As mentioned in Exhibit P-1 of our textbook, managerial accounting helps managers perform three vital activities - planning, controlling, and decision making. Write a brief 2-3 page paper about your employer or a favorite business you personally visit or are a patron (Starbucks, Netflix, Planet Fitness, etc.) and discuss the risks they face in their industry that can influence their planning, controlling, and decision-making activities.
Include specific examples of threats for all three areas and make suggestions for how they can reduce those risks. Use a SWOT analysis approach to your answer (strengths, weaknesses, opportunities, and threats). Are their risks internal, external, or a combination of both? Also include in your paper why you chose this company and evaluate how successful you think they will be, given their current strategic design, to be prepared for such risks. Provide quantitative and qualitative factors to support your opinion.
NETFLIX
Netflix's initial business model included DVD sales and rental by
mail, but Hastings jettisoned the sales about a year after the
company's founding to focus on the DVD rental business. Netflix
expanded its business in 2007 with the introduction of streaming
media while retaining the DVD and Blu-ray rental service. The
company expanded internationally in 2010 with streaming available
in Canada, followed by Latin America and the Caribbean. Netflix
entered the content-production industry in 2012, debuting its first
series Lilyhammer.Netflix, Inc. is an
American media-services provider headquartered in Los Gatos,
California, founded in 1997 by Reed Hastings and Marc Randolph in
Scotts Valley, California. The company's primary business is its
subscription-based streaming OTT service which offers online
streaming of a library of films and television programs, including
those produced in-house. As of January 2019, Netflix had over 139
million paid subscriptions worldwide, including 58.49 million in
the United States, and over 148 million subscriptions total
including free trials. It is available almost worldwide except in
mainland China, Syria, North Korea, and Crimea. The company also
has offices in the Netherlands, Brazil, India, Japan, and South
Korea.
Netflix has greatly expanded the production and distribution of both film and television series since 2012, and offers a variety of "Netflix Original" content through its online library. By January 2016, Netflix services operated in more than 190 countries.Netflix released an estimated 126 original series and films in 2016, more than any other network or cable channel. Their efforts to produce new content, secure the rights for additional content, and diversity through 190 countries have resulted in the company racking up billions in debt: $21.9 billion as of September 2017, up from $16.8 billion from the previous year. $6.5 billion of this is long-term debt, while the remaining is in long-term obligations.In October 2018, Netflix announced it would raise another $2B in debt to help fund new content.
Profiles
In June 2008, Netflix announced plans to eliminate its online subscriber profile feature. Profiles allow one subscriber account to contain multiple users (for example, a couple, two roommates, or parent and child) with separate DVD queues, ratings, recommendations, friend lists, reviews, and intra-site communications for each. Netflix contended that elimination of profiles would improve the customer experience. However, likely as a result of negative reviews and reaction by Netflix users, Netflix reversed its decision to remove profiles 11 days after the announcement.In announcing the reinstatement of profiles, Netflix defended its original decision, stating, "Because of an ongoing desire to make our website easier to use, we believed taking a feature away that is only used by a very small minority would help us improve the site for everyone," then explained its reversal: "Listening to our members, we realized that users of this feature often describe it as an essential part of their Netflix experience. Simplicity is only one virtue and it can certainly be outweighed by utility.
Subsidiaries
Risk Factors
If any of the following risks actually occur, our business, financial condition and results of operations could be harmed.
In that case, the trading price
of our common stock could decline, and you could lose all or part of your investment.
Changes in competitive offerings for entertainment video, including the potential rapid adoption of piracy-based video offerings, could adversely
impact our business.
The market for entertainment video is intensely competitive and subject to rapid change.
Through new and existing distribution channels, consumers
have increasing options to access entertainment video.
The various economic models underlying these channels include subscription, transactional, ad-
supported and piracy-based models.
All of these have the potential to capture meaningful segments of the entertainment video market.
Piracy, in particular,
threatens to damage our business, as its fundamental proposition to consumers is so compelling and difficult to compete against: virtually all content for free.
Furthermore, in light of the compelling consumer proposition, piracy services are subject to rapid global growth. Traditional providers of entertainment
video, including broadcasters and cable network operators, as well as internet based e-commerce or entertainment video providers are increasing their
internet-based video offerings.
Several of these competitors have long operating histories, large customer bases, strong brand recognition and significant
financial, marketing and other resources.
They may secure better terms from suppliers, adopt more aggressive pricing and devote more resources to product
development, technology, infrastructure, content acquisitions and marketing.
