Develop a 10 - 12 slides PowerPoint Presentation for the case study Reed Hastings-Netflix.
Addressing all questions.
Include at least five peer reviewed sources properly cited and referenced. References and citations
must be APA formatted.
Identify and the main issues found discussed in the case (who,
what, how, where and when (the critical facts in a case).
List all indicators (including stated "problems") that something is
not as expected or as desired.
Briefly analyze the issue with theories found in your textbook or
other academic materials. Decide which ideas, models, and
theories seem useful. Apply these conceptual tools to the
situation. As new information is revealed, cycle back to sub steps
a and b.
Identify the areas that need improvement (use theories from your
Specify and prioritize the criteria used to choose action
Discover or invent feasible action alternatives.
Examine the probable consequences of action alternatives.
Select a course of action.
Design and implementation plan/schedule.
Create a plan for assessing the action to be implemented.
Team PowerPoint presentation (10-12 slides with notes)
APA format, for citations and references.
Use the APA template
In January 2005,Wedbush Securities stock analysts Michael Pachter called Netflix a “worthless
piece of crap.” He put a price target of $3 on the stock that was trading at around $11.
Doubters thought Blockbuster,Walmart, or Amazon.com, with their economies of scale and
established customer bases, would simply destroy Netflix. Founder and CEO Reed Hastings
wasn’t supposed to be Fortune’s Businessperson of the Year in 2010, five years after his demise
was predicted. Not only did Hasting earn the No. 1 spot; he and Netflix also killed it. Netflix was
the stock of the year, up more than 200 percent in 2010, while the S&P 500 was up only 7
percent. Netflix shares ran laps around even Apple’s.75 Between 2010 and 2013
Netflix subscribers doubled to over 40 million and its stock price quadrupled to $375, making it
again the best-performing stock on the S&P 500.76 Don’t you wish you bought it back in 2005
when it was selling for $11? In Fortune’s List of 2013’s Top People in Business, Reed Hastings
was ranked #5, ahead of Amazon’s Jeff Bezos, Google’s Larry Page, Facebook’s Mark
Zuckerberg, and Apple’s Tim Cook.
So how did Hastings do it? A lot of his success is based on how he built his company on a harddriving and risk-taking culture, and Hastings never stops looking over his shoulder to stay one
step ahead of the competition. Unlike Blockbuster, which went into bankruptcy, Netflix wasn’t
afraid to change its business model by abandoning the past to build its future. How, by
cannibalizing its own mail order DVD customers to focus on streaming existing program and
even to launching original series, including the highly successful House of Cards that won three
Emmy awards, with more to come. Although the change in focus from mailing DVDs to
streaming with a pricing revamping was clumsily handled, resulting in angry and lost mail
customers, it clearly was a good strategic move. With streaming, Netflix is now stealing
customers from cable and pay movie channels HBO, Showtime, and Starz, as it is the world’s
largest video subscription company. Growth is also coming from Netflix global expansion from
Canada (2010), to Latin America (2011) and most recently to Europe (2012), where streaming is
new in many countries.
Let’s talk about Hastings’s leadership style that led to suc- cess. It has changed over the years
between the two compa- nies he created. As a young founding CEO of Pure Software, Hastings
was considered as hard headed as they come and couldn’t take criticism. He used the
autocratic style to push for his ways of doing things, and he sometimes embarrassed employees
with nonverbal eye rolling and critical comments about dumb ideas. So much so that Hastings
earned the nick- name “Animal.” Hastings sold Pure for $750 million, and it made him realize he
had helped build a company he didn’t want to be part of.
So when he used the money to start Netflix, as CEO Hastings was determined to create a
culture in which people enjoyed coming to every day. He wanted the company to be run
differently, so he changed his style to be participative. He is more honest and direct with
employees but not confron- tational, but he still has a Steve Jobs–like perfectionist streak.
Instead of simply telling others what to do, he actively seeks out ideas and advice from his
employees. Now when he hears ideas that seem silly, he doesn’t roll his eyes and humili- ate
employees by making critical comments about the idea or person being dumb. Hastings digs
deeper by responding with comments like “I don’t understand how your idea will work, so help
me to understand how it will solve the problem.”
Hastings was ahead of the technology curve. Even back in 1997 when Hastings cofounded
Netflix, he anticipated that consumers would eventually prefer to get movies instantly delivered
via the Internet.This is actually amazing foresight because back then less than 7 percent of U.S.
homes even had broadband. Hastings actually had a team working on the technology to bring
movies to the home via the Internet back in 2000.They even developed a Netflix-branded box
with a hard drive that connected to your movie queue, but it took six hours to download a
movie back in the early 2000s. Once Hastings saw YouTube videos, he killed the hard-drive
device and put this team to work on a streaming machine, a sort of YouTube-in-a-box.This again
was meant to be a branded piece of hardware produced and sold by Netflix. However, even
though they built the technology, once again Hasting killed the idea in favor of software that
could be embedded in all kinds of devices— the software today is known as apps.
No.This wasn’t wasted time. Netflix built on this base to be able to come out streaming a year
and a half, in 2007, after YouTube showed the world instant viewing over the Inter- net. Also, it
spun off the hardware technology into an existing company called Roku, which today makes a
digital device that plays content via software from Netflix, as well as Hulu, Ama- zon, and
Does this mean that Netflix doesn’t face any present and future threats? As Hastings admits,
there are plenty of challenges ahead. Analysts like Pachter now are warning that Netflix could
be crushed or acquired by the likes of Amazon.com, Google, or Apple. Anyone can come after
Netflix by streaming bits via con- tracts with data-delivery companies like Level 3, Limelight, and
Akamai. Who knows what Facebook will come up with? Also, Netflix has to pay the studios for
contents. Content acquisition could be denied or costs could go through the roof, and new
expensive original series may not have the success of House or Cards. In February 2014, Netflix
agreed to pay Comcast extra to speed up its streaming service to its customers, which could
lead to having to pay other cable providers extra. The European media companies across the
continent are girding for battle to stop Netflix from taking market share. But Hastings is confident, as he enjoys solving subtle, yet tough, problems alongside the smartest people he can
find. He said,“For me the thrill is making a contribution by solving hard problems.” Only time
will tell if he can stay ahead of the competition and technology curve.
GO tO the INterNet: To learn more about Reed Hastings and Netflix, visit their Web site
Support your answers to the following questions with spe- cific information from the case and
text or with other informa- tion you get from the Web or other sources.
1. How did Hastings change his use of communications in sending and receiving messages from
Pure Software to Netflix?
2. How did Hastings change his use of feedback from Pure Software to Netflix?
3. How did Hastings change his use of coaching guidelines (Exhibit 6.3) from Pure Software to
4. Which conflict management style did Hastings tend to use at Pure and Netflix?
5. In making a deal with content suppliers, which conflict management style was most likely
used by Netflix?
Purchase answer to see full