Assignment:
Imagine that you are a consultant to Netflix. Netflix has hired you to advise on how it can ensure its future success as a company in its current market.
Write a 7 to 9 page research paper analyzing market and business data to explain how the core microeconomic principles impacts the sustainability of Netflix and what actions it can take to ensure success.
Specifically the following critical elements must be addressed:
I. Introduction firm that matches the following criteria: a publicly traded company operating in the U.S. market that is currently in business.
a. Outline the purpose of the paper and how it will inform your conclusion.
b. Summarize the history of Netflix, and provide an overview for what Netflix does and what goods/services it sells.
II. Explore the supply and demand conditions for Netflix's product.
a. Evaluate trends in demand over time, and explain their impact on the industry and Netflix. Include annual sales figures for the product Netflix sells.
b. Analyze information and data related to the demand and supply Netflix's product(s) to support your recommendation for Netflix's actions. Remember to include a graphical representation of the data and information used in your analysis.
III. Examine the price elasticity of demand for the product(s) Netflix's sells.
a. Analyze the available data and information, such as pricing and the availability of substitutes, and justify how you determine the price elasticity of demand for Netflix's product.
b. Explain the factors that affect consumer responsiveness to price changes for this product, using the concept of price elasticity of demand as your guide.
c. Assess how the price elasticity of demand impacts Netflix pricing decisions and revenue growth.
IV. Examine the costs of production for Netflix.
a. Analyze the various costs Netflix faces, their trends over time, and how they have impacted Netflix's profitability.
b. Apply the concepts of variable and fixed costs to Netflix for informing its output decisions. For instance, analyze how different kinds of costs (labor, research and development, raw materials) affect Netflix's level of output.
V. Explore the overall market for your firm.
a. Discuss the market share of Netflix and its top competitors by providing details on current percentages for each firm and describing the trend over time. You might consider presenting the data graphically.
b. Analyze the barriers to entry in this market to illustrate the potential for new competition and its impact on Netflix's future in the market.
c. Describe the market structure for Netflix, and analyze how this affects Netflix's ability to influence the market.
VI. Recommendation
a. Develop a recommendation for how Netflix can manage its future production by synthesizing the data presented.
b. Suggest how Netflix position within the market and among its competitors will allow it to take your recommended action.
c. Describe how Netflix can sustain its success going forward by evaluating the findings from demand trends and price elasticity.