New entrants may enter the market or existing providers may adjust their
services with unique offerings or approaches to providing entertainment videos.
The long-term and fixed cost nature of our content commitments may limit our operating flexibility and could adversely affect our liquidity and results
of operations.
In connection with licensing streaming content, we typically enter into multi-year commitments with studios and other content providers. We also enter
into multi-year commitments for content that we produce, either directly or through third parties, including elements associated with these production such as
non-cancelable commitments under talent agreements. The payment terms of these agreements are not tied to member usage or the size of our membership
base (“fixed cost”) but may be determined by costs of production or tied to such factors as titles licensed and/or theatrical exhibition receipts. Such
commitments, to the extent estimable under accounting standards, are included in the Contractual Obligations section of Part II
If we are not able to manage change and growth, our business could be adversely affected.
We are expanding our operations internationally, scaling our streaming service to effectively and reliably handle anticipated growth in both members
and features related to our service, ramping up our ability to produce original content, as well as continuing to operate our DVD service within the U.S.
As our
international offering evolves, we are managing and adjusting our business to address varied content offerings, consumer customs and practices, in particular
those dealing with e-commerce and internet video, as well as differing legal and regulatory environments.
As we scale our streaming service, we are
developing technology and utilizing third-party “cloud” computing services.
As we ramp up our original content production, we are building out expertise
in a number of disciplines, including creative, marketing, legal, finance, licensing, merchandising and other resources related to the development and
physical production of content.
If we are not able to manage the growing complexity of our business, including improving, refining or revising our systems
and operational practices related to our streaming operations and original content, our business may be adversely affected
hanges in how we market our service could adversely affect our marketing expenses and membership levels may be adversely affected.
We utilize a broad mix of marketing and public relations programs, including social media sites, to promote our service to potential new members.
We
may limit or discontinue use or support of certain marketing sources or activities if advertising rates increase or if we become concerned that members or
potential members deem certain marketing practices intrusive or damaging to our brand.
If the available marketing channels are curtailed, our ability to
attract new members may be adversely affected.
Companies that promote our service may decide that we negatively impact their business or may make business decisions that in turn negatively
impact us.
For example, if they decide that they want to compete more directly with us, enter a similar business or exclusively support our competitors, we
may no longer have access to their marketing channels.
We also acquire a number of members who rejoin our service having previously cancelled their
membership.
If we are unable to maintain or replace our sources of members with similarly effective sources, or if the cost of our existing sources increases,
our member levels and marketing expenses may be adversely affected.
SWOT
SWOT stands for: Strength, Weakness, Opportunity, Threat. A SWOT analysis guides you to identify your organization’s strengths and weaknesses (S-W), as well as broader opportunities and threats (O-T). Developing a fuller awareness of the situation helps with both strategic planning and decision-making.
The SWOT method was originally developed for business and industry, but it is equally useful in the work of community health and development, education, and even for personal growth.
SWOT is not the only assessment technique you can use. Compare it with other assessment tools in the Community Tool Box to determine if this is the right approach for your situation. The strengths of this method are its simplicity and application to a variety of levels of operation.
A SWOT analysis can offer helpful perspectives at any stage of an effort. You might use it to:
SWOT also offers a simple way of communicating about your initiative or program and an excellent way to organize information you've gathered from studies or surveys.
A SWOT analysis focuses on Strengths, Weaknesses, Opportunities, and Threats.
Remember that the purpose of performing a SWOT is to reveal positive forces that work together and potential problems that need to be recognized and possibly addressed.
We will discuss the process of creating the analysis below, but first here are a few sample layouts for your SWOT analysis.
Internal factors include your resources and experiences. General areas to consider:
Don't be too modest when listing your strengths. If you're having difficulty naming them, start by simply listing your characteristics (e.g.., we're small, we're connected to the neighborhood). Some of these will probably be strengths.
Although the strengths and weakness of your organization are your internal qualities, don't overlook the perspective of people outside your group. Identify strengths and weaknesses from both your own point of view and that of others, including those you serve or deal with. Do others see problems--or assets--that you don't?
How do you get information about how outsiders perceive your strengths and weaknesses? You may know already if you've listened to those you serve. If not, this might be the time to gather that type of information. See related sections for ideas on conducting focus groups, user surveys, and listening sessions.
LISTING EXTERNAL FACTORS: OPPORTUNITIES AND THREATS (O, T)
Cast a wide net for the external part of the assessment. No organization, group, program, or neighborhood is immune to outside events and forces. Consider your connectedness, for better and worse, as you compile this part of your SWOT list.
