Strategic Scenario Analysis - Salesforce.com

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Prepared by the students of advanced strategic management at the MBA program of IE Business School, this presentation looks at the business strategy of Salesforce.com, analyzes its competitive positioning and performs a SWOT analysis, and explores the future trends and how they will affect it.

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  • Buyer Power:Salesforce.com’s main customers are Enterprise-level applications in major companies. For these companies, the switching costs are very high.Supplier Power: This is low because the basic requirements for building the software are found on a commodity market.Entry & Exit: The barrier to enter this market is extremely low. After the software is developed, there are virtually no more costs. Economies of Scale are huge.Substitution: The ease of entry drives many competitive offerings. Industry specific software solutions could pose a threat.Internal Rivalry: The top 4 companies have only a 60% share of the market, leaving many smaller businesses competing on the fringe
  • Buyer Power:Salesforce.com’s main customers are Enterprise-level applications in major companies. For these companies, the switching costs are very high.Supplier Power: This is low because the basic requirements for building the software are found on a commodity market.Entry & Exit: The barrier to enter this market is extremely low. After the software is developed, there are virtually no more costs. Economies of Scale are huge.Substitution: The ease of entry drives many competitive offerings. Industry specific software solutions could pose a threat.Internal Rivalry: The top 4 companies have only a 60% share of the market, leaving many smaller businesses competing on the fringe
  • Strategic Scenario Analysis - Salesforce.com

    1. 1. Leading the Enterprise Software on CloudAdvanced Strategic Management in Technology Intensive Industries Group D Anurag  Esteban  Farid  Jason  Rachel  Vishal  Yana IE Business School
    2. 2. Evolution of the Company1999- Founders launch salesforce.com in small apartmentin San Francisco 2001- launch first on-line sales automation solution aimed at CRM application market 2003 – 400+ employees with operations in USA, Australia, Japan, Ireland, UK, France, Spain and Germany 2004 - IPO In NYCE, raising USD 110 million 2006-2010 – growth through M&A
    3. 3. Business Model Revenues - USD 1.6 billion – 27% Customers - 92,300 customers growth worldwide, a net increase of Fastest growth 20,300 – 27% of Growth Model Value Add on applications Up to ½ – small fee the costs Enterprise Third Party Software - Developers $125/user FasterAppExchange SalesForce PaaS ?? Hassle Free
    4. 4. Growth Strategy Acquisitions Tie Ups 2008:Google - combining Google AdWords2010 with Salesforce on-demand CRM• Jigsaw Data Corp 2009:IBM,LotusLive workflow – Integrated• Activa Live Chat Salesforce• Heroku 2010:Bodhtree - consulting and• Ecacts implementation partner2011 2010: Fujitsu – consuting and sales• Dimdim 2011: Intuit - provide accounting and CRM• Manymoon software together• Radian 6• Merrill Lynch - 25,000 seats (largest salesforce.com customer)• Cisco - 15,000 seats SunGard (this was Salesforce.coms first 1,000 seat license)• SunTrust Banks (> 2,000)• ADP (> 2,000)• Advanced Micro Devices (> 1,000)• General Electric (> 1,000) A single customers does not account for more that 5% of the Revenue
    5. 5. CompetitorsPrepackaged software Cloud Computing
    6. 6. Competitive Analysis Buyer Power MediumSubstitution Internal Rivalry Entry & Exit Medium High High Supplier Power Low
    7. 7. SWOT AnalysisS • Brand W • Scalability • Single product • Market position • Size • Little competition • Seasonality in Billings • Financial stability • SecurityO • Expansion of complementary T • Entry of large (>$10B) firms products • Competition in the Cloud • Growing On-demand CRM Computing industry market • Competition in the CRM • International Expansion Industry
    8. 8. Exploring Future TrendsPaaS
    9. 9. Future StrategiesThe greatest risk to Salesforce.com is the ease ofentry into the cloud-based software market.• Building network effects – Apps and add-ons• Market segmentation – Different offerings for industries or business size• Innovation – Building new business processes into the tool – Expanding service offering
    10. 10. Thank you!

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