1) In what ways is the Zara model counterintuitive? In what ways has Zara\'s mod
ID: 3667174 • Letter: 1
Question
1) In what ways is the Zara model counterintuitive? In what ways has Zara's model made the firm a better performer than Gap and other competitors?
2) What do you believe are the most significant long-term threats to Netflix? How is Netflix trying to address these threats? What obstacles does the firm face in dealing with these threats?
3) Spend some time online researching services such as Netflix, BlockBuster, Hulu, and other streaming movie sites. How do these services compare? What are the advantages and disadvantages of each of these different services?
Please provide online reference if utilized. Thank you in advance.
Explanation / Answer
1) In what ways is the Zara model counterintuitive? In what ways has Zara's model made the firm a better performer than Gap and other competitors?
A)To make sure that the stores carry the kinds ofproducts customers want, Zara managers ask the customers.
Zara’s business model and competitive advantages:
Zara – a Spain-based high-fashion, low-cost retailer, stunned investors and analysts by revealing that its profits climbed 30% in the first quarter of this year along with an increase in sales of 15%. Yet, 70% of its revenues come from Europe, and it is based in a country where the macro economic situation is quite challenging. Zara is the flagship chain store of the Inditex group and is considered a Spanish success story. How is Zara doing it so well while other eurozone firms have stuggled?
Well, Zara has a unique business model. Innovation in business models does create value, and is generally cheaper than product and technology innovations.Countless companies such as IKEA, Dell and Zipcar are highly successful due to innovative business models.
2) What do you believe are the most significant long-term threats to Netflix? How is Netflix trying to address these threats? What obstacles does the firm face in dealing with these threats?
A)In Netflix, Hastings had built a great firm, but let’s face it, his was a dot-com, an Internet pure play without a storefront and with an overall customer base that seemed microscopic compared to these behemoths.
Before all this, Netflix was feeling so confident that it had actually raised prices. Customers loved the service, the company was dominating its niche, and it seemed like the firm could take advantage of a modest price hike, pull in more revenue, and use this to improve and expand the business. But the firm was surprised by how quickly the newcomers mimicked Netflix with cheaper rival efforts.This new competition forced Netflix to cut prices even lower than where they had been before the price increase.
Studying Netflix gives us a chance to examine how technology helps firms craft and reinforce a competitive advantage. We’ll pick apart the components of the firm’s DVD-by-mail strategy and learn how technology played a starring role in placing the firm atop its industry. In the second part of this case, we recognize that while Netflix emerged the victorious underdog at the end of the first show, there will be at least one sequel, with the final scene yet to be determined. Act II looks at the very significant challenges the firm faces as its primary business shifts from competing in shipping the atoms of DVDs to one focused on sending bits over the Internet. We’ll see that a highly successful firm can still be challenged by technical shifts, giving us an oportunity to examine issues that include digital goods, licensing, platform competition, and supplier power.
3) services such as Netflix, BlockBuster, Hulu, and other streaming movie sites. How do these services compare? What are the advantages and disadvantages of each of these different services?
A)Blockbuster vs. Netflix – Best Service for Movies
Movie rentals are gaining popularity as people more frequently decide to drop premium movie channels or cut the cord on cable altogether. And it makes a lot of sense – you can get access to thousands of movie titles on demand or you have DVDs delivered directly to your door, all for the price of one month of a premium movie channel. Access to inexpensive movie rentals was one of the reasons I dropped my cable subscription.
Blockbuster vs. Netflix – Comparing the Best Movie Services
Not too long ago, Netflix and Blockbuster were two very different companies, with Netflix exclusively offering DVDs by mail and Blockbuster exclusively offering DVDs in a rental environment. Technology and market conditions have changed both of these models and the two services became very similar to each other, with both offering a mail service and and online streaming service. Blockbuster still maintains some store front buildings, but the focus of their business now BlockBuster Total Access, which is the direct business model with DVDs and BluRays by mail and a pay as you go streaming option.
Netflix has had their own issues with the changes in technology, branding and pricing and recently split their DVD by mail and online streaming services into two different companies, each focusing on one business model. Amid strong customer backlash, Netflix quickly changed their business model back to the Netflix rand – though they continued to split the pricing model between the online streaming and DVD by mail.
