Ahmad Reza Khawar - Midterm Assignment SIBM Feb 2016

Ahmad Reza Khawar (@00450058)
UNIVERSITY OF SALFORD
INTERNATIONAL BUSINESS
MANAGEMENT

Contents
1. Introduction ..........................................................................................................................................1
2. Analysis (analysis of macro-environmental).........................................................................................1
2.1 Market size....................................................................................................................................1
2.2 Environment impacts....................................................................................................................2
2.3 Business strategy (in similar business)..........................................................................................2
2.4 Problems/barrier (environmental factors) ...................................................................................3
3. SWOT Analysis: .....................................................................................................................................3
3.1 Strengths and Weaknesses...........................................................................................................4
3.2 Opportunities and Threats............................................................................................................5
4. Strategy of entering the market ...........................................................................................................6
4.1 Competitive characteristics ................................................................................................................7
5. Appendix ...............................................................................................................................................9
Bibliography ................................................................................................................................................11

1
1. Introduction
In today’s world most of multinational companies are moving very fast within different markets, these
companies provide high level of services to their customer; the services which have international
demands. These companies, which are providing services through technology, grow very fast in all
markets. Nowadays whenever any service is needed for customer, the very first thing he/she do is an
online search, whether that business is available online or not. In online services one of the top business
is the video streaming services, these business have unlimited number of customers.
Netflix, though it is one of the leading global provider of streaming movies, TV shows and series with over
75 million subscribers, may not survive if it does not keep pace with the rapidly changing world. Its global
competitors may capture the market and it will be too late and difficult to compete with. Turkey as one
of the potentially attractive target market for Netflix’s future international expansion is analyzed in this
report.
The analysis done on macro-environmental aspects through SWOT analysis with PESTAL framework. This
report talk about Netflix company strategy when targeting the Turkey market, however Netflix Company
has its international strategy how entry to the markets.
2. Analysis (analysis of macro-environmental)
When it comes to video streaming businesses, Netflix is the first company that pops in mind which implies
that the company, with more than 75 million subscriber, made his way as one of the top video streaming
companies. For any company to expand in a new market or region, the top most challenge is the macro-
environmental factors of the region. Netflix with markets in more than 130 countries need a very clear
and good business strategy for expanding to a new market not to lose its reputation and credits in
international market.
This report is intended to provide detailed information and analysis of Turkey as one of the potentially
attractive target market for Netflix. Based on an in-depth study and analysis from different sources, the
report summarizes the analysis in the following categories:
2.1Market size
“In 2015 Turkey has over 44 million broadband subscribers – with the majority of these connected via
mobile broadband services” (Budde.com, 2015). It can be inferred from this report that Turkey has a large
market for internet users, and thus can be a good target market for Netflix. However broadband
subscriber and internet users are not same in all cities of the country. Most of the cities, but not all, in
Turkey have more internet users like Ankara, Istanbul, Antalya and Izmir. Thus, one of the major factors
that might affect Netflix customers is the Location factor of market segments.

