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Objectives of Netflix

Netflix incorporation was quite successful in the internet browsing of movies during the late 19th century, while the changes in the start of 2000 had taken place in order to remain the tremendous results occurred in the past. The critical situation for the company to take decision of the new business plan due to the poor performance of NASDAQ in the early 20th century.

However, the company decided to change its business plan along with the chain of new subscribers in order to increase the profit levels even bigger than the past one. It was urgent to implement the plan because the company was not performing well and would generatepositive cash flows during the current years and therefore,it could not allow to offer an initial public offering by the NASDAQ.

Therefore, Netflix introduced the plan with different boundaries and goals to achieve. Moreover, the addition of subscriber model wasadded to increase the size of revenues to generate positive cash flows in order to provide estimated results for IPO.

The first objective of Netflix was to increase the demand of DVD technology among different consumers and other users, as well as it was expected that the company would produce 49% of compound growth sales in the next five years by adding the numbers of new subscribers. Moreover, it would also ensure that the sales coming from the DVD could be considered four times larger than the sales which would be generatedthrough videocassettes.

The second objective of the company was to provide less priced DVDs with high quality and durability in terms of video quality and cost effective according to the round-trip of the product.However, the processing cost would be the additional value to recover the price of every DVD to its customers, the additional price of delivery for rental would charge only $1 to the subscribers.

The company believed that the subscriber would likely have a computer with high speed internet and could search for the new products in the websites therefore, it had decided to retain such subscribers for increase the revenue margins for positive results.

Netflix was also looking for the addition of new subscribers and to allow free subscriptions in the first month in order to make sure that the new subscriber could enjoy the service quality of the product and would attract to pay for the next order.

Now the current results show that the company still faces the negative results as compared to the existing business model and was looking to change the model to generate positive cash flows, inthat case Netflix would either go for revenue sharing with different movie studios and major retailers in order to reduce the extra operating expenses and carried working capital or try to adopt the concept of video on demand for increasingthe awareness of personalized movies around the U.S.

The main objective of the company is the combination of all the assumptions given to increase the size of profit margins and to reduce extra cost and operating expense by adopting any of the two proposed criteria given above, therefore the company in the current situation was not successful however,it can overcome all the losses in the future by adding new subscribers to the model.

Use of subscriber model

The importance of the model was based on the future performance in order to achieve the target of future positive cash flows for issuing an IPO for the company and to generate the competitive position in the market. However, some elements were considered to be a key role to run the subscriber model. These are the probability of the occurrence for the new and existing subscribers connected to the company...................

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