Tuesday, November 24, 2009


Netflix is the most successful online movie-by-mail rental in the United States, founded by Wilmont Reed Hastings Jr in 1997. Two years after founding the company, they launched the companies subscription service. Within another four years its popularity grew to one million subscriber and by the end of 2008 Netflix had 12 million subscribers.
Netflix has adopted the code of ethics, for its directors, officers, and other employees to deter wrongdoing and to promote ethical behavior. Netflix wants to maintain a honest and ethical code of conduct throughout its company. In doing so the company would like all report and documents to be disclosed in a full, fair, accurate, and timely manor. The prompt internal reporting to an appropriate person identified in this code of violations and accountability for adherence to this code. Netflix maintains compliance with applicable government laws, rules, and regulations.
The main business strategy used by Netflix is overall cost, offering their services at a price lower than what any of the competitor could offer at that moment. By reaching the goal of offering a service not only at the lowest cost possible but with the most efficiency. Since the customer buying power is low the supplier will have to give in to make sure that their merchandise gets the best possible exposure.
The company must keep up with technological advances, that is why some of their new innovations is allowing the customers to download movies directly at home, eliminating wait time. They have also taken a step forward creating a database which takes your past rentals and recommend rentals that fit your preferences. The threat of new entrants is on the lower side, but Netflix entry barriers are large which makes it harder for other companies to compete.
Netflix is an e-commerce company allowing the customers and the company to form a powerful relationship by selling their products and services via the internet, allowing the customers the ease of rental service from home. This is mostly known as Business to Consumer e-commerce. Netflix also offers different types if software to stream their services directly at home, like the Roku digital video player, Xbox 360, HD televisions, and DVRs. Netflix will continue to remain on top of their market share as long as they hold the competitive advantage over the other companies that it is up against.


Netflix uses a variety of different files to maintain their business database. Within these files contain records and fields which hold the information about their products, suppliers, employees and customers among other things. The customer file contain customers’ information; name, address, phone number, and billing information. There also is an employee file; this holds of employee private information, name, phone, when hired, SSN, etc. Two of the databases that are used are the Customer and Product Databases. The brand of database software is Oracle.
The person that is responsible for the database is the database administrator and the database architect helps develop and design it. The types of reports that the managers will receive in this company will be new customers added, new movies coming out, and company sales in certain markets.OLAP is used to manipulate the information the company already has to support decision making, enabling analysts, managers, and executives to gain insight into data through rapid, reliable, interactive access to a wide variety of possible views of information. It can be say that Netflix may use OLAP to forecast for future trends, marketing, budgeting, for business reporting for sales, to analyzes which regions are responsible for their increase in sales, what particular product or service contributed the most to the increase in sales.
As known Netflix tries to keep his information secret, but it can be information gathered from many different operational databases to create business intelligence to support business analysis activities and using data for strategic decision-making. In this data-driven culture, the Business Intelligence group is in charge for getting timely, precise, and applicable data to those in charge of decision making. This data is the focus to guide the company’s strategy, direction, and profitability. As the book mentions, most data warehouses are multidimensional represented by layer and rows. It contains layers of columns and rows representing product information, like product line and region, year, customer segment>and the timing of advertising.

Data mining tools are software tools used to query information in a data warehouse. Query and Reporting tools helps the company generate simple queries and reports. Multidimensional analysis tools allow members to view information from a different perspective. Statistical tools help members of the company to apply different mathematical models to the information stored in a data warehouse to discover new information. This type of data mining will help them for example manage their advertising budget.

Data marts are subsets of a data warehouse which focuses on certain portions of the data warehouse. The data marts contain areas such as: Merchandising, Advertising, Distribution, Sales, Marketing, Services, and Account Receivables. Because data marts are smaller and more manageable employees make better use of information. Data marts support the use of query and reporting tool, intelligent agents, multidimensional analysis, and statistical tools.
The person responsible for the data base is the Database Administrator. The DBA’s function is based on the technical land operational aspects of managing the information, contained in organizational information like, databases, data warehouses, and data marts. It also includes defining and organizing database structures and contents, developing security procedures, and providing and monitoring the development of database and database applications. The person in charge to make sure everything within the company is functioning correctly.The type of system software used by Netflix is Windows 7. Netflix also offers different software’s to stream movies directly into your home. Some of these software's includes: Roku digital video player, which deliver high quality movies and TV episodes directly to your TV instantly. They also offer the Xbox 360m the only console that lets members instantly watch movies & TV episodes streamed from Netflix on the TV. Some other software option offered to their customers are internet connected blue ray players, internet connected HD televisions and digital video recorders. It is important to mention that Netflix has extended its partnership with LG Electronics and embedding its online video service directly into the new HDTVs. Another type of software used by the company is Management software which helps manage the movies they have, payroll software and collaborative software.

