MGNT801 Economics and Markets (T XXXXXXXXXXAssessment Task: Case Study Analysis 2Due Date: 26 Feuary...

Question

MGNT801 Economics and Markets (T XXXXXXXXXXAssessment Task: Case Study Analysis 2
Due Date: 26 Fe
uary 2018/10PM Maximum Word Limit: 2,000 words Maximum marks: 30
Note: There are five questions in this assessment task. Questions 1 to 4 integrate the topics of vertical integration/firm boundaries and information goods and are categorised under a single topic heading. A question related to the topic of labour markets is separately categorised below.
Topic: Vertical integration/firm boundaries and Information goods
Netflix is a streaming service that essentially deals in information goods. Utilising the sources provided below, supplemented with your own independent research, derive insights on Netflix’s business model and cost
evenue structure. Using these insights, answer the following questions 1 to 4.
1. Explore the possible forms of technical economies likely exploited by Netflix and its content creation partners? Review the media sources provided and identify and explain instances where such technical economies are present? [6 marks]
[Further
eakdown of marks based on marking ru
ic criteria: Understanding and application of theories, concepts and models (3 marks); Quality and application of research - as evidenced by the use of quality sources and the stimulus material provided, and clarity, conciseness and coherence of arguments – in support of analysis (3 marks)]
2. In class we discussed the nature of the information economy favouring a networked structure instead of integrated hierarchies. But vertical integration also makes less sense under specific conditions discussed in class. Netflix has increasingly engaged in integrating some key elements of its value chain, for instance, creating in-house content. Out of the scenarios where vertical integration makes less sense, which ones are the least applicable to Netflix? Please explain and justify. [6 marks]
[Further
eakdown of marks based on marking ru
ic criteria: Understanding and application of theories, concepts and models (3 marks); Quality and application of research - as evidenced by the use of quality sources and the stimulus material provided, and clarity, conciseness and coherence of arguments – in support of analysis (3 marks)]
3. The traditional richness vs reach trade-offs do not usual apply to Information goods. Discuss this trade-off and the three aspects of richness in the context of Netflix. How has the richness vs reach trade-off been overcome by Netflix through its streaming service? [6 marks]
[Further
eakdown of marks based on marking ru
ic criteria: Understanding and application of theories, concepts and models (3 marks); Quality and application of research - as evidenced by the use of quality sources and the stimulus material provided, and clarity, conciseness and coherence of arguments – in support of analysis (3 marks)]
4. What is the nature of revenues and costs of Netflix as a provider of information based product? Carefully review Hardy XXXXXXXXXXand other sources provided, and identify possible implication(s) of the structure of Netflix’s Variable Costs (VC) and Marginal Revenue (MR). What aspect of
(
Page
1
of

3
)
Netflix’s behaviour can be explained by looking at the unique nature of Netflix revenues? [6 marks]
[Further
eakdown of marks based on marking ru
ic criteria: Understanding and application of theories, concepts and models (3 marks); Quality and application of research - as evidenced by the use of quality sources and the stimulus material provided, and clarity, conciseness and coherence of arguments – in support of analysis (3 marks)]
Topic: Labour markets
5. It has been reported recently in the media that the Australian labour market has been experiencing sluggish growth in wages, but worker productivity has been steadily growing over the last few decades. What does the labour market model say about the link between labour productivity and wages? What are the factors behind this divergence between productivity and wage growth? To justify your response to this question, make sure you use relevant models and concepts, supported by evidence from relevant, quality sources. State clearly any assumptions you make. Please note that this question requires independent research as stimulus articles have not been provided. [6 marks]
[Further
eakdown of marks based on marking ru
ic criteria: Understanding and application of theories, concepts and models (3 marks); Quality and application of research - as evidenced by the use of quality sources, and clarity, conciseness and coherence of arguments – in support of analysis (3 marks)]
Stimulus sources on Netflix
Vena, D. (2018, January 25) ‘What You Missed in Netflix's Quarterly Report’ The Motley Fool. Retrieved from: https:
www.fool.com/investing/2018/01/25/what-you-missed-in-netflixs-quarterly-report.aspx
Hardy, R. (2018, Fe
uary 16) ‘Netflix, MoviePass and how technology is radically redefining the movie business’. Retrieved from: https:
newatlas.com/netflix-moviepass-theater-industry-technology- distruption/53426
Rose, L (2014, June 18). “Netflix's Original Content VP on Development Plans, Pilots, Late-Night and Rival HBO (Q&A)’. Retrie ved from: https:
www.hollywoodreporter.com/news/netflixs-original-content-vp- development-712293
Ovide, S. (2018, January 23) ‘Netflix's Growth Is in the Eye of the Beholder’ Retrieved from: https:
www.bloomberg.com/gadfly/articles/ XXXXXXXXXX/netflix-earnings-growth-is-in-the-eye-of-the- beholde
Semios, Z. (2016, December 9) ‘White Ra
it Project: how to make a series for Netflix’ Mum
ella. Retrieved from: https:
mum
ella.com.au/mum
ella360-video-pitch-
anded-content-idea-tv- network-
and-innovation-stage-414622
Thomson, A. (2018, January 28) ‘Meet Netflix’s Indie Content Team, at Sundance and Beyond’ IndieWire. Retrieved from: http:
www.indiewire.com/2018/01/netflix-indie-content-production-sundance-2018- private-life XXXXXXXXXX
Willy Shih (2014) ‘Netflix in 2011’. Harvard Business School Publishing [available on iLearn]
Ya
ow, J. (2015, Fe
uary 14) ‘Netflix will spend $5 billion on programming in 2016, more than everyone but ESPN, says Janney’. Retrieved from: https:
www.businessinsider.com.au/netflix-will- spend-5-billion-on-programming-in XXXXXXXXXX?r=US&IR=T

