PESTEL Analysis of Netflix
Netflix is an American provider of on-demand internet streaming media available to viewers in north and south America, parts of Europe and the Caribbean. It is a subscription-based movie and television program rental service that offers media to subscribers through the internet streaming and via US mail. It is easy to understand how Netflix works by conducting a PESTEL analysis of the company. The PESTEL analysis provides a way to review factors that impact business positively or negatively. Key factors to look at while conducting a PESTEL analysis include political, economic, social, technological and legal factors among others.
Netflix success was followed by the establishment of many other DVD rental companies. Due to its success in the field, Netflix has been able to open many stores in the globe. The Netflix stores carry about 1000 titles of VHS and DVD format. The online DVD rental industry has been growing rapidly are they are popular among many internet lovers. Netflix has large market due to lack of late fees and due dates and this has made these services highly desirable. It is not that easy to excel in the online market. Thus why, it is a wise move to understand the Netflix PESTEL analysis. Here are the key factors to look at;
- Political factors– These are typically external to the company’s operations such as government regulations or individual especially politicians who can control how a company is able to operate smoothly. A review of political factors has made it easy for Netflix to find a better way on how revenue increases will affect tax liability. It has also been able to pick out the barriers to entry in new markets on national and local laws and the probable penalties for acting in violation of political laws and regulations.
- Economic factors– economic trends have contributed a lot to the growth of Netflix. These are things that include consumer income, spending rates, inflation and interest rates among other factors. Netflix has been aware of these factors and it has played great roles to keep its employees and all clients satisfied. For instance, it has worked carefully to avoid taking too much debt when interest rates may adjust higher in future and affect the company.
- Social factors– These are the social aspects of a PESTLE analysis that relate to demographics and cultural changes on the economy. Consumers may need fewer electronics, but more devices to help improve their health or life-related issues.
- Technological factors– Advancement in technology has brought many changes in the world. Business technology changes take place frequently and Netflix has stayed afloat to stay on pace with its competitors by creating a competitive advantage over its core competitors in the industry.
- Environmental factors– These are factors that related to the natural environment surrounding Netflix. Each company should always be able to conserve and protect the environment and this is a strategy that Netflix has always embraced.
- Legal Factors– These are factors that relate to regulations and laws that control the business environment. Any unfavorable legislation can led to difficult operating environment for Netflix.
Netflix success in the rental market as offered a great pathway for other companies to succeed in the field. More so, Netflix has been able to compete with other companies in the market due to its reliable PESTEL analysis.
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