's organizational administration team always focuses on practising

Netflix Organizational Change & Structure Case Study

and maintaining the principles of total quality management tools that trigger it to become the most popular company worldwide.

Netflix Organizational Structure 2022

The three main divisions of the Netflix organizational structure are functional, geographical, and products team. The functional division includes CEO, content, communication, talent, finance, legal, and so more. Additionally, the geographical team consists of local and international streaming. Finally, the product team controls the content and ensures the effectiveness of the operation.

Netflix CEO in 2022 Reed HastingsandTed Sarandosis the current CEO of Netflix. In 2020, Ted Sarandos joins Netflix as co-chief executive officer and chief content officer. Initially, Hastings and Marc Randolph were the co-chief executive officers of Netflix.Marc Randolphleaves Netflix in 2002.

Netflix Organizational Transformation :

First-Change in 1999 (Pay-For-Use Model Into a Subscription Model) Netflix has made two significant changes since its launch. At first, it began the subscription option in 1999 to store DVD rental. This change allows consumers to rent unlimited DVD rental without late fees. It was the first change in the business model in the history of Netflix.

Second-Change in 2007 (Streaming Service) Later, in 2007, Netflix made its second change by launching an online video streaming service. Consumers have accepted this change. It is believed that the launching of video streaming services has become the prime business pillar of income.

Purpose of Netflix Organizational Change

Netflix is becoming famous day by day for its easy accessibility quality and sophisticated features. After all, the new technology adoption and adaption is an inevitable approach to exceeding customer demand. In the 21st century, people do not want to allocate extra time to go to the cinema hall. People used to go to the cinema hall to watch new movies before watching movies at home on Netflix. New technology, including a computer, laptop, and smartphone, entertain people easily through internet service. In addition, the social media revolution changed the way we communicate with each other. It has become an excellent platform for sharing user-generated content, including photos and videos. Now, many citizen journalists are practicing democratic journalism because of the social media revolution.

Most people globally use social media in many perspectives, such as education,entertainment, and marketing. Netflix's authority had perceived the upcoming marketdemand. Therefore, they have changed the business model to watch movies and television series on computers and smartphones. The management of Netflix realized that consumers do not like to store video, so they changed the business model. Additionally, Netflix is always aware of the approaches of competitors. Blockbuster is a crucial Netflix competitor;

Netflix Organizational Change & Structure Case Study

hence, they added a new feature to distinguish from competitors. The reason for changing the business model of Netflix was appropriate and effective to bring success.

How Netflix Handle the Organizational Change Forces

Organizational change refers to the adjustment and transformation of the way a company operates. The company brings a minor or significant change to improve productivity and cope with the new context. There are two types of forces of change in a company: external forces and internal forces. External forces are technological change, globalization, social and political change, and managing ethical behaviours. For example, technological change and globalization are the primary external forces that compelled Netflix to change the feature.New technology changes people's expectations and behaviours; therefore, changing the company product or service's features, tools, and patterns. Netflix handled the forces ofchange effectively to bring success and prosperity to the company. Internal forces also influence the organization to change management, such as changing managerial personnel, work climate, effectiveness, employee expectations, and crisis. For example, Netflix realized that watching movies at home would reduce the entertainment budget and transportation crisis. Therefore, Netflix accepted the organizational change.

Conclusion and Takeaway

Netflix started its journey as an ordinary company, but it has achieved a competitive advantage by changing its business model to fulfil customer demand. The authority of the company changed its feature to cope with new technology. It has made two changes in 1999 and 2007. However, the video streaming service brought huge popularity and income for the company that launched in 2007. The author has determined some takeaways that can be a key point for any company. Firstly, it is essential to change the company feature to fulfilcustomers' expectations.

Additionally, digital adaption and adoption need to be accepted for both employee andcustomer's gratification. Finally, sophisticated features and tools have to be added to thecompany for better function, such as Netflix launching its online video streaming feature in2007. "The measure of intelligence is the ability to change"-Albert Einstein

Netflix has followed the blue ocean strategy to achieve a competitive advantage. Blue ocean strategy refers to creating a new business market; whereas, red ocean strategy refers to contesting to beat the opponent companies in the same market. Blue ocean strategy introduced a new feature to attract the customer that creates a unique and uncontested marketplace. Finally, Netflix has accepted the blue ocean strategy and become one of the successful companies around the world.

Netflix Organizational Change & Structure Case Study

QUESTIONS:

1.What change management strategy did Netflix use to incorporate the changes? Explain them in detail on how they were incorporated showing the entire process of implementation of the change.  

How many changes did Netflix incorporate from the time the company was formed to date?   

Elaborate the change model adopted by Netflix in terms of Koffers 8 step change implementation model. Elaborate on each step of the change.