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C

Cha
arterred Po
ostg
grad
duate
D
Diplo
oma in
n Mark
ketin
ng
(Le
evel 7)
5
561 An
nalysis and De
ecision
Time:

09:30 12:30

Date:

8th Ju
une 2011
1

ours Dura
ation
Three Ho
The examination com
mprises TH
HREE com
mpulsory tasks.
Task One is worth 50%
5
of the total mark
k.
Task Two
o is worth 25%
2
of the total mark
k.
Task Thre
ee is worth 25% of th
he total mark.
ALL tasks relate to th
he pre-see
en case stu
udy and the
e additionaal
information
n included in this exa
am paper. You are alllowed to bbring your
annotated copy of th
he case stu
udy and yo
our audit (not to exceeed SIX A4
o the examination roo
om.
sides) into
You are re
equired to give
g
your a
answers in the CIM answer
a
boook provided
d.
DO NOT repeat
r
the task in you
ur answer, but show clearly thee number of
o
the task atttempted on
o the apprropriate pa
ages of the answer boook. Pleas
se
start a new
w page when starting
g each of th
he three ta
asks.
At the closse of the ex
xamination
n you mustt secure yo
our audit suummary
within the back cover of your a
answer boo
ok with a trreasury tagg. This will
be provide
ed by the examination
e
n centre in
nvigilator.
You must write your CIM stude
ent membe
ership num
mber clearlyy on the top
right hand corner of the audit ssummary before
b
the close
c
of thee
examinatio
on.
Rough work and notes must be
e written in
n the answer book orr on
supplemen
ntary sheets and musst be clearrly identified.

T
The Chartere
ed Institute of Marketin
ng 2011

Analysis and Decision Examination June 2011

CHARTERED POSTGRADUATE DIPLOMA IN MARKETING


ANALYSIS AND DECISION
Netflix: Additional Information
Following the launch of its services in Canada in September 2010, Netflix is now
considering other opportunities to offer its services internationally. It is likely that Europe,
Asia and South America would be among those markets to be explored first. The company
has previously contemplated similar moves when in 2004 there was a planned initiative to
enter the UK, which was abandoned in favour of developing its domestic market. However,
the over-riding strategy of moving towards streaming as the primary service in favour of the
distribution of physical discs serves its ambitions for global expansion very well. Netflix is
aware that it faces stiff competition from companies like Roku, Apple and Amazon if it is to
penetrate new markets.
The position of the company has been strengthened by a joint venture with Disney,
announced in December 2010, having secured the rights to stream popular and potentially
highly lucrative Disney TV programmes such as Greys Anatomy. This contributed in part
to a threefold increase in the share price during the year 2010.The success of Netflix has
brought with it greater criticism and hostility from its competitors, especially the more
traditional cable and satellite distributors. However, there is strong evidence that streaming
is catching on in a big way, perhaps even more rapidly than Netflix could have hoped for.
Netflix now offers (from November 2010) a streaming only option that is cheaper than the
standard combined streaming and DVD package. This has quickly established itself as a
popular option for new subscriptions, accounting for over one third of them in the months
following its introduction.
A potential obstacle to Netflixs progress is the consideration of usage based pricing of
broadband, which could place considerable additional costs on video streaming. Various
pilots have already been held in Canada and there are discussions underway about
introducing something similar in the US. A further negative prospect for companies like
Netflix is that, as content owners observe how much money there is to be made from
streaming, they are more likely to want to charge more to the providers. Many of Netflixs
licensing arrangements are short term and so it is possible that it will see significant
increases in the amounts demanded for future extensions and renewals.

Chartered Postgraduate Diploma in Marketing

CHARTERED POSTGRADUATE DIPLOMA IN MARKETING


ANALYSIS AND DECISION
ALL TASKS ARE COMPULSORY
You are employed as a marketing consultant in the home entertainment sector. You are
working for Netflix, Inc.
With reference to the case study, your previously prepared strategic marketing audit and
the additional information included in this examination paper, you have been asked to
produce a report that addresses the following tasks.

Task One
a.

Critically assess Netflixs existing core competencies, its competitive advantage and
value proposition.
(20 marks)

b.

Critically evaluate the fit between Netflixs culture and its current business strategy,
including an assessment of its ability to be responsive in a changing marketing
environment.
(15 marks)

c.

Critically evaluate the strategic benefits and risks associated with Netflixs staff policy.
(15 marks)
(Total 50 marks)

Task Two
In the context of developments in technology, rising competition and changing consumer
behaviour patterns, assess the strategic options available to Netflix to sustain its competitive
advantage.
(25 marks)

Task Three
a.

Based on your answer to Task Two, recommend with justification ONE strategic option
you think Netflix should adopt that will ensure the long term sustainability of the
company.
(10 marks)

b.

Identify the risks and financial implications associated with implementing your chosen
strategy, and recommend different mitigation strategies that will help Netflix reduce these
risks.
(15 marks)
(Total 25 marks)

Analysis and Deecision Examina


ation June 2011

(Oveerall Total 100


1 marks))

Moor H
Hall
Cookham
Maiden
nhead
Berksh
hire, SL6 9Q
QH, UK
Teleph
hone: 01628
8 427120
Facsim
mile: 01628 427158
Websitte: www.cim
m.co.uk

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