Forces and facts that your group does not control include:
Steps for conducting a SWOT analysis:
HOW DO YOU USE YOUR SWOT ANALYSIS?
Better understanding the factors affecting your initiative put you in a better position for action. This understanding helps as you:
As you consider your analysis, be open to the possibilities that exist within a weakness or threat. Likewise, recognize that an opportunity can become a threat if everyone else sees the opportunity and plans to take advantage of it as well, thereby increasing your competition.
Finally, during your assessment and planning, you might keep an image in mind to help you make the most of a SWOT analysis: Look for a "stretch," not just a "fit." As Radha Balamuralikrishna and John C. Dugger of Iowa State University point out, SWOT usually reflects your current position or situation. Therefore one drawback is that it might not encourage openness to new possibilities. You can use SWOT to justify a course that has already been decided upon, but if your goal is to grow or improve, you will want to keep this in mind.
As mentioned in Exhibit P-1 of our textbook, managerial accounting helps managers perform three vital activities...
When comparing financial and managerial accounting, which of the following apply to managerial accounting? Check all that apply. 0 Information reported for whole company 0 Emphasizes the future Objective and reliable O Reports at the decision making level Mandatory for external reports 0 Reports are prepared as needed Do you know the answer? Read about this I know it Think so Unsure Unsure No idea
they are monitori company on track. i More Info Directing Creditors Managerial Managers Planning Stockholders Controlling Financial Print Done st and then click Check Answer Check Clear All DOON Slatic) Match the following terms to the appropriate statement. Some terms may be used more than once, and some terms may not be used at all Click the icon to view the terms.) Question Help a. Accounting systems that must follow GAAP. External parties for whom financid accounting reports are prepared....
Explain how managerial accounting helps managers in key areas of planning, controlling, and decision making. Give examples with details of each area and state why these are relevant and important to a company's success or failure
All of these internal management activities are part of managerial accounting except: Question 33 options: A) Controlling B) Planning C) Decision making D) Financial reporting to stockholders
In the context of managerial accounting, relevant information is information that will make a difference in the decision. is information that has been provided by the controller. must be provided in quantitative terms. must be reviewed by the chief financial officer before being provided to managers. Good managerial accounting information helps creditors decide on good credit risks. managers to do their jobs. stockholders make informed investment decisions. creditors assess liquidity. Which of the following is a characteristic of managerial accounting...
E18-14 (book/static) Match the following terms to the appropriate statement. Some terms may be used more than once and some terms may not be (Click the icon to view the terms.) a. b. c. Accounting systems that must follow GAAP. External parties for whom financial accounting reports are prepared. The role managers play when they are comparing the company's actual results with the planned results. Internal decision makers. d. AAP. bunting reports are prepared comparing i More Info - X...
Assignment Questions: 1. One of the differences between Managerial Accounting and Financial Accounting is reporting flexibility. Financial reporting is restricted by Generally Accepted Accounting Principles whereas reporting in Managerial Accounting has fewer rules. a) Why is it permissible to violate Generally Accepted Accounting Principles when preparing reports used strictly by company management? b) Should external users always have the same information as internal users? Explain. 2. The United States uses accounting standards developed by the Financial Accounting Standards Board (FASB)...
1. The management process is defined by a. Planning b. Controlling c. Decision making d. All of the above e. None of the above 2. The organization that controls the certification of management accountants is the a. FASB b. SEC c. IMA d. AICPA e. None of the above 3. One of the differences between managerial and financial accounting is a. Financial accounting is oriented towards internal users b. Managerial accounting has to follow GAAS c. Managerial accounting is oriented...
- are only finished goods and nerally maintained by a manufacturing firm are only finished goods mvee acc materials Tree False Job order costa True b. False 10. ring systems may be used to evaluate a company's efficiency Multiple Choice Kend each statement question carefully and indicate the BEST answer by writing the corresponding "letter on the Answer Sheet provided. Managerial accounting reports are a prepared according to GAAP b. prepared according to management needs c. prepared periodically only d....
Instructions: Designate the best answer for each of the following questions. 1. A debit balance in the Manufacturing Overhead account at the end of an interim month means that a. the balance should be reported as an asset in the monthly balance sheet. b. corrective action by management is necessary. c. overhead has been underapplied d. cost of goods sold should be credited on the monthly income statement. 2. In a job order cost system, which of the following accounts...