Compare Netflix and Blockbuster Online Streaming
Since Netflix split into two companies, there isn’t much of a comparison between Netflix and Blockbuster, since they primarily offer two different services. Netflix now only offers unlimited online video streaming for $7.99 per month. This is a great deal if you have a fast internet connection and a system capable of displaying high definition graphics. This could be through a PlayStation 3, Roku Box, Nintendo Wii, XBox 360, many types of Blu-Ray players, or a variety of other devices – which you may already own. There are currently over 20,000 movie titles and tens of thousands of TV shows to choose from for online viewing.
Compare Netflix and Blockbuster DVD by Mail
These two services are very similar – members select the movies they wish to rent and place them in a queue, then the company mails the movies to the member when they become available. Movies are mailed in a postage paid envelope and come with a postage paid return envelope for your convenience. All you need to do is watch the movie, put it in the postage paid envelope and drop it in the mail, and wait for your next movie to come. The standard features between Netflix and Blockbuster include:
Differences between Netflix and Blockbuster: These two services aren’t identical though. There are some key differences:
Which is better – Netflix or Blockbuster?
All three of these services offer customers good value for their money, depending on their needs. A lot of people are upset at the recent changes with Netflix, but even the combined price of the DVD by mail and online service can be cheaper than the Blockbuster by mail plus two or three movies on demand. It can also be cheaper than premium cable channels. The key here is to decide which plan works the nest for you and how you watch movies and other video content.
Each mobile application has pros and cons when streaming over LTE or 3G, but the Netflix and Hulu applications stand out when it comes to content discovery, quality of video playback over Wi-Fi, software stability, and the continuity of the layout design between smartphone, tablet, computer and home theater devices.
All three services are compatible with iOS, Android, as well as Amazon’s Kindle Fire devices. Netflix and Hulu applications can also be found on Windows 8 mobile devices and Nook tablets, as well as the new Apple TV, while Amazon Instant is still absent.
Analysts estimate that Netflix’s content library is roughly double to triple the size of Amazon’s library, though Amazon is making a push to catch up. Netflix’s vault is also larger than Hulu’s, but the type of content that’s available on Hulu is far more TV-centric than what’s available on Netflix. Hulu’s also been making aggressive plays, nabbing exclusive licensing for future seasons of The Walking Dead from AMC, and the service also paid a reported $180 million for the Seinfeld catalog. Meanwhile, Amazon has its own exclusives, and the service has also made some waves with its original content, including the critically acclaimed dramedy Transparent.
Netflix and Hulu charge the customer on a monthly biases whereas Block Buster is a pay perview. All three movie sites can be used on multiple devices under the same long in. Netflix andHulu have their own shows and movies which you can only watch on their site. Netflix offersshows and movies that are a little older and only release new content for TV shows as a season,whereas Hulu offers new shows available to watch the day after it airs on the TV networks.Hulu’s movies are a little older than those on Netflix or Block Buster. Hulu also has paidadvertising and the other two do not.
1.Netflix/Qwikster
Also known as Netflix: Redux. It's the same service we know and love, only completely different. Faced with massive customer backlash in the wake of a price hike, Netflix split itself into two separate companies this week. The streaming service will retain the Netflix branding while the DVD-by-mail service will be named Qwikster. Netflix CEO Reed Hastings said the split will better serve customers in the long run because each company will be able to better focus on one type of service.
Netflix pioneered the DVD-by-mail service, creating an entire industry where one did not exist previously. But after serious flux in Netflix's new pricing system — which split the streaming and DVD mailing services into two separate plans starting at $8 a month minimum — there's no guarantee the company's customers will continue to stick around.
WIRED: It's been around the longest, and is the most familiar service. Massive offering of physical mail-away media. New game rental service sounds intriguing. Streaming to all iOS devices and Android smartphones.
TIRED: Can you say price increase? We don't like paying more money for the same service, and we're failing to see how splitting the companies in twain is going to benefit consumers. Streaming-only service still lacks selection compared to DVD catalog.
2.Amazon Prime :
Amazon's elite-level service launched in 2005, offering two-day shipping on any of its products to members anywhere in the continental United States and other select countries for a reasonable $80 a year. Originally meant for those who couldn't wait more than 48 hours for their tangible goods, Prime expanded in February to offer instant, streaming movie and TV show access to existing Prime customers at no added cost.
WIRED: Fast shipping on everything Amazon! What other movie service offers that? Lower yearly rate than Netflix and Qwikster. Works with over 100 different web-connected set-top boxes, including the ever-popular Roku.
