This activity is important because, as a manager, you should understand the factors that affect firm profitability and longterm survival. These include resources that are inimitable and rare, as well as high$-$performance work practices.

The goal of this activity is to demonstrate your understanding of the resource$-$based view of organizations and highperformance work practices by answering questions after reading a case study.

Read the case and answer the questions that follow.

Netflix is a leading streaming video on demand $($SVOD$)$ company operating in $190$ countries with $140$ million subscribers as of $2019.$ The company launched its online DVD rental site in $1998$ and, in $2007,$ began offering web streaming content. In $2013,$ its first original series, House of Cards, was hugely successful with viewers and media critics. As the earliest entrant into the video rental and web streaming market, the company had advantages in gaining subscribers and market knowledge.

The hiring process at Netflix is described as "hire slow, fire fast," meaning that considerable investment is put into selecting new employees. The company has exceptional benefits, including unlimited paid time off $($PTO$).$ Companies in the SVOD industry tend to offer strong benefits packages, so Netflix is not much different from competitors. However, Netflix describes its stock option program as a "unique" company incentive plan compared to competitors because it gives employees choice in how much to participate.

Human resource professionals praise the innovative approach to training employees with an app$-$based program. More than $90\%$ of Netflix employees have completed a course since the system was implemented. The Netflix performance appraisal system was also drastically changed recently to eliminate the formal, infrequently scheduled system, and replace it with more frequent informal reviews that include input from peers, subordinates, and superiors. Performance appraisals are strictly used to help determine raises. According to the company's CEO, $"$A$-$level performance" is rewarded, not $"$A$-$level effort."

Despite these positive employee practices, it may be surprising to hear that a recent Wall Street Journal article described the Netflix culture as "ruthless, demoralizing $...$ dysfunctional," including intense pressure and a "cutthroat environment." However, Forbes praised the company for adhering to values that built its "strong" culture. Netflix explicitly states that the company avoids rules, only keeps the best employees, and that employees are "extraordinarily candid with each other."