Netflix's hardware categories consist of inputting and outputting devices, storage devices, and telecommunications devices. Netflix customers use games controller and gaming systems as input devices. Outputting devices for customers used are PCs and Macs which decode the WMA audio files. Some of the telecommunication devices that are used by their customers is to streaming movies directly into their home include the Roku, LG, and Samsung, players along with the Silverlight player from Microsoft. Netflix newest partner is Sony among other companies in the past to get their product known. Netflix does not want to be associated with just one company it would like to be a part of every technological company. It seems that the company will not take a no for an answer. Netflix, like most companies, uses a mainframe computers to store all the data that is received and sent out. The Database Administrator is the person who is responsible for the more technical and operational aspects of managing the information contained in organizational information repositories. Netflix has recently upgraded to using Windows 7 as it software system. Using Windows 7 ,Silverlight, will allow customers a best way to stream movies among other things that the company has to offer.
Netflix, like any other internet based companies, use a Wide Area Network (WAN). A WAN connects multiple LANs to one another over great geographic distances, the size of a country or continent. This type of network typically uses low-speed links for data transfer through the internet. Netflix may use is Global Area Network (GAN) which represents a very large network that has a global coverage, by using a combination of different technologies such as satellite communication.

Netflix uses an Application Programming Interface. API is an interface that a software program implements in order to allow other software to interact with. APIs are implemented by applications, libraries and operation system to define how other software can make calls to or request services from them. It may include specifications for routines, data structures, object classes, and protocols used to communicate between the consumer and implementer of the API. The practice of publishing APIs has allowed web communities to create an open forum for sharing of content and data between communities and applications. In this way, content that is created in one place can be dynamically posted and/or updated in multiple locations on the web.The information can be shared from web communities to outside applications, delivering new functionality to the web community that shared its user data via an open API.
Media types are a classification system used to identify files commonly found on Web sites. They are crucial to the functioning of the Web, because when a client computer requests a Web page from the server, the client computer uses media types to tell the server what type of files the client computer will accept and the same will follow suit when the files are sent back. This information tells the client computer software how to render or process the files that it receives. Media types were developed by the Internet Engineering Task Force to help the Internet work efficiently and consistently. Software vendors that produce Web servers and Web browser have widely adopted media types, which are now the primary method for classifying files used on Web sites.
Netflix uses wireless communications media which allows their information to travel through the air. Communications satellites are used to send information over long distances. Satellites basically allow the information to be spread over the entire earth allowing this data to be sent from one location to another. This proves very effective for Netflix, since business can be done from essentially anywhere.

Netflix uses routers as their connecting device; this enables several computers to communicate amongst each other and to the internet all at the same time. A router is a network device that typically handles tasks of routing and forwarding information. Netflix uses such a device to enable all employees to share and view information on their clients. Larger corporations such as Netflix may also need powerful routers and more than one router compared to smaller businesses.

