Challenges in Netflix Organization- MGT 460 Paper


This paper will be an application of the leadership practice concepts learned throughout your degree program to a real-world situation. In an eight- to ten-page paper, discuss one significant organizational challenge within your organization or an organization you have researched. How did the leadership of the organization address the challenge? Could it have been done more effectively? How would you recommend future leaders strategically plan to avoid encountering a similar challenge within their own organizations? Provide suggestions for overcoming the challenge based on your own research and concepts presented in your degree program and grounded in leadership theory. Some challenges to consider would be (but are not limited to): an ethical challenge, a challenge occurring because of changes in the economy, a globalization challenge, or a challenge of organizational culture. Please request instructor approval of the challenge you would like to use as your focus before beginning your paper.

The Final Paper should, at minimum, include:

A description of the organization and its primary stakeholders. Include the vision and mission statement if they are available to the public, and the code of ethics if the company has one (if it is long, an excerpt or description is an acceptable alternative).

A detailed analysis of one challenge facing the leadership of the organization.

A strategy for overcoming the challenge based on outside research, the textbook, and concepts discussed during your degree studies.

 MGT 460 Leadership Priorities & Practice Sample paper

Challenges in Netflix Organization

Netflix is an online movie subscription-based rental service that was established by Reed Hastings in1997. Netflix refers to an internet portal in which, subscribers can hire movies in DVD form and have the DVD’s directly delivered to their homes. Netflix was initially founded in the United States of America and it delivered DVDs to its subscribers through U.S. Postal service. This was a strategy to replace the DVD brick and mortar rental business, by expanding the business to home delivery market. By so doing, Reed and his group made in home entertainment accessible and easy to the masses. The company started as DVD delivery services during the time when the VHS the most famous entertainment distribution channel.

Netflix’s strategy

A radical change took place in the Netflix trajectory when it transitioned in 2007 to online streaming. Netflix has since managed to position itself as a dominant actor in the industry of online entertainment, with a worldwide subscriber base of about 190 million individuals and still growing. However, this is not without experiencing challenges (Sadq, 2015). Netflix is currently experiencing a number of challenges that are founded on growing competition in the market, unpredictable customer behaviors and change of technology among other things. The company needs to make important changes to be able to handle these challenges, as a way of protecting its competitive position in the market.

According to London & Mone (2012) changes entail radically modification or alteration of some organization aspects from its systems to its highly important direction. Change requires a process which is a way of planning, sustaining and implementing change by the organization leaders. This paper focuses on identifying challenges that Netflix is or has been facing, and how these challenges are being addressed or can be handled, for the organization to maximize its potential in the market.

Netflix competition advantage

Netflix initially managed to overcome competition by defining a way to sidestep the outdated brick and mortar retail stores, by delivering their products direct to their customers. Netflix later realized that it could reduce its operational cost by offering its product through the internet, and offering its customers a chance to change. Netflix main reason for success has been the courage to try new technology, to embrace change and unique operation strategies. With the expansion of internet use in the world, Netflix took advantage of the situation by offering its products online at a small subscription fees and with different subscription packages to fit different types of viewers.

Read Also: Leading Organizational Change

With this strategy, the company has grown from national level where it used to send DVDs to US address only to an international company that serves customers across the globe. The company is currently has over 30 million subscribers in around 43 different countries in the world, with a wide variety of movies and films titles and TV shows (Netflix Company, 2019). The new change resulted to the need of altering the company model to fit the new kind of business. This resulted to transformational change in the organization mission, value and vision, as illustrated by London & Mone (2012) who claims that, fundamental changes in an organization will require drastic changes on the organization vision, mission, structure, culture, and/or leadership.

Netflix leadership direction and the organizational future

To be able to understand Netflix leadership direction and the organizational future, it is highly important to understand the organization mission and vision. According to Netflix (2019) Netflix current core strategy is to grow its streaming business subscription globally and domestically, by expanding its streaming content, and promoting interface of its user and extending its streaming service to be accommodated by more internet linked devices, without reducing its level of profitability.

