Netflix’s operations management maximizes productivity and efficiency in entertainment content production and streaming services. For the 10 critical decisions of operations management, the company’s strategies and tactics are mainly for its streaming services and entertainment content production, although the operations of regional and local offices are also considered. The fulfillment of the goals of Netflix’s mission statement and vision statement depends on the effectiveness of the company’s operations management in ensuring reliable and satisfactory services. High productivity and effective operations enable the company to offer competitive prices for high-quality content, while ensuring profitability for investors. Netflix continues improving its business performance with support from productive operations using best practices in operations management.
Competition influences the impact of operations management on Netflix’s business success. The company’s competitors include the entertainment businesses of Sony, Walt Disney, and NBCUniversal, as well as the streaming services of YouTube (Google (Alphabet)), Apple TV Plus, Facebook (Meta), Amazon Prime Video, and Microsoft Movies & TV (Films & TV). These competitors’ operations management ensure business competitiveness and the challenging market described in the Five Forces analysis of Netflix. As a result, the standards and operational targets used for the 10 critical decisions of Netflix’s operations management must consider the company’s performance relative to competitors and their respective operations management strategies.
10 Critical Decisions of Netflix’s Operations Management
1. Goods and Services. Netflix’s business objectives for this critical decision are to produce satisfactory entertainment content that matches market demand, and to provide high-quality, reliable, and affordable streaming services. The company’s operations managers decide on cost limits, quality specifications, productivity targets, and resource allocations to support these objectives in the entertainment and streaming business. Netflix’s generic competitive strategy and intensive growth strategies ensure cost-effective operations and competitive product development, in support of this decision area of operations management.
2. Quality Management. This critical decision focuses on satisfying Netflix’s quality standards and targets for its various processes and operational outputs. For example, the speed and video quality used for the company’s streaming service are included in quality management decisions in this area of operations management. Also, Netflix’s work culture (organizational culture) maintains human resources that aim for high quality and business competitiveness. These characteristics ensure the satisfaction of this critical decision area of operations management, in terms of quality standards and targets for movies, series, games, and the streaming service.
3. Process and Capacity Design. Netflix’s operations management aims to maintain high efficiency and productivity in all business processes, while keeping sufficient capacity for streaming content. For the company’s movie and series production operations, high productivity and efficiency are achieved in processes with effective talent (human resources) and using the right equipment and facilities. For example, Albuquerque Studios have the right process and capacity design, involving the right equipment and facilities, which professionals use to produce Netflix Originals. On the other hand, for the company’s streaming operations, the focus of operations management is on information technology and related processes. In this regard, Netflix’s streaming process performance and capacity levels depend on effective management of servers and related network technologies. The competencies and competitive advantages in the SWOT analysis of Netflix allow for efficient operations based on economies of scale, and for high productivity based on the company’s content production capability.
4. Location. The goal of this critical decision of operations management is to maximize business efficiency and productivity in the movement of resources and in reaching Netflix’s target customers. Considering that the company’s operations involve digital services and content, most location decisions are for content production processes, content storage, IT assets, offices, and marketing activity. For example, the locations of the company’s facilities for animation and movie production are based on accessibility for people and on access to resources needed for production processes. In terms of marketing activity, Netflix’s marketing mix (4P) involves location decisions for some marketing campaigns. This decision area also deals with operations management for the optimal productivity of offices in various locations, including Netflix offices in North America, Europe, and Asia.
5. Layout Design and Strategy. Netflix’s operations management aims for optimal movement of people, materials, and information for this critical decision area. For example, the company’s studio layouts are based on industry standards, conventions, and best practices for high productivity in filming and production. Netflix’s offices have layouts that suit the movement of people and materials based on the processes involved, such as the Legal department’s document processing and marketing teams’ meetings for promoting the streaming service.
6. Human Resources and Job Design. Netflix’s strategic objective in this critical decision area of operations management is to develop its human resources for current operations and for business growth. A highly productive workforce can maximize the company’s entertainment content production and strategic implementations. The limits, communication channels, team structure, and resource allocations in Netflix’s business structure (company structure) affect the achievement of targets for this critical decision of operations management.
7. Supply Chain Management. Netflix’s operations managers streamline the supply chain to ensure its stability, reliability, and sufficiency for this critical decision area. Effective supply chain management supports productive studio operations and high-quality streaming services. The external factors in the PESTLE/PESTEL analysis of Netflix can affect the results of decisions in this area of operations management. The company’s strategies address these external factors to mitigate any negative effects on its supply chain and streaming services.
8. Inventory. Netflix’s inventory management aims to maintain an adequate inventory level while minimizing costs. In content storage and streaming services, the company optimizes server resource allocations for this critical decision of operations management. In content production, inventory management focuses on maintaining supplies and stocks for Netflix’s studio operations, including props and equipment. Inventory adequacy and consistency support the company’s productive studio operations to satisfy cost limits and the competitive strategy of cost leadership.
9. Scheduling. The strategic objective of this critical decision is to operate Netflix’s business in a timely manner, with consideration for resource availability, maintenance requirements, supply chain operations, market demand, and other internal and external variables. Effective operations management ensures that Netflix’s activities are scheduled to maximize the achievement of strategic goals, including goals for productivity, revenues, and profits.
10. Maintenance. Netflix’s operations management aims for the stability and reliability of the company’s processes and resources, including human resources. The streaming business involves maintaining content production facilities, equipment, and talent. The company also maintains resources, people, and processes of offices to support operations, like marketing and partnerships with internet service providers in various countries. Effectiveness in this critical decision area of operations management leads to operating efficiency and high productivity that contribute to the achievement of goals for Netflix’s sustainability, ESG, CSR, and stakeholder management.
Productivity at Netflix
Productivity goals in Netflix’s operations management are set to optimize business competitiveness and performance, while satisfying market demand and taking opportunities for business expansion. The company achieves its productivity targets using strategies for human resource development and other aspects of the entertainment and streaming business. The following are some of the productivity metrics applicable to the 10 critical decision areas of Netflix’s operations management:
- Episodes completed per year (Netflix original series production productivity)
- App iterations per year (Netflix mobile app development productivity)
- Game iterations per year (game development productivity)
References
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