Netflix uses a broadband connection to connect to the internet. Broadband provides a high-capacity telecommunications line that gives businesses the ability to connect to the internet with high-speed. DSL and Cable modem are examples of broadband connections; both enable users to run high-speed connection through their telephone line or cable TV. “The Federal
Communications Commission defines broadband as a capacity of 200 kbps both upstream) to the Internet) and downstream (from the Internet)” (Haag, Cummings).
Netflix uses IP which is a protocol used for communicating data across a packet-switched internet work using the Internet Protocol Suite. Their IP address isnetflix.com IP: Netflix domain name is www.netflix.com
Netflix, like many online businesses, are always concerned with their security. The first thing that must be obtained is confidentiality of both the company information and clients information. They must make sure that everyone information is only obtained by authorized parties. Next the company must be concerned with the authenticity of the information that it gains. The company must make sure that there is no fraudulent information. Following is the integrity of the information so that it is not altered. Last is the availability of their services. Netflix must ensure that it's product is available when their client requests it.
Netflix implements these principle by applying some of the following techniques. They request user authentication before playing the video. Each client is allowed a maximum of six playback devices (browsers, Roku, etc.) per account. They reject requests that come from IP addresses outside of the US range. Netflix encrypt the video content that is sent the clients uses as well as provide unique decryption keys per movie and device
Netflix Movies to Stream to Sony’s PlayStation 3 Article
By Brad Stone

Netflix has now linked up with Sony Corporation to launch its service on the PlayStation 3 device. Netflix now enables Xbox 360 users the ability to stream movies and television shows from a catalogue of about 17,000. Netflix streaming is already available on the Microsoft Xbox 360, TiVo, and an assortment of Blue Ray players. Giving another option available to the public with the PlayStation 3 device will open the door to millions of possible new customers. Netflix will be available for free on PlayStation 3 for those who have a monthly subscription of $8.99 or higher. The Xbox 360 also offers Netflix streaming however it is only available to Xbox Gold Members who also pay an annual fee of $50.00. In order to access Netflix and watch a movie on PlayStation 3, users for now will have to order a unique, free of charge disc from Netflix to put into their console; Netflix and Sony are working on the upgrade in PlayStation 3’s software regarding this matter. Netflix continues to find new ways to reach out to millions of potential new customers, with the PlayStation 3 it will only continue to achieve Netflix’s popularity.