2
2.2Environment impacts
“The macro-environment is the highest-level layer. This consists of broad environmental factors that
impact to a greater or lesser extent on almost all organizations” (Johnson, et al., 2008). With the launch
of Netflix services in Turkey, DVD and CDs sales and rental companies may go down and people may lose
their jobs which might create a bad picture of the company in society beforehand, especially when
unemployment rate in Turkey is already high. It is common that good and bad impacts of the environment
to the business and vice versa will be in place when entering a new market, but a clever strategy should
be considered to tackle this problem. Considering this environmental impact and the current
unemployment rate of Turkey, it will be a good opportunity for Netflix to provide huge number of jobs in
its company from local workers. This can in turn be a solution to another environmental issue for Netflix
in Turkey which is the local language. Turkey is a country with very few percentage of people knowing
English language. Movies need to be sub-titled or dubbed in Turkish language to attract majority of Turkish
population. This creates a huge job opportunity for Turkish people and resolves the aforementioned
environmental issue.
2.3Business strategy (in similar business)
Business Strategy for any company cannot be built or formulated unless an in-depth knowledge and
understanding of competitors in the market are in hand. One of the foremost reasons why companies fail
to enter a new market is inappropriate business strategy of the company. Turkey, as one of the potential
target market for Netflix, already has lots of good running international media streaming service providers
which has huge impact on what business strategy should Netflix choose when entering the market.
Location of offices is one of the crucial factors that should be considered when considering business
strategy for Netflix to enter Turkey. This should be done by an in-depth analysis of customer segmentation
based on which company should start recruiting local workers. Office location should be chosen in big
cities of Turkey such as Istanbul with professional setup that should well-depict the status of the company.
It is recommended that female staff should be selected as marketing team which has huge impact in
customer attraction. Customer satisfaction is one of the foremost factors that leads to the success of the
business. Netflix should consider customer satisfaction as one of the important factors in its business
strategy to enter Turkey market. Establishment of a call center for their customer to give 24/7 support is
one of the good strategy to achieve customer satisfaction. Providing movies with high quality and lower
price which has always been of the values of Netflix, but in local language is another of the important
strategies to achieve customer satisfaction.
Netflix should work with local banks of Turkey to manage the financial transactions in local currency. A
good relationship with the banks and central bank of Turkey should be established in order to manage the
taxation and other duties of the company in Turkey.

3
2.4Problems/barrier (environmental factors)
Expansion to any market has its own barriers and problems that needs to be considered beforehand and
strategy to tackle these problems should be prepared. Turkey is a country with more than 96% population
of Muslims. The society and laws in Turkey are highly influenced by Islam (Sharia). Most of the people in
Turkey does not like to watch movies other than G (General Audience) rated movie. Most of today’s
movies are above G which includes (PG, PG-13, R, NC-17) which might not have good welcome in Turkey.
In addition the Turkish government applied highly restriction on the contents of movie streaming which
affects Netflix business. “Internet Law No. 5651, passed in 2007, prohibits online content in eight
categories including prostitution, sexual abuse of children, facilitation of the abuse of drugs, and crimes
against (or insults to) Atatürk” (Greg Epstein, 2013). Netflix should work on the legal authorities of Turkey
to minimize these restrictions so to be successful in its business. Alternatively, Netflix should censor the
contents of movies to be in accordance with the society demands.
3. SWOT Analysis:
This chapter summarizes the SWOT analysis that is conducted on Netflix and its future in Turkey. Through
SWOT analysis the future of Netflix in Turkish market can be forecasted. “SWOT summarizes the key issues
from the business environment and the strategic capability of an organization that are most likely to
impact on strategy development. This can also be useful as a basis against which to generate strategic
options and assess future courses of action” (Budde.com, 2015).
SWOT Analysis
 Brand name
 Own original series
 Low monthly subscribing fee
 75 million subscriber
 Financial situation of the company
Strengths
 Movies and show languages
 Cultural difference in Turkey market
 Transaction extra/exchange charges
between banks
Weaknesses
 Online streaming
 High speed internet Availability
 Innovation to cloud
 High customer demand for movies
 Availability of big range of customer
Opportunities
- Competitors
- Illegal download
Threats

