Business Analysis: Netflix's Technology Strategic Alignment Model

886 Words 4 Pages
Netflix uses Information technology as catalyst to meet the business strategies and goals of the company. The effectiveness of Netflix is largely dependent on the alignment of information technology innovation with business value that has direct impact on market share, customer relationship and employees. In order to be the leading movie streaming company – Netflix has to maintain its strong customer relationship and product quality.

Figure 1: Technology Strategic Alignment Model (Henderson, J. C., & Venkatraman, N., 1993).

The Technology strategic Alignment Model by Henderson, J. C., & Venkatraman, N., 1993 (Figure 1) analyzes the functional integration and implementation of business strategy with adequate
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Netflix's business model was contrary to that of Blockbuster's. The company made profit from customer’s monthly subscription fee. As long as the ordered DVDs are unwatched by customers, Netflix did not have to pay for prepaid return postage-or send out the next batch of movies. Netflix’s adopt VHS to DVD technology; modern online portal and innovative logistics system by U.S. Mail for renting DVDs provides easiness to access and quick delivery to customers with just a click of mouse. It says rent by adding as many as movies and TV episodes to queue from online DVDs list followed by free and fast delivery by the U.S. Mail to doorsteps in just in one business day with add-on value of no late fees which allows customer to watch when they want and final offering of Exchange “as often as you want” which provides customer simple return facility via prepaid envelope. Monthly fees are what sustain Netflix. (Teece …show more content…
PSP, Blue Rays, XBOX 360 etc.). Online streaming enables Netflix to improve the services they offer and enhance the target customer watching experience by adding huge value proposition such as recommendations and no commercials.
“Because we have a direct relationship with consumers, we know what people like to watch and that helps us understand how big the interest is going to be for a given show. It gave us some confidence that we could find an audience for a show like ‘House of Cards’ ” Stated by Jonathan Friedland, CCO, Netflix (The New York Times, 2013).

Netflix launched a personalized movie recommendation system in 2000, with the help of member’s feedback known as user ratings to precisely anticipate choices for all Netflix members. In 2007 after introducing streaming, Netflix found that the predicted ratings weren’t actually of great use, so they introduce Recommendation Algorithm based on what members played, searched for, or rated, as well as the time, date, device, browsing or scrolling behavior. Algorithm works on assumption of viewing pattern and behavior of users and results in deriving preferences. (Source: http://techblog.netflix.com/, Netflix,

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