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Case Study On Oracle (2000)


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Case Study On Oracle (2000)

  1. 1. Case study on<br />(2000)<br />On the first years of the new millennium, Oracle’s embrace of internet technology gained traction even as the so-called “internet economy” retrenched. And despite a downturn in enterprise IT investment during the period, Oracle continued to deliver innovation and results. The era has been marked with major technical breakthroughs for Oracle—some, the result of millions of dollars and years of research and development—that would set the company’s future course. Oracle Real Application Clusters, Oracle E-Business Suite, Oracle Grid Computing, support for enterprise Linux, and Oracle Fusion all fuel a commitment to innovation and leadership that has defined Oracle for 30 years.<br />Prepared by Roula Abou Samra<br />
  2. 2. Current Performance<br />The company has cut its costs and saved $ 1 billion that was budgeted the year before.<br />Revenues grew by 15% which was lower than prior years due to lower consulting services growth rates<br />Sales and marketing expenses constitute 26% of operating cost<br />R&D expenses increased by 20%<br />Earning per share increased, therefore lower P/E ratio<br />Good liquidity level <br />It is financed by equity for than debt which is more costly<br />Return on investment has increased 2.82 times <br />
  3. 3. Strategic Posture<br />1- Mission<br />“To be thebiggest and best software vendor on the planet and the best employer anyone could wishto work for.”<br />2- Objectives<br />“To be the company that makes the software that runs e-commerce.”<br />“To develop and deploy Web-based business and commerce applications on the internet.”<br />“To replace the (PC) personal computer with (NC) network computer “<br />“To pass Microsoft”<br />
  4. 4. 3- Strategies<br />Release of new innovative products<br />Global growth<br />Higher Market share<br />Forge partnerships <br />Invest in ventures for wireless data devices.<br />4- Policies<br />Cost reduction in operating costs except for R&D<br /> Continuous enhancement in products in order to be more beneficial for customers <br />
  5. 5. Strategic Managers<br />Board of Directors<br />Twelve members – 4 are outsiders<br />Highly respected Americans, most on board since 1997 or earlier<br />Formerly employed in other leading companies and members in various government councils<br />TOP Management<br />Larry J. Ellison founder and CEO wiped out most of the headquarters functions and distributed some of it to the division heads<br />Highly professional <br />
  6. 6. External Environment<br />Societal Environment<br />Economic<br />Slump in high-tech stocks<br />Beginning of US recession<br />Downturn in enterprise IT investment <br />2. Technological<br />Computers and IT business becoming more essential<br />3. Political-Legal<br />US government was working closely with IT developers and supporting entrepreneurs<br />US government allowing companies to have subsidiaries worldwide.<br />
  7. 7. 4. Socio-cultural<br />E-business was growing worldwide especially in developing countries and demand for software applications was rising respectively.<br />Task Environment<br />Rivalry high: Microsoft was still leading the market with the highest market share for PCs and IBM in mainframes.<br />Power of other stakeholders: Red Hat Inc., a popular Linux operating system.<br />
  8. 8. Internal Environment<br />Corporate Structure<br />Divisional Structure: <br />Systems software and Internet business applications software<br />Consulting, education and support services<br />Corporate Culture:<br />“Sales-driven”<br />
  9. 9. Corporate Resources<br />Marketing : The company identifies two market segments, the enterprise business market (businesses with total revenues of $500 million and above) and the general business market (businesses with total revenues less than $500 million) .<br />Finance : The company has a sound financial position now after various efforts on solving the sales issue which was concocting in pursuit of commissions. <br />R&D : Highly professional and dedicated team. The company invested generously on R&D because it was targeting growth. <br />Operations : Very well managed and have a competitive advantage.<br />
  10. 10. 5. Human Resources : Employees showed high motivation and satisfaction . The company had experienced no work stoppages and believes that it’s employees relations are good.<br />6. Information Systems: Has significant qualifications and technologies. Two data centers came online and lead to 80% reduction in leased space for computer operations and cut 50 out of 250 staff members who supported Oracle’s staff members, and therefore Oracle saved $200 million of IT costs.<br />
  11. 11. Analysis of strategic Factors<br />Strengths<br />Oracle rated as #1 integrated suite of enterprise applications in the world compatible with any operation system.<br />Has a gold standard for database technology and applications in enterprises throughout the world, from the largest multinational corporations to the corner coffee shop<br />It’s aggressive market campaigns had drawn legions of developers.<br />It’s revenues from subsidiaries and agents all over the world constitute almost 50% of its turnover.<br />Revenues from online sales will increase tremendously<br />The high degree of professionalism in all aspects.<br />
  12. 12. Weaknesses<br />Oracle prices vary from country to country<br />Investments must be covered by liabilities more than equity because it’s less costly<br />The aggressiveness in speech of the CEO towards competitors might lead to legal problems.<br />The aggressive approach of the CEO towards employees might be de-motivating for some.<br />
  13. 13. Opportunities<br />Increase market share by innovating more products and services<br /> IT business is growing very fast worldwide<br />The great success of E-business suite and sound financial position, will attract many investors and venture funds.<br />
  14. 14. Threats<br />“Microsoft will always be the biggest threat because of the great efforts it employs on R&D and dominating power in the market.”<br />
  15. 15. Strategic Alternatives and Recommended Strategy<br />Strategic Alternatives:<br />Growth through Concentric Diversification: Acquire companies in the related industry to ensure market share and decrease competition risks.<br />Recommended Strategy:<br />Growth strategy is the ultimate strategy for the short-run as well as the long-run due to the aggressive competition.<br />Retrenchment strategy to be maintained and enhanced by integrating new applications in the company’s information system.<br />Oracle quality is to be maintained by continuing to invest on R&D. <br />
  16. 16. Implementation<br />Employee costs will decrease when the e-commerce suite is more implemented.<br />IT costs will decrease when the e-commerce suite is more implemented.<br />R&D will develop new products and services because of it’s high experience and dedicated high efforts.<br />
  17. 17. Evaluation and Control<br />“Oracle is and owns the #1 integrated suite of enterprise applications for evaluation and control. It has applied it internally with great success and the result was high efficiency and effectiveness”<br />