Netflix's Flexibility: Real Options Analysis Under Risk and Uncertainty

Uncertainty about a firm's actions can have an effect on a firm's competitive strategies. Flexibility is an important factor of any strategy in states of high uncertainty. Flexibility is the ability to change direction quickly and at a low cost, given unanticipated changes in the competitive situation of a firm. Netflix has gained its flexibility in terms of the option to expand meaning the firm has made choices that enhance their ability to abandon a certain strategy. When Netflix first entered the movie rental market, they offered movie rentals through the mail. Netflix expanded its options by offering online movie streaming through many different devices.