Answer the following question for Netfic case (Netflix's 2020 Strategy for Battling Rivals in the Global Market for Streamed Video Subscribers)
Current and Generic Strategy (Chapters 4 and 5)
Identify the Mission of the company. Is the firm pursuing a cost or differentiation strategy? Explain, what factors enables it to achieve a low cost or product differentiation strategy. How well is the companys present strategy working, based on the data in the case?
Example below:
5.1 Mission: The main mission of Lululemon Athletica is stated in the case as creating components for people to live longer, healthier, fun lives (Lululemon Case, pg. 15). The promotion of having a fun lifestyle by living healthy and also by creating yoga- inspired apparel clothing that offers excellent comfort, practicality, and functionality They also conduct yoga classes with professional instructors in their retail store locations during their opening/closing hours as a way for consumers to experience and embrace the lifestyle they have chosen (Lululemon Case, pg. 11). 5.2 Differentiation Strategy: Lululemon is currently pursuing a product differentiation strategy where the products that they manufacture are significantly better in some aspects of its use compared to other competitors. The use of the "Science of Feel" approach on developing their products by manufacturing their apparel with very good use of the newest fabric technology that helps provide comfort and functionality (Lululemon Case, pg. 9) They also sell their products in limited sizes only which means most of their buyers are fit and currently living a healthy lifestyle and are primarily involved in fitness activities (Lululemon Case, pg. 9). This creates a sense of exclusivity to buyers and makes them feel good that they are worthy of wearing Lululemon. The products they offer are always sold at a full price which creates brand value because consumers are buying premium clothing (Lululemon Case, pg. 9). Most of Lululemon's products only have a 12-week life cycle and some even have a shorter shelf life (Lululemon Case, pg. 11). This differentiates them from most of their competitors because they are implying to their customers that the products they offer are in limited numbers and scarce, which then gives incentive to buyers to shop regularly and frequently. According to the financial analysis numbers, Lululemon's current strategy is currently doing well and is on the right track in terms of profitability and growth. As seen on the trend of their profitability ratio it is continuously going up in a steady direction throughout the past 5 years and is expected to grow. According to the figure in 3.1, The CAGR for Lululemon's Revenues from 2015 to 2019 is 18%. This tells us that the company is rapidly growing and increasing revenues every year. We can also see that the number of stores are constantly increasing each year, having only 363 stores in 2015 to 491 in 2019 (Lululemon Case, pg. 5). The yoga culture that Lululemon has created incredibly complements the high quality products that they sell and we can see that the culture has successfully helped them retain their high value. Lululemon has been selling their products constantly at full price and consumers are not turned away from it