tae_636551551974666274_115561_1.docx

Soma · Accepted Answer

MGNT801 Economics and Markets (T1 2018) Assessment Task: Case Study Analysis 2
Due Date: 26 February 2018/10PM	Maximum Word Limit: 2,000 words	Maximum marks: 30
Note: There are five questions in this assessment task. Questions 1 to 4 integrate the topics of vertical integration/firm boundaries and information goods and are categorised under a single topic heading. A question related to the topic of labour markets is separately categorised below.
Topic: Vertical integration/firm boundaries and Information goods
Netflix is a streaming service that essentially deals in information goods. Utilising the sources provided below, supplemented with your own independent research, derive insights on Netflix’s business model and cost/revenue structure. Using these insights, answer the following questions 1 to 4.
1. Explore the possible forms of technical economies likely exploited by Netflix and its content creation partners? Review the media sources provided and identify and explain instances where such technical economies are present? [6 marks]
[Further breakdown of marks based on marking rubric criteria: Understanding and application of theories, concepts and models (3 marks); Quality and application of research - as evidenced by the use of quality sources and the stimulus material provided, and clarity, conciseness and coherence of arguments – in support of analysis (3 marks)]
Technical economies of scale are achieved when lower unit cost of production occurs due to use of more efficient techniques of production. It is the result of productive efficiency. It is one form of internal economies of scale. Expensive and specialized capital inputs is the key source for technical economies. Large scale business can afford to invest specialized and highly expensive capital equipment in their business.  This is viable or cost efficient only for a large business, not for a small one.
Netflix is the leading internet entertainment service in the world. Netflix has shown how the technological advancement can redefine the entertainment business. It is recognized as the new disruption of old theatrical model. The business model is huge threat to the traditional theatrical model- recent industry data suggests a downfall in U.S summer box office numbers. (Haridy, 2018) 
Technical economies of scale have vast implications behind their remarkable success. Netflix exploits technical economies of scale from various sources that includes their agile structure of the model, technological advancement, licensed and original content and many others.  Due to technical economies of scale, Netflix enjoys significant competitive advantage that helps to slash down the cost per unit so that they provide more focus on performance. (BusinessDigest, 2017)
Let us examine the possible forms of technical economies that are exploited by Netflix and its content creation partners: 
1. Content spending: 
Netflix is spending billions on content spending – the projected content spending for the year 2018 is $7.5 billion to $8.0 billion. CEO Reed Hastings has provided clear indications that the content spending will be more in the subsequent years of 2019 and 2020.  During the time of its inception, Netflix was based entirely on licensed content but gradually moving towards their own content. Licensed content plays an important role in establishing loyal audience across the territories. Both the licensed content and original content are the sources of technical economies for Netflix. (Dignan, 2018)
2. Investment in technology and development:
This is the key source from where Netflix can exploit technical economies. They are planning to invest $1.3 billion on technology and development where as it was only $1.05 billion in 2017. Netflix is spending heavily on technology and development and experiencing skyrocketing subscriber growth. It would help to improve the platform and reduce the cost per subscriber. (Dignan, 2018)
3. Steaming infrastructure: 
Netflix does not rely on traditional merchandising system and has introduced proprietary recommendation system with the intention to better balance the customer demand. They have built their own streaming structure that offers substantial economies of scale. This definitely will offer technical economies (Kaufman, 2014)
2. In class we discussed the nature of the information economy favouring a networked structure instead of integrated hierarchies. But vertical integration also makes less sense under specific conditions discussed in class. Netflix has increasingly engaged in integrating some key elements of its value chain, for instance, creating in-house content. Out of the scenarios where vertical integration makes less sense, which ones are the least applicable to Netflix? Please explain and justify. [6 marks]
[Further breakdown of marks based on marking rubric criteria: Understanding and application of theories, concepts and models (3 marks); Quality and application of research - as evidenced by the use of quality sources and the stimulus material provided, and clarity,

MGNT801 Economics and Markets (T XXXXXXXXXXAssessment Task: Case Study Analysis 2 Due Date: 26 February 2018/10PM Maximum Word Limit: 2,000 words Maximum marks: 30 Note: There are five questions in...

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment