The rapid growth is not always good: Netflix

By: Alexander Castro
Apparently grow at any cost is the priority of Netflix executives, as apparently is coming to a stop which Netflix is ​​all the way to reverse. Netflix after launch in 130 countries in January, was not synonymous with complete success, as not all markets are equal. Not all speak English and not everyone has a credit card. It turns out that original programs such as "house of cards" and "Orange is the News Black" that helped attract about 45 million viewers are not available for some of the countries to which they have come.
Netflix is ​​losing money on its expansion which incidentally is being managed badly because you are forgetting an important factor in its expansion process is customer loyalty something that has been noticed in Japan for example, accustomed users to see their favorite in their own language and programs like "House of Cards" and "Orange is the News Black" that are not available even in the Japanese program. How can you be sure that your company prosper in foreign territory if the flagship of your country is not available! Something more Netflix is ​​spending a lot of money on original programs in countries where they have come such as France, Brazil and Japan. What you want Netflix is ​​spend on original content that is user demand, which is what gives sustainability, which is fine, but you can not have the political GROW, GROW AND GROW whatever the cost is too obscene. Bloomberg data.
Here it is showing a bad business and financial planning should go because they are well structured and for a sustainable growth and not into trouble as is happening with Netflix.
"Usually, the proper goal is to increase the market value of the equity of the owners and usually the result: GROWTH" - Ross, the foundation of corporate bonds.
For example, the policy seemed Amazon before GROW AT ANY PRICE, a policy that did not bring positive results as grew so fast that the company fell into losses. What happened with Amazon? For change their approach: I leave aside the ambition to grow and concentrated on generating profitability. It gave results since Amazon had earnings years later. Care must be taken "good decisions increase the value of the shares and the decrease bad decisions." If the shares decrease in value, the price will be below the nominal normal value which would prevent the investor sold them which would generate loss in the investment.
It is not right financially spend on expansion and original content at once because over time there will be a shortage of money. This would help the company cash flow is negative.
Without going too far here in Peru was the same with Alicorp whose policy was to grow and to finance growth had to be financed with debt and made in dollars because at the time the exchange rate was low thinking that the dollar may not rise, following issuing debt in dollar and everything to make to finance their growth. The dollar rose putting pressure on financial management.

refreshing conclusions, we must be very careful that direction should give the company, we must work hard to win the market to which we are coming, retain customers and secure income is the result of good planning which would lead to optimal growth, earnings per share would rise and both the investor and the client would be satisfied because the price will not rise (client) and would detract profitability (shareholder) and everything to spend that money to a disproportionate expansion.

Source: Bloomberg, finance-Ross Foundation and System Noise (Web-site of financial tools)