Tuesday, October 20, 2009

Business Strategy

Out of the three generic business strategies, the main one used by Netflix is overall cost leadership or simply low cost. They offer their service at a price lower than what any of the competitors could offer at that moment.Netflix came to the market with the goal of offering their service at the lowest cost possible and with most efficiency. It is also important to keep in mind that another of the strategies used is differentiation. It service at the moment was unique and innovative in the marketplace due to the fact that none of the movie rental business like Blockbuster, which at the time was offering in store rental, were offering the online rental service like Netflix does, making them number one in the DVD rental market.In the on-line video renting market Netflix customers buying power is low. The company holds a large share of the market, which enables them to manipulate their suppliers to get the most out of their dollar spent. Although the market is growing Netflix is perceived as a treat by other video rental companies because it takes the hassle out of rentals. Since the customers buying power is low the supplier power is high, which benefits the company greatly. The supplier will have to “give in” to make that sure that there merchandise gets the best possible exposure. If the supplier merchandise does not get the exposure their profit goes down.When Netflix was first introduced into the market place it did not have many possible substitutes or threats in the industry, because they held the advantage edge at the time. Currently other video rental companies, such as Blockbuster, are creeping in on the market making it challenge for Netflix. Netflix needs to keep that advantage edge, but times will become tougher with new innovations around the corner. Some of the new innovations that Netflix is currently using are to have consumers downloading a movie directly at home, which eliminates any wait time at all. When consumers are happy they return to the service and continue to use what works best for them.The switching costs of going to another video rental service would not be beneficial to the consumer. Netflix has created its market to suit what people want in the video rental service, which is cheap, fast and hassle free service. Netflix has taken another step forward and created a database which takes your past rentals and recommends rentals that will suit your likes, which again gives the consumer more options. The threat of new entrants is on the lower side, but it is possible as it is in any market. Innovation is everywhere, but Netflix entry barriers are large which makes it harder for other companies to compete. One of Netflix entry barriers is that they have established shipping facilities to allow them to reach the consumers in just one business day along with downloading rental directly at home. Netflix must keep their barriers high if they wish to continue to hold the advantage over other rental companies.Netflix took the initiative in broadcasting their movies online and made it easy to access their movies at your own home. No longer do you have to go to the store to rent a movie. Netflix is innovative because it took renting movies to the next step. Netflix embraced technology instead of ignoring it and that is why it is becoming the world's largest online movie rental service providing more than seven million subscribers access to more than 90,000 DVD titles plus a growing library of more than 5,000 choices that can be watched instantly on their PCs. The company offers nine subscription plans, starting at only $4.99 per month. There are no due dates and no late fees ever. All Netflix plans include both DVDs delivered to subscribers' homes and for no additional fee, movies and TV series that can be started in as little as 30 seconds on subscribers' PCs. DVDs are delivered free to members by first class mail, with a postage paid return envelope, from over 100 U.S. shipping points. Nearly 95 percent of Netflix subscribers live in areas that can be reached with generally one business day delivery. Their business initiatives are top of the line because no one else has been able to compete with their technology or prices.Netflix uses Customer Relationship Management Systems to fully maximize the efficiency of their business. A CRM system uses information about customers to achieve insights on their needs and wants in order to try and serve them better. This in turn can allow Netflix to predict what the customer needs before the customer themselves may realize it. One of the most resourceful technologies Netflix uses is their intelligence software. For example, Netflix uses a recommender system; this interactive application gathers data about a person and draws conclusions from them. From there, this recommender system will suggest movies based on previously viewed items or on the user’s similarity to other users. Netflix also uses Business Intelligence software for their company known as Micro Strategy. Netflix uses “Micro Strategy for reporting and analysis of financial data, marketing campaigns, and movie recommendations” (Micro Strategy Selected by Netflix). Micro Strategy will allow Netflix to achieve valuable insight with personalized movie recommendation data and significant marketing data, this will allow Netflix to better evaluate and create extraordinary marketing campaigns. Netflix provides adequate customer support to their customers, which proves to be a great philosophical and successful approach. Effectively responding to their customer’s needs will prove to build loyal and long lasting relationships with their customers.Netflix uses the Fully Integrated approach within its organization. In this approach, IT personnel are located within the other functional units of the company even though there is still usually a separate IT department. These integrated IT people may have their own budget; they can also approve division plans, and can initiate the end-user development of smaller projects, ad hoc reports, etc. Netflix uses a Decentralized philosophical approach throughout their company. Employees are encouraged to try new and upcoming technologies in the hopes of finding some that may provide a great competitive advantage. Netflix encourages its employees to stay innovative, avoid rules as they try and grow, but use process to grow in an effort to drive proficient execution of their current model.For the consumer, it is relatively easy to appreciate the importance of e-commerce. Why waste time fighting the very real crowds in supermarkets, when from the comfort of home, one can shop online at any time in virtual Internet shopping malls, and have the goods delivered home directly. Netflix goes along with digital because of its low cost inventory and shipping. There isn’t another company that ships their movies for free and has them come at an exceptionally fast rate. Netflix adopts e-commerce enabling customers and consumers to form a powerful relationship by selling their product and services with the use of the internet, facilitating its costumers to break down barriers as time and location at a very low cost.Netflix uses Business to Consumers, B2C, e-commerce allowing them to sell their products to customers and not other businesses. B2C is basically a concept of online marketing and distributing of products and services over the Internet. It is a natural progression for many retailers or marketer who sells directly to the consumer. The general idea is, if you could reach more customers, service them better, and make more sales while spending less to do it that would the formula of success for implementing a B2C e-commerce infrastructure. Netflix also follows the B2C Mass Customization e-commerce model. With this model it allows the customer have the opportunity to tailor the product to their specifications.A company uses marketing to create customer relationships. Netflix uses a marketing mix which includes pop-up and online ads. They are also affiliated with many searching engines like Google, Yahoo, MSN, and AOL. Viral marketing may have played and important role when the company first launched. Netflix benefited enormously through word mouth. As of today it may not be the most important one for Netflix but word of mouth is always useful to help the company grow.Companies must create systems that enable their customers to pay in an easy and securely manor for their purchases. B2C allows customers to pay from their purchases in a variety of electronically methods. Customers have the choice of paying using credit cards, financial cybermediaries, electronic checks, Electronic Bill Presentment and Payment, or smart cards. Netflix’s customers must register using a major credit or debit card for finalize transactions. The company expands their opportunity by gaining cliental with offer gift subscriptions for various renting intervals.

