Strategic Review Niklas Zennstrom and Janus Friis Essay

Excerpt from Essay :

Strategic Review

Niklas Zennstrom and Janus Friis formed Skype in 2003. The two produced VoIP software based on P2P architecture that revolutionized the field of communication. The software provided its users with high quality and free voice calls, as firewalls did not affect this software. The company rapidly grew due to the free quality voice calls reaching its critical user mass in a short time. The company later started premium Skype products to corporate users, which increased the revenue generated. VoIP technology used by Skype means that the company relies on the internet or IP-based networks to transmit the signal. The information transferred through the software requires protection from hackers and for privacy thus encrypted.

Microsoft acquired the company in 2011 for a record 8.5 billion U.S. dollars. This is considers one of Microsoft's most expensive acquisitions as the company grows to become the number one software company in the globe. Strategic analysis of Skype enables the management at Microsoft to identify the changes required to the company to match the policies of the acquiring company (Hitt, Ireland & Hoskisson, 2012). Strategic analysis will also be useful in evaluating the profitability of the company acquired and how to generate extra income. PEST and SWOT analysis used to evaluate the internal and external environment that the company exists.

The company's mission describes what the company aims to achieve in the future. Skype wants to become the fabric of real- time communication on the World Wide Web. This mission achieved through implementation of various strategies aimed at improving the company's position. Skype's vision aims at revolutionizing the way people communicate and creating the largest communication company. The company basis its vision on the basic modes of communication used in the modern world. These modes include the mobile phones, personal computer and the sitting room. The company's values depict a company that is disruptive and constantly changing. The values also focus on the elegance and functionality that is maintain by the products released.

Current set of strategic goals

The goals targeted by an organization aim at improving the way products production by addressing the needs of the customers. Skype's goals aims at eliminating the barriers to the way people communicate in the globe. The barriers to communication include connectivity, cost and availability of suitable technology to facilitate communication. The problem of communication faces business corporations and the common person. The barriers to communication affect the efficiency of an organization through ineffective communication. The company aims to reduce the cost of communication among users thus improving connectivity across the globe (Hill & Jones, 2012).

By focusing on these goals, the organization aims at providing organizations and people with affordable software for the communication problems. Focusing on the organizations goals has also enabled the organization to grow through increased client base. Microsoft bought the company in 2011 providing free advertising for both businesses. One company is a leader in the field of communication while the other is a software giant. This advertising has enabled both companies to increase their client base and maintain a steady client flow. The company also aims at producing products that will be easy to use. The products used by the company are affordable and easy to configure.

The company other goals is venturing in emerging markets to ensure that customers use its quality services. E-learning is among the emerging markets that the company has ventured into to increase its client base. The company connects a number of teachers to students through provision of a classroom environment. Its current products promote text typing, voice and video calls and file transfer. This mode of education is cheap for the user thus a preferred mode of communication. The goal of the organization as a social network is to improve global interaction through its interface. The company also provides premium products to its corporate users to enhance communications in multinational. The company aims to improve the quality of communication between these nations and provide adequate security for information shared (Luthans & Doh, 2009).

PEST Analysis

PEST analysis evaluates the external environment influence on the performance of the organization. Evaluation of the external environment enables the management to formulate long-term and short-term strategies used by the organization to ensure the growth of the company. The company has an international outlook with users in the global market. The political environment that the company operates under does not pose significant challenges to the company. Realistic growth of the company is dependent of the policies prevailing in the governments where the company operates. A government that promotes the use of technology and invests in ensuring connectivity enables the company to grow. In the current economy, many governments promote connectivity to facilitate the transfer of information. The policies implemented ensure that the citizens have access to the outside world. The policies also attract investors from foreign nations thus increasing the foreign exchange generated. The main challenge facing the company is a nation with conservative policies, which affect its expansion.

Evaluation of the economic aspect affecting the company in the global market reviles a difference in call rates. The cost of calls to the customers in the market differs due to the difference in economic status and political environment. The company strives to ensure that the customers enjoy low cost calls. The effect of the economy is negligible among developing countries as the exchange rates are relatively low. Call cost among developing nations and nations faced by inflation are generally high. This environment affects the ability of the company to generate income in the developing nations. The cost compared to other forms of communication is low.

The social environment in which the business exists depends on the organizations ability to market its products to the public. The company mainly markets its products by addressing the needs of a demographic. The social environment influences the company positively as the need to communicate is universal. With globalization taking effect in many nations, many societies use technology to interact with other people in the globe. Socialization through social media has facilitated the flow of information thus promoting the growth of the company. The future of the company is good due to improved connectivity among nations (White & Bruton, 2007).

Technological environment in which the company exists provides both challenges and opportunities to its growth. New technology in the market enables the company to increase its customer base. New devises in the market are compatible with the software and customers can communicate through Skype. Technology availability is a challenge in that many nations lack broadband connections that facilitate effective communication. The lack of effective technology affects the number of users. Advances in technology improve the odds for the success of the company in the future. Technology development will improve the connection speeds and reduce the cost of the equipment needed to communicate.

SWOT Analysis

SWOT analysis refers to evaluation of some factors that affect an organization. To attain the vision set by the organization, the management has to formulate a set of goals that will enable the company to use the opportunities in the environment and handle the challenges. The term SWOT stands for strengths, weaknesses, opportunities and threats affecting a company. The company has an established brand name in the market, which customers associate with market leadership. The company provides free calls at low rates with benefits of free calls.

The company provides high quality services protected through encryption. This enables the users to transfer information cheaply. The company requires no infrastructure as it is a software producer. This ensures that its operation costs remain low regardless of the changes in technology. The communication company is an innovation leader revolutionizing the communication sector. The company uses advanced technology to provide its services, which ensures that the customers enjoy quality services. The company also has an established customer base, which ensures that it remains dominant.

The opportunities available in a market facilitate the growth of the organization by promoting growth. The company has launched products that address the corporate market. The corporate market provides the company with substantial revenue. Corporate clients use the software to communicate with branches in the global market. The form of communication is cheap compared to available forms of communication. Advances in the field of technology provide opportunities for the company to exploit. The mobile devices available compared to devices made a decade ago have a significant difference. Mobile devices now include tablet computers that can use the software (Cronin, 2010).

The threats facing the company affect its ability to grow in the competitive market. Advances in the field of technology have benefited other forms of communication like telecom that provide stiff competition. The company also faces threats from political bans from nations that are conservative. Some nations may ban the use of social media since it affects the productivity of the organization. The company faces the threat of bans and lawsuits, which provide negative publicity for the company. Negative publicity reduces the company's market share, which in turn reduces…

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