The company strategy changed from increasing the number of home services at local level to increasing the number of subscribers at local and international levels. According to the company’s CEO and cofounder Reed Hasting, Netflix vision is becoming the global best entertainment service distributor, licensing content of entertainment around the globe, generating markets which are reachable to film makers, and assisting content makers around the globe to establish global audience (Netflix Company, 2019). The company thus focuses on reaching many viewers and many film makers to create diversity in the market. The company vision demonstrates the company future plan of exploring far and wide for viewers and filmmakers, by working as their main meeting point.

The adapted organizational culture plays a great role in guiding the organization to achieve the anticipated change. Organizational change requires the participation and engagement of all stakeholders, especially workers who play the main role in implementing change. According to London and Mone (2012) organization culture plays a great role in determining the workers behaviors and involvement in organization operations. In a situation where the culture does not support workers performance feedback, engagement, ethical behavior, development and innovation, then it need to be changed.

In addition, organization cultural change needs leaders to guarantee that their essential beliefs are suitable, their behavior and values are consistent with the beliefs and the suitable process are applied to sustain and drive the desired culture. The Netflix company value shows the standards with which it requires its workers to function in their daily activities and decisions. Some of the company’s core values include honesty, passion, selflessness, creativity, intelligence, reliability, productivity, and communication (Netflix Company, 2019).

Read Also: Goal-Setting Framework (MGT 460) 

The company values demonstrate the workers dedication in serving customers with high level of ethics. It also demonstrates the company’s commitment to doing what is right at all time, with intention of pleasing its customers and avoiding any negative publicity that would soil its name in the market. The company also has its culture that guides how it interacts with people of different calibers. Based on this section, the company value people more than processes, which means the company can make changes on its processes to accommodate its stakeholders or to make them more comfortable. This cultural statement demonstrates the company’s readiness to change and commitment to change, to meet the needs of its customers among other stakeholders.

Netflix challenges

Netflix is experiencing a number of challenges in their business operations that require changes to minimize or eliminate their effects. One of these challenges is poor strategies in most aspects of its operation. According to Sadq (2015), Netflix initially ignored it actual situation when adopting the online business, by selecting business model that was similar to other popular internet brands such as Amazon and eBay. Due to competitive advantages with different retailers, the company failed to realize its mistake until it established that the subscribers wound not consider coming back due to bad first experience.

The company other main challenge is that, customers normally liked popular new released movies that were considerably expensive, therefore increasing the Netflix cost. Consequently, the scribers were required to pay extra cost to get new movies due to ’all you can eat’ strategy  though majority did not welcome the extra cost positively.

Netflix was thus always shipping the packages of new movies with a number of old movies, though most of subscribers did not like it. In addition, the number of new films was not enough to meet the desire of Netflix customers. At this point, there was no direct association between Netflix and major studios. The company only established its library via associations with a few movie distributors.

This also lowered their sales as many customers were dissatisfied by what the company was offering. The company also experience video on demand (VOD), which impacts the Netflix

performance seriously. VOD can instantly offer customers a chance to watch latest movies. Thus, they regard VOD to be more convenient compared to traditional video store and rental DVD (Sadq, 2015).

Netflix is also experiencing growing competition in the market. As a result the company is experiencing loss of customers due to increase of price of some of its products, especially new popular movies that they can get elsewhere at a cheaper price. The company experience local competition from Hulu which is growing at a very high rate in the US market and which is demanding considerably low subscription per month, to offer quality and relevant content. The company is also experiencing high competition for Amazon and Disney+ among others (Bradley, 2019).

Although these companies have not managed to dominate the market or to pull Netflix down in a noticeable way, they have managed to win a great share of its customers in the market, making competition a great threat to the company. Moreover, companies such as Disney have a better ground to source their films and TV series than Netflix, and thus, standing as a potential competitor, with ability to push Netflix off balance. The new upcoming competitors are also forcing Netflix to reduce its prices to be able to continue wining more customers and hence, reducing its profitability. The company is also experiencing a decline in the new subscription growth, especially due to this high competition (Bradley, 2019).