Netflix Benefits as Gamemakers Cut Prices

This article states that Sony, along with other companies, has cut its price in there gaming system. Since the companies have cut their prices they have increased there sales. Netflix has partnered with Microsoft and by doing so Netflix will be streaming movies exclusively through their Xbox console. Although Microsoft is not the leading gaming system with this agreement it hopes to increase their sale even more. Netflix is positioned to take a chunk of the 45% of the video rental market controlled by Blockbuster. Netflix has creating bonds with a variety of other companies to create even more growth and create a stronger hold on the market. Netflix's biggest competitor will be the studios if they create other partnerships that will compete with Netflix. Netflix recently stated that they would like to see Netflix in "all the game consoles, all the Blu-ray players, all the Internet TVs”, which at that point will not give Microsoft a leading edge since it would like a variety of different systems.

Tuesday, September 22, 2009


Wilmot Reed Hastings Jr. founded one of the world’s largest online DVD rent-by-mail services in 1997 called Netflix. Two years later, Reed launched the subscription service, and within less then four years Netflix’s popularity grew to an amazing one million subscribers. Netflix is a company that offers a monthly flat-fee service of DVD movie rentals that are mailed to subscribers in pre-paid envelopes which include a return mailer and postage. Subscribers choose their movies by adding them to an ordered list called a rental queue. There are no late fees and a subscriber can keep a rental out for as long as they wish. The number of rentals a subscriber can have out at the same time depends on their subscription level, to rent a new movie, the subscriber must send one of the previous DVDs back. When the DVD is returned, Netflix mails out the next DVD on the subscriber’s rental queue.
Netflix was founded in Scotts Valley, California, in August of 1997 by Reed Hastings and Marc Randolph, both veteran "new technology" entrepreneurs, to rent and sell DVDs over the Internet. Reed came up with the idea for rental-by-mail when he was forced to pay $40 in fines after returning an overdue videotape of the film Apollo 13. As a business man and entrepreneur he thought why not pay $30 or $40 a month for as little or as many movie rentals as a person wanted. In addition, creating the concept of no late fees and unlimited due dates also proved to the companies advantage. Due to Netflix’s innovative ways, at the end of 2008, Netflix had an estimated astonishing 12 million subscribers.
Key to the firm's initial strategy was the fact that few stores carried DVDs, making renting them in person a hit-or-miss affair. The company was also able to take advantage of the small size and light weight of the discs, which could be shipped to users very cheaply.
The company opened for business on April 14, 1998, with 30 employees and 925 titles for rent, which comprised nearly the entire catalogue of DVDs in print. NetFlix initial rental plan offered a seven-day DVD rental for $4, plus $2 shipping, with the cost going down when additional discs were rented. Discs could be kept longer for an additional fee. New DVDs were also offered for sale at a discount of up to 30 percent. Consumers had the option to purchase a rented disc once they received it home by having the balance of the retail price charged to their credit card.
The firm has more than 1.1 million subscribers who pay a monthly fee of $8.99 for one DVD at a time rental, $13.99 for 2 DVD's out at a time rental and $16.99 a month for 3 DVD's out at a time rentals. The company offers over 100,000 titles and maintains an inventory of more than 5 million discs. For fast delivery, Netflix has opened more than 20 regional shipping centers around the United States. DVDs are received by customers within a business day after ordering them on the company's Web site.
A month after the company opened its virtual doors, it announced a promotional venture with Toshiba America to offer three free DVD rentals to purchasers of new Toshiba DVD players, and similar offers were soon made to buyers of Pioneer DVD players and select Hewlett-Packard and Apple computer models that included DVD drives. Later in the year, Sony was also signed up, with additional companies following later.
Reed is responsible for founding Pure Software, which he built into one of the world’s largest public software corporations earlier in his career. Reed has made it into Time Magazine’s “Time 100” list in 2005 as one of the most influential worldwide people. In addition to these accomplishments, back in March 26, 2007 he was elected to Microsoft Corporations board of directors. Therefore, as a powerful, intelligent businessman, Reed Hastings will be sure to continue the growth and prosperity of Netflix.

Ethical and Social Responsibility
Netlflix has adopted the Code of Ethics, for its directors, officers, and other employees. This Code has been reasonably designed to deter wrongdoing and to promote:
· Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
· Full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission and in other public communications made by the Company;
· Compliance with applicable governmental laws, rules and regulations;
· The prompt internal reporting to an appropriate person or persons identified in this Code of violations of this Code; and
· Accountability for adherence to this Code.

