Strategic Management: Project. Mgt489

1. NORTH SOUTH UNIVERSITY
PANDESIC: CASE
ANALYSIS
MGT489: Strategic Management
Monday, August 3, 2015
Prepared by: Prepared for:
Aysha Rahman ID: 121 1175 030 Mohammad Hannan Miah
Tabassum Binte Ahsan ID: 113 0438 030 Course Instructor
Syeda Aisha Nawal ID: 121 0837 030 Section 5
Hridoy Islam ID: 121 1141 030
Sakib Anwar ID: 121 1103 030

2. 1
DEVELOPMENT AND BIRTH OF PANDESIC
In order to capitalize on the emerging market of e-commerce, Intel and SAP took the initiative to
specifically design a low cost internet-based information and communication system aimed at
automating the business processes of small and medium enterprises involved in the retail
business. This gave birth to Pandesic, a joint-venture of Intel and SAP. Pandesic had a very a
strong corporate team, comprising of some of the best employees of the two parent companies.
The management and communication in the venture was shared by the Chairman, CEO and
COO. Since there were no other significant players providing total web-based business solutions
to the embryonic e-commerce industry, Pandesic was able to enjoy a first-mover advantage.
However despite the opportunity provided by the explosion in internet usage, the company failed
to achieve its expected sales growth level.

3. 2
EXTERNAL ANALYSIS
1. Analysis of the Macro-environment
Social/Demographic
Internet usage around the world has been increasing exponentially, with the U.S. alone
anticipating an increase from 40 million users to 135 million users between 1998 and 2002.
Companies aiming to take advantage of this low-cost resource were searching for reliable and
premium quality internet-based communication and commercial tools.
Technological
Growing need for efficient allocation of resources to minimize costs and for the automation of
business processes, by e-retailers, through the use of web-based applications will benefit
Pandesic as the e-business solution being developed by it fulfills all the requirements stated.
Environmental/Geographic
Rising requirement for e-business solutions and products in European and Asian countries as
well as the reduction in time and cost in travelling across countries will enable Pandesic to gain
access to foreign markets at reduced costs and improve its brand recognition.
Overall Assessment: The macro-environmental analysis indicates that many opportunities are
available for Pandesic to take advantage of, which could result in rapid growth of the company’s
operations and superior profitability. However, almost no specific information regarding the
political/legal/governmental and economic conditions was available in the case provided due to
which a complete analysis of macro-environmental factors could not be conducted.

4. 3
2. Industry Analysis
The Industry analysis was conducted using Porter’s Competitive Forces model
Threats of new entrants: Low
The internet was a relatively new commerce medium where the availability of data was poor
because of which industry participants were facing difficulties in offering complete e-business
solutions that would minimize costs and enhance profitability.
Related products being offered in the market at the time were priced at around $ 1 million, hence
significant investment needed to be made by customers, thereby increasing switching cost.
High initial fixed costs in purchasing hardware and investment in R&D to develop products
primarily provide large companies with the opportunity to enter the industry.
Threat of substitutes: Low
Few substitutes offered total integrated e-business products at premium prices with no guarantee
of increased profitability and no sharing of risks. Also, no substitute offered 24 by 7, 365-day
operational ability at low cost or significant reduction in inventory warehousing and carriage
costs.
Power of suppliers: Low
Sourcing capabilities from various nations are viable options, thus increasing the pool of
potential suppliers and decreasing dependence on specific suppliers.

5. 4
Power of buyers: High
Large pool of potential buyers, available as both established companies and start-ups were
searching for web-based commercial tools.
Elastic demand for total web-based business solutions translates to high price sensitivity. In-
house solutions were opted for by many companies.
Degree of rivalry: Low
The industry is fragmented, consisting of a few established IT companies offering web-based
service tools and some other companies offering ‘total integration projects’ with ambiguous
features and functions.
Increasing demand for web-based commercial products reduces intensity of rivalry as growth
potential is high for all industry participants.
Overall Assessment: Due to minimal threat of substitutes, low supplier bargaining power, need
for significant capital to enter the industry and low rivalry among existing industry participants,
the industry is attractive for companies (with strong financial backing) providing integrated e-
business solutions.
3. Competitive Analysis
Pandesic enjoyed the first mover’s advantage in entering the Internet market with its complete
and integrated e-business solutions. Notable companies providing e-business related products
included Microsoft and Netscape. Both of these companies had made large investments in e-
commerce platforms. However, they were not considered direct rivals of Pandesic as they were