4
3.1Strengths and Weaknesses
Strengths and weaknesses are two internal environmental factors in SWOT analysis that are opposite to
each other. Netflix, as a global provider of streaming movies with over 75 million subscriber in almost 19
years of history have a great deal of strengths which should be considered while preparing strategy for
the company to enter Turkey. Netflix’s background and success story in 130 countries is one of the highest
valued strengths of the company that can be used to attract potential customer in new market. The high
quality of services that Netflix provides and background of satisfied customers is another of the positive
points or strengths of the company. Cost effectiveness is also one of the foremost strengths of Netflix as
it provides services in cheaper prices. The professional team of Netflix is another of the top strengths of
Netflix which has driven the company to success.
Entertainment has always been a necessity for humanity; movies and games are of the top most
entertainment means which people enjoy in today’s world. But the concern for environmental damages
that it creates is day-by-day getting higher. People are starting to subscribe to movies and games
streaming provider companies instead of buying DVDs and CDs. On the other hand, the international
community and the governments are imposing environmental laws to protect the environment. Netflix is
very supportive to environmental law and provides services online, which is a positive point for the
company and can attract more potential customers.
High demand of movies and shows in the market is another of the strengths for Netflix. Every month
around 1000s of movies and shows are released from different countries and production companies. The
on-time availability of these shows and movies for customers is a challenge for production companies.
People are impatiently waiting for the new movies to be released and great rush can be observed in box
offices. Netflix with the high number of customers and a good background of customer satisfaction is a
good means through which the production companies can reach to its viewers. Netflix can have can easily
acquire a very good business to business deal with production companies.
Strengths of Netflix cannot be limited to the financial situation of the company or the high quality of
services that it provides. “Strengths include the positive attributes of the people involved in the business,
including their knowledge, backgrounds, education, credentials, contacts, reputations, or the skills they
bring. Strengths also include tangible assets such as available capital, equipment, credit, established
customers, existing channels of distribution, copyrighted materials, patents, information and processing
systems, and other valuable resources within the business.” (Berry, 2008)
Though there are several strength factors that Netflix possess in Turkish market, there are few weaknesses
that should be considered before making strategy to select Turkey as one of the potential target market.
The first weaknesses of Netflix in Turkey is the differences in law from Turkey to other European and
North-American countries. Netflix needs to prepare its corporate law and its business strategy for Turkey
in accordance to the law of Turkey government. This includes the censorship of contents that should be
in accordance to the Turkish “Internet Law No. 5651”. Some movies may not be acceptable by the Turkish
government, which should not be distributed by Netflix. The content of movies should be checked and

5
those parts that are against Turkish law, e.g. insult to Ataturk, should be censored before distributing in
Turkey.
Another of the weaknesses is that most of the movies Netflix provides are in English and European
languages. These movies may not get a good welcoming in Turkey unless it is dubbed or sub-titled in
Turkey local language which is a huge job and may takes time after release of the movie. Movies produced
by North-American and European countries will be very different from the Turkish culture which
minimizes the interest of people in movies. Netflix needs to build a good relationship with local production
companies to provide Turkish movies to have high number of customers.
Financial transactions in Turkey market should be done in Turkish currency and with local banks of turkey.
Transactions in International banks will impose exchange charges to customers which might increase price
of movies and adds-up to customer dissatisfaction.
3.2Opportunities and Threats
Opportunities and threats, like strengths and weaknesses, are opposite to each other. The opportunities
exist in Turkey market is the rationale behind selecting Turkey as the potential target market for Netflix.
“Opportunities may be the result of market growth, lifestyle changes, resolution of problems associated
with current situations, positive market perceptions about your business, or the ability to offer greater
value that will create a demand for your services.” (Berry, 2008). The very first of these opportunities is
the high demand of video streaming that exist in the market. The life style of Turkish people is changing
rapidly as the Turkey market has very fast growth. In addition, the high GOP per capita income shows
good financial situation of the country and its population which makes it a good place to expand business
in.
High technological advancement in the country and high internet bandwidth availability in Turkey is
another the opportunities for Netflix online business. People’s awareness of the technology and their
interest in movies and entertainment is a positive point that infers bright possible future for Netflix in the
country. Foundation are developed and ready for online businesses in Turkey, as Netflix provides services
online, this is a great opportunity for Netflix to start business. The points that make Netflix company
success within all nations, is the video sub-title on the local languages. Launching online movie streaming
services with local language (Turkish) in the Turkey market will increase the customer interest for the
Netflix. Beyond that, launching local movies with Turkish culture can be other plus point for the company
marketing.
When talking about threats in the business, the first threat that pops in mind is existence of similar
business or competitors. Most of the time unhealthy competition between similar businesses create high
threats for the company. To have more customers some of the companies selling their services or products
in low price, or they bring their services or products cost too much down, as company when we down our
cost it directly affects the company services and product quality. With such unprofessional market
strategy all similar businesses lose their customers, because when customer do not receive a product or

