Netflix Business Strategy: Netflix's Organizational Strategy

853 Words 4 Pages
Netflix’s organizational strategy is focused on a competency based structure. The company keeps in mind that paying an employee a high wage for good performance gives them a competitive advantage over similar firms, they will be able to acquire the most qualifies candidates. Netflix believes that in order to retain the best employees and continue to have leading results they would have to “Pay them more than anyone else likely would. Pay them as much as a replacement would cost. Pay them as much as we would pay to keep them if they had a higher offer from elsewhere.”
Netflix’s operates on a high-performance organizational culture. When hiring, Netflix only considers the most talented candidates. Once hired on to the team, candidates are held
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Their model is based off of providing a massive amount of content while keeping the lowest cost in their industry to retain their customer base. There are many other streaming competitors such as Hulu, Amazon Prime, YouTube Red, Google Video, and many others so by having an abundance of content while maintaining a lower rate than most competitors it keeps them atop in a competitive market.
According to Miles and Snow’s generic business strategy, Netflix would best be considered a prospector because they strive for fast growth, take risks, and are constantly innovating with the help of their extremely talented dream team. Another reason Netflix is considered a prospector is because they are constantly working on ways to make their service better and differentiate it from the competition. The company tends to act proactive, not reactive in the
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Another key component includes pricing. For this component option grants were monthly where “one-twelfth of the annual allocation granted and priced on the first trading day of each month.” Another component may include vesting because it makes the employees active and work for today. When employees do not have to wait for stocks to be vested it makes them more productive because they understand that they will lose an asset that has been made available to them. When an employee must wait to be vested it makes them less productive because they are just working to get by until their incentives are in effect. Termination is also a key component for Netflix. This component allows employees to have access to their options for up to ten years after their termination regardless of voluntary or involuntary. They choose to do this because the employees forfeited salary for the options to be made available initially so the company felt it was important to give them access to those options after employment. The last key component at Netflix was the fact that no employee is offered cash bonuses. Instead of cash bonuses that a competitor would reward, they decided to add that to the employee’s total salary. They believe that not having cash bonuses allows the employees to continue applying

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