Honest and Ethical Conduct
Netflix Parties are expected to act and perform their duties ethically and honestly and with the utmost integrity. Honest conduct is considered to be conduct that is free from fraud or deception. Ethical conduct is considered to be conduct conforming to accepted professional standards of conduct. Ethical conduct includes the ethical handling of actual or apparent conflicts of interest between personal and professional relationships as discussed in below.

Conflicts of Interest
A conflict of interest exists where the interests or benefits of one person or entity conflict or appear to conflict with the interests or benefits of the Company. While it is not possible to describe every situation in which a conflict of interest may arise, Netflix Parties must never use or attempt to use their position with the Company to obtain improper personal benefits. Any Netflix Party who is aware of a conflict of interest, or is concerned that a conflict might develop, is required to discuss the matter with a higher level of management or the General Counsel promptly. Senior Financial Officers may, in addition to speaking with the General Counsel, also discuss the matter with the Audit Committee.

Senior Financial Officers are responsible for ensuring that the disclosure in the Company's periodic reports is full, fair, accurate, timely and understandable. In doing so, Senior Financial Officers shall take such action as is reasonably appropriate to (i) establish and comply with disclosure controls and procedures and accounting and financial controls that are designed to ensure that material information relating to the Company is made known to them; (ii) confirm that the Company's periodic reports comply with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (iii) ensure that information contained in the Company's periodic reports fairly presents in all material respects the financial condition and results of operations of the Company.Senior Financial Officers will not knowingly (i) make, or permit or direct another to make, materially false or misleading entries in the Company's, or any of its subsidiary's, financial statements or records; (ii) fail to correct materially false and misleading financial statements or records; (iii) sign, or permit another to sign, a document containing materially false and misleading information; or (iv) falsely respond, or fail to respond, to specific inquiries of the Company's independent auditor or outside legal
It is the Company's policy to comply with all applicable laws, rules and regulations. It is the personal responsibility of each Netflix Party to adhere to the standards and restrictions imposed by those laws, rules and regulations, and in particular, those relating to accounting and auditing matters.Any Netflix Party who is unsure whether a situation violates any applicable law, rule, regulation or Company policy should discuss the situation with the General Counsel.

Internal Reporting
Netflix Parties shall take all appropriate action to stop any known misconduct by fellow Netflix Parties that violate this Code. To this end, Netflix Parties shall report any known or suspected misconduct to the General Counsel or, in the case of misconduct by a Senior Financial Officer, also to the Chair of the Company's Audit Committee. In addition, Netflix Parties are encouraged to use the Company's confidential internal reporting system to report breaches of this Code. Information concerning the Company's confidential internal reporting system can be located on the Company's Intranet. The Company will not retaliate or allow retaliation for reports made in good faith.

Any violation of this Code may result in disciplinary action, including termination, and if warranted, legal proceedings. This Code is a statement of certain fundamental principles, policies and procedures that govern the Netflix Parties in the conduct of the Company's business. It is not intended to and does not create any rights in any employee, customer, supplier, competitor, shareholder or any other person or entity. The General Counsel and/or the Audit Committee will investigate violations and appropriate action will be taken in the event of any violation of this Code.

Waivers and Amendments of the Code
The Company is committed to continuously reviewing and updating our policies and procedures. Therefore, this Code is subject to modification. Any amendment or waiver of any provision of this Code must be approved in writing by the Company's Board of Directors and promptly disclosed pursuant to applicable laws and regulations. Any waiver or modification of the Code by a Senior Financial Officer will be promptly disclosed to stockholders if and as required by law or the rules of the stock exchange or over the counter trading system on which Netflix's stock is traded or quoted.

Security and Risk Management
Netflix use different types of securities and risk management. The risk management they use is deactivated or terminates an account at will if Netflix needs to. They utilize secure sockets layering it is a standard protocol which encrypts any personal information that you enter into the site, for example your email and payment information. They can’t guarantee securities to its fullest just like everyone else but they urge to restrict access to your personal computer or any device that can access your account. This in turn will keep your information safe from anyone trying to access it