What strategic move do Netflix and Qwikster reportedly undertake?

• A. Expand into physical retail
• B. Cease operations
• C. Merge with a rival
• D. Split the company to appease Wall Street

Answer: (D)

The main idea here is corporate restructuring to unlock value and reassure investors by treating distinct lines of business as separate units. Netflix considered splitting its operations into two brands—one for streaming and another for the DVD-by-mail service, which was to be called Qwikster. The aim was to let each part be valued on its own growth path and margins, potentially satisfying Wall Street’s desire to see clearer, more optimistic prospects for the faster-growing streaming side while isolating the slower DVD business. This approach—dividing the company to appease investors—fits the description of a strategic split.

Other options don’t align with this plan. Expanding into physical retail would be a completely different business move and isn’t about separating the company. Ceasing operations would end the company, not just restructure it. Merging with a rival would blur, not split, the existing business units. The split to appeal to investors is the best match for the reported strategy.