Read the mini case study below and respond to the questions that follow.

If in 1997 a customer had been charged a late fee of $40 for a VHS tape of Apollo 13, what might she or he have done? Maybe just grumble and pay it? In the case of Reed Hastings, he was embarrassed, apparently paid the $40 late fee, andthis is where hes differentgot to thinking that theres a big market out there.

So I started to investigate the idea of how to create a movie-rental business by mail, he told a Fortune magazine reviewer.

The Original Business Model: Early on, the first concept we launched was rental by mail, but it wasnt subscription-based so it worked more like Blockbuster, says Hastings, the founder and chief executive officer of Netflix. It wasnt very popular. So in 1999, he relaunched his idea with a new business modelas a subscription service, pretty much the mail business you see today. We named the company Netflix, not DVDs by Mail, because we knew that eventually we would deliver movies directly over the Internet, Hastings says.

Netflixs Changing Business Model: The Netflix DVDs-by-mail model delivered movies on DVD to customers for a fixed monthly feeand drove Blockbuster to seek bankruptcy protection. But the Netflix business model changed over eight months in 2008: from Watch Now, enabling subscribers to watch any of 1,000 streaming movies on a PC, to partnering with TiVo, Xbox, and others to enable their systems to let you see one of about 12,000 movies on your television. The movie distribution channel has also expanded with web ready TVs such as Sonys Bravia, game consoles such as Xbox 360, and tablets such as Apples iPad.

With Netflix breaking a series of technology barriers, its any movie, any time business is just around the corner. In mid-2011, Netflix introduced controversial new pricing options: DVD only, streaming only, or both. Then in late-2011, when customer reaction exploded, Reed Hastings cancelled the plan to separate Netflixs DVD-by-mail business from its movie streaming service. Change is a constant in the Netflix business model. Netflix alters its business model to respond to changing consumer demand and technologies. Many organizations need to continually improve their businesses in order to stay ahead of the changes that are evident now and predicted for the future.

Questions

1. Of the SBUs identified in Netflixs history, which ones are Cash Cows?

2. Of the SBUs identified in Netflixs history, which ones are Stars?

3. Of the SBUs identified in Netflixs history, which ones are Dogs?

4. Of the SBUs identified in Netflixs history, which ones are Question Marks?

5. How would you advise Netflix as they move into a shifting future? What should they build, hold, harvest or divest?

6. Netflixs leadership was able to foresee the change from watching movies on DVD to watching movies over the Internet. How does this success validate the final words from Mike Jackson in this chapters opening vignette?

7. What media do you access to get your news and entertainment? How can Netflix reach consumers like you?