6
service with expected quality then they will never user it again. In addition some of these customer share
their problem with new customers with becomes a word of mouth and de-markets the company. Now if
a company loses their customer they cannot continue for long time in the market.
To come-out from such threats the Netflix Company should double their marketing and advertisement to
show their customer that Netflix has high quality products and services for their customer. Also Netflix is
multinational company, they can easily recover from such threats.
Slowness or breakdown of the internet backboned is another high threats for Netflix business, however
Turkey have mature internet backbone for their customer. But if such issue come out then the Netflix
Company should have a clear recovery plan to keep their customers connected with the video streaming
services.
Social values of Turkey is another of the major challenges for Netflix. Turkish society is highly influenced
by Islam and Sharia which brings about some restrictions in the content of the DVDs. It is very important
to consider that the movies that are streamed in Turkey should not always be the same as is done in US
and the west. Some censorship should be applied to the movies that are streamed in Turkey.
4. Strategy of entering the market
Markets are directly linked with the customers; not all markets are attractive or good place for selling
same service because the service which is planned to sell does not have same demand in all markets.
When Netflix Company enters to a different market, it’s possible that the Netflix Company did not follow
same strategy, they may apply and follow different strategy based on the market and customers demand
however overall the Netflix international strategy for entering different country’s market are the same. In
order to have good penetration to the market we need to consider at least three elements of the PESTEL
framework while entering to the Turkish market.
Economic: Turkish market is growing very fast because considering their geographical location Turkey is
linking two continent i.e. Asia with Europe. During last 10 year a lot of new national and international
business are established. Most of the international companies have shared their businesses with local
partners. In 2015 Turkey GDP reached to 800 billion USD, on the other hand Turkey economic fluctuation
is very rare thus Turkey is good place for business especially for online businesses. “Fast-growth
economies obviously provide opportunities, and in developing economies such as China growth is
translating into an even faster creation of a high-consumption middle class.” (Johnson, et al., 2008). Also
in total the Turkish people economic level is very good and they are busy with their work and business.
Targeting these type of customer brings about more befit for the company. Netflix can penetrate in the
Turkey market very soon, because product quality is very high and on the other hand Netflix have millions
of high quality video, it’s very difficult for local or other competitors to do competition with Netflix. In
addition, regarding the subscription fee, Netflix can switch the service cost very effectively in order to
build customer brand-loyalty.

7
Social: the online businesses are directly connected with social market. Turkish people are well educated
people and their social life is in high level. But regarding the culture they are very restricted. Netflix can
start with their local TV’s and local movie production companies to earn more customer to begin with.
Legal: opening online businesses like movie streaming is not in contradictory with Turkey law but, showing
that are rated above PG (i.e. PG-13, NC-13) or which has some minor adults scene, will be inconsistent
with Turkey Internet law. Based on the market analysis which is done in this report the only issue which
is reported for Netflix opening online video streaming business is the movie’s adult scenes. Netflix can
tackle this problem by censoring movies’ scenes that are not appropriate for Turkish audience.
4.1 Competitive characteristics
Netflix is not only the only multinational company which plan to target the Turkey market, there are many
other companies that already targeted Turkey market e.g. YouTube, Amazon, Apple, and others. Beside
multinational companies there are many local companies that are providing same services as Netflix, but
are not very much recognized outside. Penetrate to market between these huge numbers of companies
is only possible when Netflix provide high quality of services with low subscription costing. Beyond that,
providing good customer services for the customers can also be a plus point. “According to a SunTrust
Robinson Humphrey and SurveyMonkey report of 1,500 US respondents aged 13 years and above, more
than half of streaming service users have used Netflix.” This mean that Netflix provide the original contents
for their customers. This builds customer loyalty with company which implies that the customer will stay
with the company. Publishing original content for the customer will increase the Netflix popularity among
customers for online streaming for original contents. Currently, almost 90% of Netflix members are
watching the company’s original content, which could indicate that the company is on the right track.

