Skype's competitive strategy and organizational congruence with Porter's model

Business

First discuss the organization's strategy and classify it according to Porter's three generic competitive strategies.

Then identify the most critical inputs in each of the first three categories and justify WHY they are critical. Also explain what effect the inputs from one category have on inputs from the other categories. How well does the strategy fit with the environmental, resource and historical inputs you identified?

Make a Case for your proposition as to how the Key Inputs support (are congruent with) the Strategy. Specifically make a claim: "The inputs at Skype consisting of Organizational Environment factors. Internal Resource factors, and Historical Tradition factors are, [highly, partially, or minimally] congruent with the company's strategy."

Introduction

Skype offers product uniqueness. This is one of Porter's competitive strategies. Skype has, in fact, received a reputation as being a highly unique company and indeed it works on being innovative and is constantly producing new material. Skype gives its users voice, video, and instant messaging via the Internet whilst also servicing traditional phone calls over traditional telephone networks. Calls to other Skype internet users are free of charge, while calls to landline telephones and cellular phones are charged via a debit-based user account system. Analysis of Skype's growth shows that it seems to be profiting and has also become popular for its other features, such as file transfer, and videoconferencing. Skype has become internationally renowned as an innovative company that works hard on being ambitious and competing. It took a while for competition to catch up. Skype now competes with SIP and H.323-based services, such as Linphone, Mumble, as well as the Google Talk service But it is still emerging with new products. The company's inputs are in various ways critical to the operation of the company as a whole and this essay will assesses the inputs of the three categories -- environmental, resources, and history -- in order to show that this is so.

Part 2

The company's inputs are, in various ways, critical to the operation of the company. These inputs, according to the Nadler-Tushman Congruence Module, range along the three categories or influences of environmental, resources, and history

Environmental.

Environmental refers to the larger locus of control that the organization exists and functions within. Nadler and Tushman (1980) remark that:

Specifically, the environment includes markets (clients or customers), suppliers, governmental and regulatory bodies, labor unions, competitors, financial institutions, special interest groups, and so on (p.40).

The environment is critical to organizational functioning in at least three ways. Firstly, it demands that the company's products be up to par in both quality and quantity. The environment places certain expectations -- rules and conditions -- on the company. And, finally, the environment also provides opportunities that the company can explore.

There are critics who fear that Microsoft's acquisition of Skype in 2005 represents the first step-in of government's interference with the company.

Skype has, after all, achieved the amazing innovation of linking country-to-country transcending local politics and using the global Internet age for establishing a phone connection that may well escape government scrutiny. There has been unprecedented social interaction across borders, and Skype has been partially held responsible for spreading the mass protests against the Mubarak regime in Egypt. Skype is disruptive in more ways than one. Its accomplishments make it frightening to governments and rulerships that may wish to control or suppress it. Skype's achievements also make it vulnerable to other 'sharks' in the environment such as profit seeking capitalist corporations.

As quoted by -- (2011), the New York Times had earlier reported that:

The F.B.I. has been quietly laying the groundwork for years for a push to require Internet-based communications services -- like Gmail, Facebook, Twitter, BlackBerry and Skype -- to design their systems with a built-in way to comply with wiretap orders.

Skype cries for government control. In fact, the F.B.I.'s general counsel, Valerie Caproni had stated that, "Due to the revolutionary expansion of communications technology in recent years, the government finds that it is rapidly losing ground in its ability to execute court orders with respect to Internet-based communications." (ibid.)

Microsoft has bought Skype and critics are concerned that, given Microsoft's tendency to accede with government subpoenas, Skype's pioneering spirit, its force and vigor, may yet be controlled. In this way, therefore, environmental inputs are none to promising for Skype.

Resources

Resources, according to Nadler and Tushman (1980), are the following. They include:

Employees, technology, capital, information, and so on. Resources can also include less tangible assets, such as the perception of the organization in the marketplace or a positive organizational climate. (p.41)

Resources can be used in different ways according to different configuration by companies. They can fixed or malleable. They can also be assessed in terms of their relative quality in comparison to the environment.

Skype claims that it wants "the coolest, the most talented and brilliant minds" and wants a diverse team (Skype eesti keeles). Skype's director, in fact, has posited team spirit and tight team working as crucial to the success of the company. This and rigid self-discipline as well as creativity, original thinking, innovation, and constant monitoring of goals is, according to Skype's chief strategy officer Christopher Dean (who innovated an innovation group called SkypeWorks), the route for success of the company (ComputerWeekly.com.).

Skype's employees also share Dean's passion of liking to win and competitive streak. They all love technology -- using it as well as creating it -- and are motivated in their jobs. People are expected to work hard; they are regularly assessed, and liberally rewarded on a merit basis. Small functional teams work on a project-to-project basis, and different people are selected for different roles.

Skype's employees, therefore, are intent on innovation; they possess an enthusiasm and obsession for technology. Their enthusiasm for technology amongst their various other skills and focus on innovation certainly maintains Skype's competitive drive as a pioneering innovative company.

Conclusion

In short, the inputs at Skype consisting of Organizational Environment factors, Internal Resource factors, and Historical Tradition factors are, almost exclusively highly congruent with the company's strategy.

Skype has emerged as a pioneering innovative company with its providing free phone calls, free video, and status updates using peer-to-peer technology for its call and instant-messaging services to do so. Skype, in fact, has become such a 'disruptive' company that its innovation is in danger due to government interference in restraining its activities. This has become all the more likely by Microsoft's recent acquisition of the company. Microsoft accedes to government policies, and the Federal Government wishes to control Skype.

Skype's history shows us why Skype has been called a 'disruptive' technology. It took expensive phone service, applied its innovative ideas and technology to it, and made it affordable by linking it with computer. Skype is now creeping into the mobile industry and wreaking similar 'disruptiveness' there. Inputs from the historical past linger into, and effect, the company's present.

Finally, Skype's resources, particularly its employees, offer crucial input into the company's success. Recognized for their enthusiasm, brilliance, motivation, and strong team-spirit (amongst other qualities), Skype's employees propel the organization forward.

All-in all, therefore, Skype's inputs, on two of the three levels, are conducive to its future.

Sources

Aamoth, D. (May 10, 2011) A Brief History of Skype. Time Techland

http://techland.time.com/2011/05/10/a-brief-history-of-skype/2/

Skype eesti keeles http://blogs.skype.com/et/2012/05/skype_seeks_new_employees_from_ukraine.html

ComputerWeekly.com. Interview: The man driving Skype's strategy http://www.computerweekly.com/feature/Interview-The-man-driving-Skypes-strategy

Nadler, D.A. & Tushman, M.L. (1980) A Model for Diagnosing Organizational Behavior. Organizational Dynamics, 9 (2), 35-51.

(October 14th, 2011 ) Microsoft and the future of Skype