Strategic decision-making frameworks and approaches

¶ … Strategic Action: Oracle's Acquisition of PeopleSoft

The direction Oracle Corporation continues to take in the enterprise software market is one of being a consolidator of best-of-breed companies into the enterprise suite of applications the company is globally known for. The role of consolidator or aggregator in the enterprise software market is one that also forces the aggregating company to create a broader platform on which to support the acquired companies (Tsou, Hantos, Sie, 2005). Oracle's decision to acquire PeopleSoft in 2004 was primarily driven by the increasing role the company is playing in terms of enterprise software consolidator, and the need to bolster is product strategy with Human Resource Management (HRM) applications over time. A third factor that led to the acquisition of PeopleSoft was the need to create a Service -Oriented Architecture (SOA) platform on which future product strategies could be based on, which was called Fusion (Weier, Babcock, 2009).

The founder and CEO of Oracle, Larry Ellison, is one of the most focused on aggressive growth of any in the enterprise software industry. Mr. Ellison has stated his specific strategy is to concentrate on creating as many end-to-end process solution application suites as possible, integrating them into his E-Business platform over time (Osterfelt, 2004). The acquisition of PeopleSoft was specifically done to accomplish this goal, of providing customers with end-to-end process control of human resource management process functionality. This strategy has been particularly effective with the acquisition of PeopleSoft, a critically needed Human Resources Management (HRM) application suite, in addition to a low-end ERP system Oracle needed to round out its entire suite of applications (Tsou, Hantos, Sie, 2005). Central to Mr. Ellison's vision of creating an enterprise-wide SOA platform and populating it with applications across functional areas of the organization including HRM in the case of the PeopleSoft acquisition, fulfills the value proposition or differentiation of the company (Schauer, 2005). Oracle will continue acquiring companies to slot into their SOA architecture and provide end-to-end process coverage for its thousands of customers globally.

Summary

Oracle's enterprise customers, many of whom are Fortune 1,000 companies, rely on the software company to deliver end-to-end support for their most critical processes including HRM. For Fusion to be as effective as an SAO architecture and business platform the company will need to continually acquire new software businesses to build out its total and unique value proposition.

Strategic Action: Amazon.com's decision to Acquire Zappos

The factors that contributed to Amazon.com purchasing Zappos in July, 2009 centered more on the build-out of the global online merchant's product strategies and less on the revenue increase made possible through the acquisition. The senior management teams at Amazon.com rely on environmental scanning and competitive analysis techniques that are comparable to Dr. Micheal Porters' Five Forces Model (Porter, 2008) in that determinants of competitive advantage are continually evaluated for their impact on the organization.

Amazon also ascertained that Zappos also has exceptional high levels of logistics expertise and also had been able to successfully infuse a passion for service throughout their organization. There is also a much thinner organizational reporting structure throughout Zappos, an area Amazon.com has struggled with continually trimming back as it has grown over time.

Most significant of all was the ability of Zappos to turn social networking into a channel, an area Amazon had struggled with on Facebook and Twitter quite often in the past and continues to today. Zappos is a global leader in e-commerce through social networks (Chafkin, 2009). Zappos.com has successfully created an entirely new customer service channel over social networking platforms including Facebook, Friendfeed, Twitter, and other social networking sites that collectively form the groundswell (Bernoff, Li, 2008) of the Zappos.com brand. Amazon.com has expertise in managing online reviews and also being able to manage the personalization of content to the specific visitor (Forman, Ghose, Wiesenfeld, 2008). Zappos.com has created an entirely new distribution channel for themselves purely through social networking (Hung, Wu, Wen, Wu, 2008). The combining of these two strengths is one that many industry analysts consider to be exceptionally profitable over time. The most critical concern over this acquisition however is the ability of Amazon.com to keep the Zappos.com culture intact and growing so that it can pervade the Amazon.com culture as well.

Summary

Amazon.com sees the future of e-commerce retailing as needing to be more focused on the experience of shopping, purchasing, and recommending products online over and above the basic transaction. The acquisition of Zappos is an investment in creating a customer-centric culture, an area the founders of Amazon.com have continually attempted to create in their own company.

Strategic Action: Wal-Mart Choosing to Enter China

Wal-Mart's history of growth within the U.S. And nations which have comparable cultures is exceptional in its speed and success. Yet the expansion into other regions of the world, notably Germany (Christopherson, 2007) has failed as they do not capitalize on the core strengths of the company. The decision to enter the Chinese mass merchandiser market was a difficult one, as the company has a history of being very successful in rural regions of the U.S. And other nations, yet the Chinese market is one where the majority of sales are made in urban centers including Shanghai and Beijing. The shift from selling in rural locations and regions to urban regions required WalMart to completely change their internal mindset of how to grow their business (Fong, 2009). In addition, competitors including Carrefour and Tesco had been able to estblaish strong relationships with the Chinese Communist Party throughout the most lucrative regions of the country before WalMart began its market development plans (Fong, 2009). Instead of concentrating on how to create their own stores in retail centers, WalMart chose to first Joint Venture with Taiwanese-based Trust-Mart and then selectively invest in the launch of stores acquired in the highest growing regions including Shanghai. This proved to be an excellent strategy as it gave WalMart rapid access to knowledge and operating performance of the small, highly focused urban stores, the mid-size specialty stores Chinese consumer preferred, and the supercenter concept in suburban and urban regions (Thuermer, 2006). By concentrating on the unique requirement of the Chinese market and the role of the government, WalMart succeeded.

Summary

For the many contradictions that entering the Chinese market presented to Wal-Mart, the decision to adopt a more aggressive development plan by entering regional cities provided to be effective. In making this decision WalMart also had to redefine their own approach to managing relationships with governments. The partnering with the Chinese Communist Party in Shanghai is a case in point.