General Management of the Software Firm - Case Study Example

? General management Contents Problems and Analysis 3 Issues 3 Constraints 3 Objectives 3 Industry Analysis 4 SWOT Analysis 4 Key Success factors 5 Consumer Analysis 5 Trade Analysis 6 Competitive Analysis 6 External Analysis 6 Corporate capabilities 6 Alternative Analysis 7 Decision / Recommendation 8 Bibliography 10 Problems and Analysis Issues The company SWO, small software firm developed software packages which were highly praised by its target customers. But the main issue lied with the firm was that it was pulled by its customers into different directions. Although the firm upgraded its software’s and changed with the demands of the customers, the customers still demanded a low cost product along with alterations in the product. Sales took place in software service but big hardware and software were sold occasionally and not at a regular interval which led to fluctuation in profitability. In addition, economic conditions and internal problems also led to major setback for the firm. Constraints Main constraint for the firm was that the customer demanded low cost product and the sale of its hardware’s and software’s were pretty less as compared to the sale of software packages which resulted in loss of money in the company’s ongoing services. The external factors also acted as one of the major constraint in the working of the firm. Objectives Personal objectives and corporate objectives are important for organizations as the personal objectives would help the members of the organization to stay maintained and disciplined towards the work and working environment and the corporate objectives would define the goals and target that are to be achieved. Both personal and corporate objectives are somehow linked with each other. Corporate objectives usually mean to achieve a set goal like to capture market share of 10%, customer satisfaction and other factors n relation to the business. Therefore personal objectives would help to achieve the corporate objectives of the firm. Industry Analysis The industry analysis would take into consideration tools such as SWOT analysis which would look at the strength and weaknesses, the internal issues along with the firm’s opportunity and threats referred to as the external issues both for software industry and the firm. SWOT Analysis Strength: The partners of the firm, Dave had extensive programming experience and had worked for many software firms. The firm’s software package was highly praised by its customers and this it can be said that the strategy was highly successful adding it to be one of the strength of the company. The software industry had distributors according to the size and need of the customers. Weakness: The hardware and software because of their high price were not sold at regular interval which impacted the profitability of the firm. SWO primary source of income did not provide SWO with stable source of income. The firm was also financially unstable as a result banks refused to offer loans also lack of consistent data entry proved the internal issues of the firm. Opportunities: opportunity for SWO in the future is to either sell of the firm or to expand the business in order to stay competitive in the software industry. In addition marketing sector can also be improved to create awareness. Threat: A major threat came from the competitors of SWO as competition in the software industry is quite stiff. ACCPAC, IBM and Arthur Anderson were the leading competitors in the software industry. Key Success factors According to the distributors, better inventory and accounts management was the key success factor for the firm to regain its position and make a mark in the software industry. Consumer Analysis I II III IV Who Business form Computer parts Small distributors Mid size customers What distributors distributors distributors distributors When business Why bankrupt Unhappy with SWO service Receivables problems N/A How Provide effective service Provide service with the problem Market size N/A N/A N/A N/A Implications: Individuals Professionals Company Product Accounting package Good inventory control system Packages Price High High High Place Toronto Toronto area Toronto area Promotion Word of mouth and in store promotion Word of mouth, testimonials Consultant or company expert Trade Analysis The relationship between the software house and hardware were limited and was based on mutual exchange of business. The software houses received a margin of about 30% on the sale of the hardware. The deals were made from leasing company which bought hardware from the hardware company and paid commission to the software house. Competitive Analysis Competitive advantage for the industry was its distribution channel. The industry has three forms of distribution as per the demand and size of the customers and it adds on to the competitive advantage for the industry as well as for the firm. External Analysis Politically the government has initiated the GST which led business to computerize in order to manage the process. In addition, the economic factors also impacted the software industry. The economy was sluggish as result there were o or little purchase of the products. Corporate capabilities Finance: SWO was suffering from loss from its two main services and due to lack of asset bank did not provide for further loan. Marketing: The marketing or the promotional means were not given importance by the firm, the customers got to know only through word of mouth and in store promotion. However word of mouth regarded as powerful tool in communication adds on to the strength of the firm. Production: The firm provided software and software services out of which the services were implemented by the customers and highly praised but due to high price of the software they were not sold off at a regular interval resulting in a loss of the firm. Human resources: the firm did not have enough human resources, it lack accountant, receptionist and other core members of the firm. Alternative Analysis Alternative analysis for the firm is to target the big companies and also the professionals and cater to them by taking into consideration all the requirements of the target customer’s base. The reason for concentrating into the two targets is the future growth opportunities in such target market. The professionals require software in order to control the inventory and by supplying such service in Toronto with high promotional and marketing tools would help the firm to overcome its weakness and financial issues. Also with big corporate, as they demand a total package to be used only by a particular company, if the firm is able to provide what the company demands, through word of mouth, other organization are likely to tie up with SWO to make complete package for them. However with more effective marketing and promotional tools awareness about the firm would be high leading to more information and high demand for its services in Toronto and other parts. Financially, the firm would aim to breakeven within a year or two from its operation into the new market segment. With increase in demand, the unit also increases, thus assuming that the two customer segments are to perform well and the firm is going to utilize the opportunity in these two market segment, break even analysis are as follows, Assuming, Fixed cost (operating expense) : $500000 Variable cost (COGS) 10000 Break even in sales= FC + VC=510000 Therefore SOW would need to sell $510000 to be able to breakeven in the next two year of its operation. The firm is likely to break even because of the high demand for the software packages and service provided by the firm within the stipulated time frame. When the supply is high, demand tends to increases and when demand increase, profit tends to increase. But since SWO do not any further capital to invest into new target customers therefore achieving the breakeven point at the current year would prove to be difficult for the firm. Decision / Recommendation Based on the above analysis, it can be concluded and recommended that the firm needs to target new set of customers base so that it is able to survive in the market. The business already suffers financially as well as lack of trained and effective human resources led to the fall of the business. The two partners looked after the business but with high demand and changing needs of the customers, it became hard for the firm to maintain profit. The major drawback was that none of the customers did not buy the software package they only availed the service which led to no profitability. Thus, in terms of new customer base the firm should concentrate particularly on the 4Ps of marketing mix. The product to be offered would suit the demands of the professional and corporate business. The price charged would be reasonable or will be based on competitors pricing so that the target customers try out the service provided by the firm. Promotional tools such as advertising, word of mouth, and tie up with hardware firms would generate awareness. Firstly it is important that the firm hires accountants so that dealing with customers gets easier for the partners. In the first three to four month the firm would engage to develop software as per the requirements of the customers, then from the fifth month onwards, as targeted would sell its services to its customers along with promotional activities and would try to tie up with institution or hardware industry so that when software of SOW are supplied to the corporate. This would help the firm to increase the profitability ratio and thus increase the market share in software industry. Bibliography Grasby, Elizabeth. Business Decision Making: Text and Cases. Nelson Thomson Learning, 2004. Print. Read More