1. The company I have chosen for this assignment is Netflix. Netflix was able to distinguish itself from other companies such as Blockbuster by providing consumers an easy way to select movies they wanted and have them mailed to their homes without having to wait in lines at the traditional brick and mortar stores. Netflix was able to create a niche in DVD rental market by competing based on
Pricing Behavior, Netflix offered a flat rate per month for their movies compared to Blockbuster that was currently based on pay per title.
Sales Promotion, Netflix advertises online as well as traditional media such as Television and magazines.
As the growth of broadband throughout the United States ...view middle of the document...
In the example of Netflix the short run costs have already been established and they will concentrate on trying to receive as many customers as they can in order to provide revenue to cover those costs. Traditionally over the long run all costs become variable because the company can choose to sell off assets or increase inputs in order to streamline the entire production process. In terms of Netflix their costs for content are amortized over years which allow them to stream content and pay the content provider for that content.
These content collections are kept on their balance sheet and are kept at book value while considering various costs during such as: marketing, Amortization for content, subscription cost and fulfillment expenses. . Netflix has been innovative by moving streaming media from their own datacenters and leveraging Amazons cloud service, Amazon Web Services (AWS) in order to cut costs and provide customers more services within their environment. Netflix also has long term debts based on the content it amortizes these long term debts are financial obligations that are reported on balance sheet.
Location Estimated square footage Lease expiration date
Los Gatos, California 250,000 March 2018
Columbus, Ohio 90,000 August 2016
San Jose, California 28,000 February 2017
The table above shows some of the domestic and International streaming corporate office, general and administrative, marketing and technology and development offices around US to show the business long term commitment.
3. In Perfect competition there are a large number of sellers that produce items or provide services that are similar the prices of these products or services are set by market forces because the businesses’ are not large enough to influence prices. Oligopoly exists where there are only a few sellers in an industry because the costs associated with entering the market is very great these businesses are very large as they need large amounts of capital to invest. A monopoly exists where there is only one seller of a good or service which allows the company to be a price setter.
2012 International Streaming Segment Results (Mergent online)
Contribution profit 2012 2011 2012 vs 2011(change)
Revenue 287,542 82,850 247%
Cost of revenue 475,570 107,482 342%
marketing 201,283 78,517 156%
Contribution loss 389,311 103,149 277%
Revenue: the $962.7 million increase in domestic revenues in 2011 as compared to 2010 was primarily due to the 49% growth in the domestic average...