8
According to (Moskowitz, 2015) Report
FY2012 FY2013 FY2014
Revenue $3,609,282 $4,374,562 $5,504,656
Net Income $17,152 $112,403 $266,799
$3,609,282
$4,374,562
$5,504,656
$17,152 $112,403 $266,799
($1,000,000)
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
Netflix status in the market
Revenue Net Income
36%
13%
6.50%
Market Share (American Households)
Netflix Amazon Hulu Plus

9
5. Appendix
Netflix Company has plan to entry in the new markets to expand their business and increase their subscription.
Currently Netflix Company has three options to select as new market, these three new markets are;
1. Malaysia
2. South Africa
3. Turkey
A macro-environment analysis has done on these three markets with some other comparative factors, the
below chart shows the comparative factors which is done on these three Countries markets. The values are
collected from different sources.
For the better visualization, I divide the GDP to 10 and GDP per person to 100. The chart
calculation range is from 0 to 100
GDP
GDP Per
capita
Annual
Growth
Rate
Population
Internet
availability
people
understandi
ng for
online
business
mature
source for
online
payments
Market
demands
Turkey 79.843 88.7191 4 74.93 95 91 100 100
South Africa 35.0085 60.9027 0.7 52.98 87 68 90 85
Malaysia 33.81 73.0414 4.5 29.72 76 81 90 77
0
20
40
60
80
100
120
Compression chart
Turkey South Africa Malaysia

10
Based on the research that is done at macro-environmental factors of the three countries, Turkey is ranked
as top of the countries as a potential target market for Netflix
The research shows that GDP and GDP per capital is very high in Turkey which has very good impacts on
the Netflix company market also If Netflix consider the GDP per capital with the number of population in
the country, it’s a great opportunity for Netflix to select Turkey market which provides highest number of
customer with high rate of GDP per capita.
Although the annual growth rate in Turkey is lower compare to Malaysia, the overall variation in GDP is
very less which makes the country more attractive for investors. Considering the aforementioned findings
it is advisable for Netflix to select Turkey as its future potential target market.

11
Bibliography
Berry, T., 2008. mplans.com. [Online]
Available at: http://www.mplans.com/articles/how-to-perform-a-swot-analysis/
[Accessed 15 Feb 2016].
Budde.com, 2015. www.budde.com. [Online]
Available at: http://www.budde.com.au/Research/Turkey-Broadband-Internet-and-Digital-Media-
Market-Overview-and-Statistics.html
Greg Epstein, E. a. G. V. A. I., 2013. www.eff.org. [Online]
Available at: https://www.eff.org/deeplinks/2013/07/online-and-information-control-persists-turkey
Johnson, G., Scholes, K. & Whittington, R., 2008. Exploring Corporate Strategy. 8th ed. s.l.:Prentice Hall.
Moskowitz, D., 2015. investopedia.com. [Online]
Available at: http://www.investopedia.com/articles/markets/051215/who-are-netflixs-main-
competitors-nflx.asp
Napoli, M., 2014. Valueline.com. [Online]
Available at:
http://www.valueline.com/Stocks/Highlights/Netflix__A_Short_SWOT_Analysis.aspx#.VsG_8_J96SM
Onfro, J. D., 2015. businessinsider.com. [Online]
Available at: http://www.businessinsider.com/this-chart-shows-how-netflix-is-crushing-the-video-
streaming-competition-like-hulu-and-amazon-instant-video-2015-7
Trading, E., 2016. Trading Economics. [Online]
Available at: http://www.tradingeconomics.com/turkey/wages

Ahmad Reza Khawar - Midterm Assignment SIBM Feb 2016

More Related Content

Viewers also liked (15)

Similar to Ahmad Reza Khawar - Midterm Assignment SIBM Feb 2016 (20)

More from Reza Khawar (6)

Ahmad Reza Khawar - Midterm Assignment SIBM Feb 2016