Assume you are consulting for a media conglomerate that is perplexed by the parting fates of Blockbuster and Netflix. As a consultant, you want to highlight the varying fates of the two companies via a strategic audit. Focusing on (i) customer (ii) product and (ii) market audits, compare and differentiate Netflix and Blockbuster’s differing fortunes to date with 1 difference between the companies for each audit and a KPI (measure) to understand customer engagement, product success and market performance. Explain the reasoning behind each KPI. First of all it is important to comprehend what is meant by the term strategic audit. For any business, strategy audit involves assessing the actual management of a business by comparing the course to the management required to prevail in varying environment. Any company’s real management is the sum of what it performs, and it does not perform. This real management is also accessed by how well an organization is aligned internally to support the strategy and how viable the strategy is when compared with competitor, financial realities and the outside market. These two categories that, internal and external market, assessment constitutes to the major elements of a strategy audit. This introductory information will help me in a simple but convincing way of giving a consultant direction on these parting companies on the issues on their customers, market and products performance.
Netflix Company is an online based movie DVD rental firm that its business approach and success has been seen in the provision of an expansive selection of their product. It has fast and free delivery services and also offering an easy way of choosing. Netflix develops software, Cinematch software technology that has enabled subscribers to customize movies recommendations for every time they are visiting their website. It has also come up with good software to keep track on its inventory and also reduce the delivery time. It also has growth strategy of continued innovation and enhancement of consumer or customer experience and al providing high quality DVD’s with digital downloading. Blockbuster did its investment in tradition stores made it slow to realize the web importance. Blockbuster was late in everything; it online rentals and video streaming. This made the consumers to have few choices and there was an absence of good services. On the other hand, Netflix came with good and tremendous varieties that include keeping movies for long duration of time, and it was also giving serviceable advice. The main reason that made the blockbuster not to develop so quickly was due to many people who have been there seen the company stated; therefore, it was slow for them to evolve in terms of technology as it was with Netflix and this affected the performance of their product. This was made even better by the familiar sunk cost fallacy
Netflix made it distribution system bigger and more efficient as well as effective. Netflix is still beating blockbuster because it has got into partnership for letting it consumer to have movies by video game machine like as Blu Ray players, and this is a big disadvantage to their competitor. This results to a great migration of customers from renting movies in Blockbuster to steaming movies in Netflix. Blockbuster had monopoly of the rental video business and ceased the effect of smaller chains. Their market was successful till the time of evolution of VHS to DVDS. Netflix realized a number of weaknesses in the blockbuster’s tradition video rental business: inconvenience in their customers; expensive charges.
KPIs (Key Performance Indicators) are commonly used performance analysis, regardless of industry. Here are some KPIs (I have crafted nearly all of them as examples – all indexed as ratios) (all are for one period). Choose any three KPIS based on your industry or interest. For each KPI, come up with an extension that might offer a better depth measure. I will consider an engineering, market and environment. In engineering, machine utilization is used by many companies to make sure the most achieved is from laborious or employees and the processes. Utilization compares the duration of time a resource was used to how much it was there to be used. This can be obtained in the equation that is shown below
Utilization=Time utilized\ Time available.
Efficiency compares the amount of time equipment was used to how long the machine was able to utilize. as shown in the equation below
Efficiency = Output/ Input
In engineering, the objective of a measure is to reduce the cost of production. Utilization is the ratio that recommends that an origination want to use a resource and want to gain a lot from the equipment. Efficiency utilization ensures production is obtained at maximum output at minimum input.
In the marketing, market share index shows an aggregate value produced by bringing several stocks or another investment together and expressing their total cost against the value from a particular date .it represents the whole market and tracks market change over time. These index values are helpful to investors as following changes in the business market over a long duration of time. These indices are calculated using the prices of given individual stock. It also reflects the relative level of values in the market on a particular day that is compared with a base figure this index can be calculated in many ways, therefore, no particular way of calculating it.
Cost of compliance is the direct cost of performing the various duties that are linked to complying with the government regulations. It has direct compliance cost and indirect compliance cost. The direct compliance cost is a development in production given by the policy for a given governing body this cost depends on the specific technological choices available to agiven firm. It can be achieved by the surveys of business and the authority that can provide direct approximations of pollution control test. All these methods that are used here are not reliable. The engineering approach is mostly applicable when employed to a specific characteristic of a single plant. The cost due to the private sectors, such as business or consumers must be determined using observations and questionnaire.