To address some of the above challenges the company leaders focused on modifying its business model to what it has today. Other than renting DVDs online to its customers as it used to do in the past, the company has today offered an option of streaming any movie or film a subscriber may want to watch’ without having to wait for DVD delivery. This has made it possible for the company to offer its services to people far and wide in the globe at the comfort of their home.

The company can currently deliver its films without hitches of poor customer services that could be experience in cases of delay in the delivery of DVD, as experienced previously, or delivery of a DVD with unwanted series or movies as experienced before (Sadq, 2015). With the current business model, the organization managed to give its customers a chance to choose what they want to get the exact same thing without wastage of time.

All that customers need is the ability to afford the desired package, a digital device and reliable source of network. The company has also tried to handle the cost issues by diversifying its packages. Today, customers can subscribe to different packages based on what they can afford or what interest them most. This has in a way eliminated a number of issues, which include receiving what one does not want, or cost related complains. This has also played a great role in retaining old customers. However, high competition especially in terms of the content and prices is still making it hard for the company to keep all its old customers (Sadq, 2015).

Netflix managed to solve a number of problems by going digital and offering streaming movies over renting DVD. However, since it realized this, there have been a number of competitors arising to challenge its market share. To handle this, Netflix should focus on improving its customers or subscriber experience, to ensure that they cannot get a match in the market.

Netflix can do this by ensuring that it is always the first entertainment company to release the best and most appealing movies or films in the market (Maune, 2014). This can be managed by sourcing far and wide, and by making partnership with many more producers and filmmakers in the globe, especially those producing the best products in the market. The company should also centers on negotiating on the content cost, which is considerably expensive at the moment. Netflix leaders should invest in negotiating for better content pricing to be able to offer their customers better deals.

This can be done by expanding the company’s services to more countries where it would manage to get more subscribers, such that, the company can manage to attract more viewers. This will give the company a chance to reduce its cost without affecting its profitability. This is likely to give the company a higher advantage in the market, and reduce chances of being overtaken in the market.

Netflix should also consider investing on defining strategies to retain customers. Although the company has been able to attract customers, it has always found it hard to keep them. Some of the strategies that Netflix may consider to use to encourage renewal of subscription include reduction of renewal subscription fees, or provision of an extra package for those who opt to renew their subscription for free. This will give existing customers a reason to stay and to continue using the company services over its competitors. This move is also likely to demonstrate extra value to existing customers and create chances of winning customers’ loyalty.


In conclusion, Netflix has played a great role in transforming the way people rent movies in the global market. The company has managed to take advantage of technology advancement, to give new experience in the entertainment world. The company main strength is that it is always ready to create a difference in its ways of doing business, to give new experience to its customers. Although this is never without challenges, Netflix has always focused on defining new operational strategies that would assist in eliminating or reducing the magnitude of these challenges.

Netflix never shy away from challenges, and consequently, it has made innovation of new business operational strategies its main strength. Its current approach gives the company a guarantee of continuous growth for a number of years, and with its flexibility in adapting new technology, Netflix stands a great chance of leading in the entertainment industry for a few more decades.


Bradley, L. (2019, Jan 18). Netflix’s biggest competition? Basically everything besides TV, says. Hollywood. Retrieved from

London, M., & Mone E. (2012). Leasdership for today and the future. (1st. ed.). San Diego, CA: Bridgepoint Education, Inc.  Retrieved from

Maune, A. (2014). Competitive intelligence as an enabler for firm competitiveness: An overview. Journal of Governance and Regulation, 3(2), 29-42.

Netflix Company. (2019). Netflix basic info. Retrieved from

Netflix. (2019). Netflix culture. Retrieved from

Sadq, Z. M. (2015). Analyzing Netflix’s strategy. International Journal of Science and Research (IJSR), 4(3), 2271-2273.