July 13, 2012 by thomasm301s12
As a loyal customer of Netflix since 2008, or whenever it became available to stream on Xbox, I have been completely satisfied with my subscription…..until…..the whole Qwikster fiasco.
As was probably the case with almost every subscriber at the time of the price and company changes, I was extremely upset. I was very happen with the product I was getting and I was extremely happy with the price I was paying for it. One factor i never noticed until taking Operations Management was how it directly influenced Netflix’s business decisions.
Please check out this article by CNET, http://news.cnet.com/8301-1023_3-57468798-93/netflixs-lost-year-the-inside-story-of-the-price-hike-train-wreck/?tag=mncol;morePosts
…I know it is kind of lengthy, but it really gives the inside look into why Netflix’s CEO did what he did.(regardless of if he was wrong or right)
Netflix success was founded on there efficient structure of Supply Chain Management. They became the best at delivering movies straight to the customer. Netflix, with the help from the internet, can claim that they killed the retail movie rental business(anyone remember Blockbuster). But with success comes ego! The very strength of Netflix was also going to be its demise for the future. The CEO Reed Hastings recognized this and wanted to make steps to prepare Netflix to change with the future.
The article does a great job of hammering home the fact that Reed Hastings failure was how and when he chose to implement his plan for the future. The greatest threat to Netflix’s strength, its Supply Chain Management, is that Netflix has no real Supply. Netflix’s product is produced by other companies. These other companies are starting to steal Netflix’s online model and cut Netflix out or raise its prices. This reason drove the CEO to want to be the first in providing all online streaming content, because if your first then your the best, right?
When you read every decision, or mistake, Netflix made with a focus on Operations Management, you can sympathize with the CEO’s decision to rush Netflix’s changes. Reed Hastings wanted to eliminate the biggest cost to Netflix’s Supply Chain, the DVDs, and along the way incidentally got rid of most of their own Management talent.
Do you agree or disagree with CEO Reed Hastings vision for Netflix?
and Is it too late for Netflix?…..are they the new Blockbuster?