The Purpose of this SWOT Analysis for Netflix

Background on Netflix

“Netflix has been leading the way for digital content since 1997” (Netflix.com, 2018)
Netflix is currently the world’s leader in the realm of internet entertainment. Netflix has a whopping 125 million memberships in over 190 countries; members enjoy entertainment such as original content as well as an array of television series, documentaries feature films that are made available in multiple languages and genres. With the convenience of the internet members can stream and even download commercial free content straight on to their internet capable devices with a click of a button.

Although Netflix has many reasons to boast of their many successes and achievements in the field of entertainment, executives must also be mindful of possible weaknesses and threats to their organization that man potentially disrupt or even halt future success.

The purpose of this SWOT analysis for Netflix

The purpose of this SWOT (strengths, weaknesses, opportunities, threats) analysis is to obtain a snapshot of Netflix’s current internal conditions and functions and external forces that the organization faces in the years to come. This analysis will also help better identify each of the four above mentioned SWOT component so that they can be utilized during a strategic planning phase that can aid the organization to develop strategies that will address and mitigate any potential issues or threats.

The importance of strategic planning

According to the article The Advantages of SWOT Analysis in a Strategic Plan, Neil Kokemuller states that “A SWOT analysis is an integral part of a company’s strategic planning process because it provides a good all-around view of the company’s current and forward-looking situation”. In short, the SWOT analysis is important to organization’s Strategic planning as it connects strategies and objectives to the role and duties it’s the workforce.

SWOT Analysis for Netflix

The Strengths

Netflix has many strengths one strength in particular is as it stands Netflix currently possesses a well-defined strategic plan. Employees are made aware that their role is within their given department and as it related to the organization as a whole. Managers coach employees on an ongoing basis in an effort to instill the organization’s core values as well as remind employees of their role/duties; this is important to Netflix as the organization currently does not perform traditional performance appraisals.

Netflix’s Human Resources Department is heavily involved in the strategic planning process. From the very beginning the HR department is made aware of company set goals as well as duties and expectations for employees; with this HR has the ability to aid to mold and shape the company’s culture that makes achieving these goals possible. In the article Human Resource Planning: Objectives, Need, Importance and Levels, the writer S. Chand states that “HR needs a seat at the executive table”, but what does this mean exactly? Well, the idea is simple in order for the HR team to be able to deliver skilled candidates with desired competencies, offer sufficient training and development to employees, and steer organizational policies and management campaigns the HR department must be part of the strategic planning process from day one; then and only then can the HR manager understand and assess the needs of the organization and develop these much-needed areas efficiently and effectively.

Based on Darwish’s Table 2.1 it is evident that Netflix utilizes Strategic HRM in their business strategy. Micro or traditional HR setting within an organization the role of HR was to recruitment skilled employees, payroll processes and employee benefits. In addition to this traditional HR departments also handled employee training and development as well as the development and regulation of policies and labor laws. Netflix operates its organization in a macro/ Strategic HRM setting along with the necessary departments and managers to develop a strategic process for which the organization follows.

Since Netflix operates with a Strategic HRM the organization shares with executives the importance of HRM within the strategic planning process. SHRM is important to Netflix as it is utilized in the recruiting of and hiring processes of the desired skilled candidate. Strategic HRM is important as the HRM has the knowledge and understand of the organization’s goals, direction, and of what skill/ competencies are important to the workforce. In order for any of this to be accomplished the HRM must be part of the strategic process from conception.

Another strength Netflix possesses is their gender diverse organization. According to Netflix.com’s diversity page, Women make up 42 percent of the workforce. In addition, leadership at Netflix in made up of 42 percent women. Women also make up 42 percent of the workforce in departments such as Creative and corporate functions. In the IT department women make up 27 percent of that workforce.

Netflix practices trusting management or honor code for employees Netflix employees manage their own employee expense accounts (within reason for purchases) and are even given free lunches and snacks of their choosing. Netflix’s expense policy is “ACT in Netflix’s best interest”. According to the How Netflix reinvented HR, Sheryl Sanberg former Chief Talent offer Netflix states “expenses accounts are another area where if you create a clear expectation or responsible behavior, most employees will comply. In addition to lax expense account management, there are “Unlimited vacation days for salaried employees” (McCord, Patty, Pg 6).

The Weaknesses

As mentioned above the HR department is heavily involved in Netflix strategic process however, there is no mention of lower level supervisors or managers in this process. Lack of key employee involvement in strategic planning process can certainly harm the organization. Managers and Supervisors who work in the forefront with lower level employees can offer invaluable input as to what is working and what isn’t as well in terms of the needs and changing skill sets of these employees. A hurtle Netflix is also facing is finding skilled candidate to preform specialized work (engineering). According to Sandberg “If we only wanted “A” players on our team, we had to be willing to let go of people whose skills no longer fit” McCord, Patty, Pg. 5). While this does give Netflix an advantage as the will remain with only skilled employees their workforce overtime has and will continue to diminish. This issue must be addressed in the future to avoid lack of skilled workers in the future.

Netflix also eliminated formal employee performance reviews. I believe this is a weakness as this can result in lack of employee accountability and confusion on what may or may not be expected of employees. Effectively executed performance reviews allow managers and supervisor the opportunity to share with employees what is expected, what their goals are how they can achieve the set goals, and training and coaching to lead them towards success.

The Opportunities

An opportunity Netflix can take advantage of when it comes to strategic planning is to focus on the competencies and skills necessary to achieve organizational goals, thus increasing productivity and make for a more efficient and effective workforce. Knowing the competencies and skills necessary will aid in the recruiting and staffing process needed to make Netflix a continued success well into the future; with the skilled and competent employees to support it.

In addition, Netflix should consider diversifying their work force. While over 40 percent of employees are female, less than 20 percent of the workforce is Minority or non-white. This can certainly prove to become an issue with possible discrimination lawsuits. According to Mimi Colin’s Recruiting for Diversity–Best Practices for Building Relationships with HBCUs “To improve the outcomes of their diversity recruitment efforts, many organizations work to build ties with historically black colleges and universities (HBCUs), Hispanic-serving institutions, tribal colleges, and other institutions with significantly minority populations”. I feel recruiting from these university and institutions Netflix will have an increased opportunity to find skilled candidates from different ethnic backgrounds. Diversity in the workforce is useful as diversity allows individuals to share their experiences, point of views, and beliefs that they have with others that maybe others wouldn’t have heard them in the first place.

The Threats

There are many external threats that the Netflix organization faces. One threat in particular is the threat of competitors offering higher pay and more desirable benefits. Employee turnover can increase due to better opportunities elsewhere. It is important for the organization to remain competitive with regard to compensation and benefits if they plan to not onlt retain their current workforce but, to also recruit and hire future employees as well.
Due to Netflix’s ever evolving organization from DVD’s to streaming Netflix must constantly innovate new and improved methods of delivering entertainment and creating content for members. In order for such painstaking work to be achieved takes skilled and competent staffers. Netflix Faces the threat of possibly not having skilled employees to recruit and aging staff that may not grow with the times; or may not have the skills necessary for the organization to remain competitive.

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