demonstrate that you can apply the concepts, principles, and theories presented in the course readings

Instructions: Please read the following case entitled "Entertaining Strategy".  After reading this
case,

you should prepare an analysis following the guidelines provided under "Course
Requirements". The purpose of this assignment is for you to demonstrate that you can apply the
concepts, principles, and theories presented in the course readings. Your analysis must employ
only the facts presented in the case description below. You must resist the temptation to
introduce facts not in evidence in the case description by searching the internet for updated
information. The company’s present situation is not necessarily the ideal solution that could be
derived from a careful analysis of the facts as presented here.
This assignment is worth 80 points.  Please post your completed case analysis under the
"Assignments" tab.

An Entertaining Strategy?

There’s no doubt that people like to watch movies, but how they watch is changing. Although
many people still prefer going to an actual movie theater, more and more are settling back in
their easy chairs in front of home entertainment systems, especially now that technology has
improved to the point where those systems are affordable and offer many of the same features as
those found in movie theaters. Along with the changes in where people watch movies, how
people get those movies has changed. For many, the weekend used to start with a trip to the
video rental store to search the racks for something good to watch, an approach Blockbuster built
its business on. Today’s consumers can choose a movie by going to their computer and visiting
an online DVD subscription and delivery site where the movies come to the customers—a model
invented by Netflix.
Launched in 1999, Netflix’s subscriber base grew rapidly. It now has more than 50 million
subscribers and thousands of movie titles and other content from which to choose. From the
beginning, Netflix’s goal was to provide the most extensive and all-inclusive selection of DVDs,
a simple and fast way to select movies, and fast, free delivery.
Netflix founder and CEO Reed Hastings believed in the approach he pioneered and set some
ambitious goals for his company: build the world’s best Internet movie service and grow
earnings per share (EPS) and subscribers every year. In 2011, though, Hastings made a decision
that had customers complaining loudly. Netflix’s troubles began when it announced it would
charge separate prices for its DVDs-by-mail and streaming video plans. Then, it decided to
rebrand its DVD service as Qwikster. Customers raged so much that Netflix reversed that
decision and pulled the plug on the entire Qwikster plan. As Netflix regained its focus with
customers, it was once again ready to focus on its competitors.
Success ultimately attracts competition. Other businesses want a piece of the market. Trying to
gain an edge in how customers get the movies they want, when and where they want them, has
led to an all-out competitive war. Now, what Netflix did to Blockbuster, other competitors are
doing to Netflix. Hastings said he has learned never to underestimate the competition. He says,
“We erroneously concluded that Blockbuster probably wasn’t going to launch a competitive
effort when they hadn’t by 2003. Then, in 2004, they did. We thought . . . well they won’t put
much money behind it. Over the past four years, they’ve invested more than $500 million against
us.” Not wanting to suffer the same fate as Blockbuster (it filed for bankruptcy protection