6. 5
not providing complete e-business solutions but were involved in the provision of web-based
component tools for businesses.
Competition also arose from Pandesic’s customers. Due to its pricing model, Pandesic’s
profitability was dependant on its customers’ revenue. The resources and capabilities of the
competitors varied with every type of customer.
In-house built systems were regarded as Pandesic’s source of competition, although no specific
direct rival could be clearly identified.
INTERNAL ANALYSIS
Capabilities
 Experienced corporate team leveraged from both parents: SAP and Intel.
 Sophisticated business data and report generation services and unmatched e-business
automation capabilities.
 Strong brand image led to successful alliance with many leading companies.
 Financial backing provided by Intel and SAP.
Core Competencies
 Superior innovation in creating integration and automated e-business solutions
 Outstanding ability to form beneficial strategic alliances and recruit employees

7. 6
SWOT Analysis
a. Strength:
 First-mover advantage
 Brand recognition
 Experienced corporate team
 Strong financial backing from parent corporations
 Established channel partners and alliance
b. Weakness:
 Small direct sales force
 High dependence on channel partners to generate sales
c. Opportunity:
 Retail e-commerce was emerging
 Low cost of internet usage
 Rising demand for e-business from foreign nations
 Opportunities to expand into B2B market
d. Threat:
 Investors pessimism
 Development of in-house e-business solutions

8. 7
PANDESIC’S STRATEGY
In order to provide timely data, Pandesic came up with enterprise resource planning (ERP)
solutions effectively through the collaboration of Intel and SAP. Primarily use channel partners
to attract new customers.
Latest strategy: Their strategy was to increase sales: 30 customers in 30 days, known as 30/30.
The strategy was taken in response to Pandesic’s failure to reach its forecasted sales growth rate.
Only three solutions were sold in 1997 and additional 6 in 1998.
Problems: Except for a small number of its customers, majority did not have the capital. Biggest
challenge was having a strong, dedicated work team to support despite the fact that employees
were too demoralized and stressed from the burden of being assigned additional task which their
positions were not signed up for. However, all the efforts went in vain because they focused on
short term sales, moving away from their mission despite launching a visionary product in the
market.
Strategic analysis of Pandesic
1. Position
 Mission: Facilitate the communication and information retail e-commerce and to
automate business processes.
 Value: Core values: Automate business processes, establish long-term customer
relations.
 Vision: Pandesic would come up with enhanced software for Web-based businesses.
Pandesic e-business solution would capture the whole business model of both front end
and back end data management and tracking capabilities.

9. 8
2. Priorities
 Hire experts
 Make a retail related commerce software that would be enhancing Web-based
communications for many startups, providing ERP solutions.
 In order to integrate the product offering and make an automated entire system, Pandesic
needed a network of partners preferably from leading industries.
 Using the brand image of Intel and Sap to enhance its own brand image and recognition
3. Payments
 Expansion in Japan and Europe
 Strengthen brand image by spending on promotional activities such as journals and
magazines; here 60% of the budget was allocated. The payments were made by SAP and
Intel.
 Gaining public sponsorship from Grove.
 Parent company, Intel had the strategy to invest in businesses that used Intel’s High-end
microprocessors.
4. Performance
 Percentage share of customer revenue
 Unfavorable growth in customer base and revenue
 Underutilized direct sales force

10. 9
RECOMMENDATIONS
1. Make greater use of direct sales force and motivate them by:
a.Establishing realistic and challenging targets, which would require abolishment of the
30/30 strategy.
2. Increase potential customer base by targeting:
a. B2B market
b. Businesses requiring supply chain management services
3. Increase product bundle by producing standard e-commerce component tools instead of only
complete and integrated e-business solutions.