3.Redbox :
Redbox made it possible for legions of supermarket shoppers to pick up a movie on the cheap, without having to make multiple stops. Instead of leaving the grocery store (or 7-11, Walgreens or what have you) with only a TV dinner and a Mountain Dew in tow, Redbox's 30,000-plus DVD-rental kiosks make sure you won't go home alone on a Friday night again.
WIRED: Cheap, cheap, cheap. DVD rentals average two bucks a pop, with anywhere from 50 to 200 recent titles to select from in each kiosk, updated weekly. Game rentals to roll out this year.
TIRED: No streaming service? Bummer.
TIRED: Smaller media selection compared to other existing services. Lacks the DVD rental option that made Netflix famous.
4.Blockbuster :
Once the dominant force in the media-rental industry, Blockbuster has fared horribly over the past few years. After scoffing at Netflix's business model years ago, the big blue-and-gold company filed for bankruptcy last September.
However late, Blockbuster jumped on the bandwagon with its own Netflix clone mail-away service, but with the added advantage of allowing customers to return DVDs to brick-and-mortar Blockbuster stores. And finally, Blockbuster Express is a blue-and-gold Redbox rip, with kiosks placed in grocery stores and Kwik-E-Mart's across the country.
WIRED: The Dish Network acquisition could mean big things for Blockbuster when (or if) the companies get a game plan up and running.
5.Hulu Plus :
At $8 a month, Hulu Plus offers instant streaming access to a wealth of TV shows only a day or so after they've originally aired. But seriously, if you're paying a monthly fee, you shouldn't have to deal with mid-show commercial breaks. That's the whole point of paying for streaming service, right?
Still, I challenge you to find a more comprehensive archive of Hell's Kitchen reruns on the web.
WIRED: Streaming to all iOS devices and some Android smartphones and tablets. Tons of TV shows that aren't out to rent on DVD.
TIRED: Despite taking your $8 monthly fee, you still have to sit through asinine commercials. "Hundreds," not thousands, of movies to choose from. Again, no physical media. Rights agreements sometimes complicate how many episodes are available for viewing on the site.
TIRED: Brick and mortar is slowly dying, so the leg-up Blockbuster has on Netflix with in-store DVD exchange may soon be moot. Ripping off its two major competitors shows a lack of ability to innovate, possibly signifying that the company is still behind the times.
6.Android Market :
Google has struggled to keep up with Apple in its media service offerings, only recently debuting its movie rental service on the Android Market in conjunction with a complete interface makeover. Fortunately, renting flicks from Google is available on all Android devices running version 2.2 and up — that's something even Hulu can't say.
WIRED: Rental ain't pricey, averaging around two to five bucks a pop. Streaming to Android phones is nice. Compatible with PCs.
TIRED: No physical media. Not functional across all Android tablets.
7.iTunes and Apple TV :
There's a down-payment to get Apple TV up and running in your home, and it's in the form of a small, sleek set-top box. Fortunately, it's only $100.
Along with Netflix compatibility, Apple lets you purchase and rent movies from its iTunes media store, along with the ability to buy TV shows (due to lack of customer demand, Apple discontinued TV show rentals last month). Further, you're able to watch streaming media on all of Apple's mobile devices. The company wants to hook you into an Apple-centric world, and the interconnection between its services makes it easier for customers to buy in.
WIRED: Purchase prices are par for the course, ranging from $1 to $3 depending on whether you want to rent or own. Ability to buy entire seasons of a show is convenient. Rumors and speculation have long suggested bigger plans for Apple TV's future, though Apple itself is staying mum on any potential developments.
TIRED: Lacks an "all-you-can-stream buffet" option, which can get costly if you watch a lot of flicks. Though its library is extensive, iTunes alone doesn't contain the esoteric indie films that Netflix totes. So if you're subscribing to Netflix and buying through iTunes at the same time, charges could add up fast.
8.Vudu :
Wal-Mart got in on the media-services game in 2010 by buying Vudu, another streaming media company. Initially the service was available only in a set-top box version, but Vudu has since extended itself to other platforms as a standalone media service in and of itself, available to Playstation 3 users, Boxee for OSX owners and Windows-based PC users.
WIRED: Rentals and purchases stay on par with most other services, settling in the $1 to $5 range for rentals, and upwards of $5 for purchases. Titles available the same day they're released on DVD, unlike other services that require waiting periods. Streaming video available on iPad.
TIRED: No monthly unlimited movie-streaming option.
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