Question 13: International Expansion

Imagine that your focal service organization is going to expand into a country which has a very different culture from the home company. Identify that country and a few significant cultural differences between the home and expansion countries. For each difference listed, indicate how the service process may differ between countries.

For this question, I'm going to discuss a potential expansion into China.

Currently, Netflix only offers their mailing service in the United States. The first thing Netflix would need to do is build their infrastructure in China. That is, they would need to build the warehouses and sorting systems necessary to support DVD shipments and receipts as well as procure Region 6 DVDs.

There is a large amount of pirated DVDs in China, and this may be a tough challenge for Netflix to overcome. Pirated DVDs are very cheap in China ($2-$3), and some major US studios have released movies there at this lower price to combat bootleggers. While this would be an option for Netflix, they would greatly cut into their profit margins if they offered their mailing service at 25% of its current cost.

Netflix would probably have the highest chance of success in China if they expanded their streaming video selection to the country, and focused on adding new titles to this service. Additionally, Netflix would have to censor their movie offerings in China due to government restrictions on media and information.