Question

Netflix, the one-time "dot-com" upstart managed to achieve scale economies despite the fact that it faced two massive rivals: Blockbuster, a name synonymous with home video rental, and Walmart, not just a large firm, Fortune One, the largest firm in the US ranked by revenues. In what ways did Netflix offer size advantages over these rivals?

a. Netflix had a larger selection of movies, giving customers more choices.
b. Netflix had a larger customer base, allowing for lower per-customer acquisition costs.
c. Netflix had more physical distribution centers, enabling faster delivery and reduced shipping costs.
d. Netflix had exclusive deals with major studios, giving them access to popular content.

Answer 1

Netflix offered size advantages over Blockbuster and Walmart through a larger movie selection, larger customer base, and more physical distribution centers.

Step-by-step explanation:

Netflix offered several size advantages over its rivals, Blockbuster and Walmart. First, Netflix had a larger selection of movies, giving customers more choices. This allowed them to appeal to a wider audience and cater to different preferences.

Second, Netflix had a larger customer base, which allowed for lower per-customer acquisition costs. This means that Netflix could spread their marketing and operational costs over a larger number of customers, resulting in efficiencies and cost savings.

Lastly, Netflix had more physical distribution centers compared to its rivals. This enabled them to have faster delivery and reduced shipping costs. By having distribution centers strategically located across the country, Netflix could ensure quicker delivery of DVDs to their customers' doorsteps.