Innovations in industry RATING: Oracle is rated #1 within industry with the recent acquisition of Sun Microsystems, its one of the top 10 companies listed on NASDAQ. Oracles revenue was $23. 2B USD in 2009 STRATEGIC POSITION: Oracle has also gradually increased its budget for its research and development department which is important if it wants to continue being an industry leader in the future because of increasing competition from companies such as Google, IBM, and Microsoft FUTURE TRENDS: Oracle is continuing to grow by leaps and bounds, positioning itself to compete head-tohead against IBM as the pre-eminent one-stop IT vendor.
Oracle will be able to reach all the way into the data center when supplying enterprise solutions. On the application infrastructure side of things, ownership of Java and an improved in-house high performance story to tell customers represent tangible gains. The deal also opens the door for Oracle to pursue an aggressive SaaS-enablement strategy. Industry and Competitive Analysis 5 Forces Model • Most important is Competitive Pressures Created by the Rivalry among Competing Sellers.
Oracle faces stiff competition from existing competitors in all areas of its businesses. Primary competitors are IBM, Microsoft, SAP, and Google. These are all large companies with strong financial resources and expertise that are very capable of direct competition with Oracle. Oracle benefits from aggressive acquisitions, brand recognition and loyalty as well as a reputation for providing outstanding service and support to its customers. Another key factor is the Threat of New Entrants.
Currently, not all of the competitors Oracle deals with have products in the various areas that Oracle has business in. However, companies like IBM, Microsoft, SAP, and Google are looking to expand their product lines and introduce new ones to further increase rivalry and try and gain market share away from Oracle. Although there are high initial investment costs to enter new markets, and brand loyal towards Oracle is strong, these companies have the resources required to pose a significant
threat. Oracle also benefits from high-switching costs and well established distribution channels Industry and Competitive Analysis 5 Forces Model Continued • Threats from Competitive Substitute Products: Although Oracle has developed an integrated application suite to merge all aspects of business for its customers. Oracle has created a multitude level of products to compete for SME, and large enterprise customers.
Oracle as an industry leader is price sensitive; it used a cost differential strategy to maintain its brand image. Many smaller businesses may not be willing to pay for Oracle’s technology. There are a number of smaller products which are more specialized and less costly that businesses without the resources to implement such a massive change may be more willing to purchase. The real future threat will be the “Cloud Computing” services market, which is a new innovative service in an ever emerging I.
T. market segment. Bargaining power of customers Oracle has recently standardized pricing for its products and makes its entire line of applications available via its online store. Discounts are given for volume purchases, and government or educational purposes, but other then that there is very little discounting on products that Oracle offers. Oracle is under little influence from bargaining power of customers.
Bargaining power of suppliers Due to Oracle aggressive acquisitions Oracle is forming into a self sufficient industrial giant. By being able to develop, manufactures, market, and distribute its own hardware and software products, it will continue to limit its already low number of suppliers. Oracle has complete control of their product pricing and so are under very little influence from any suppliers they might have. Corporate Key Success Factors Innovation is the engine of Oracle’s success. Oracle provides a
highly scalable, cost efficient sever infrastructure to support growth. Oracle has been acknowledged as the gold standard for database technology and applications in enterprises throughout the world. The acquisition of Sun gives Oracle a leadership role in the hardware arena. Oracle is the first software company to develop and deploy 100 percent internet-enabled enterprise software across its entire product line: database, business applications, application development, and decision support tools.
The key to enterprise success for Oracle is that it understands and use business applications such as Corporate Performance Management System (CPM). Oracles goal is to become #1 in middleware and #1 in applications, like its database systems. Oracle’s continued planning and evaluation to measure performance increases the value of integration between strategy, planning, and budgeting within it’s core business transaction applications. This integration is a core element for Oracle to continue to be a successful corporation in the future.
Oracle’s Balanced Scoreboard is used to gain corporate acceptance to help leaders define and rapidly implement strategy. The use of the scoreboard provides a predictive outlook on strategic success. Oracle provides reporting and analysis capabilities through analytic data models using applications such as general ledger, customer profitability analysis, public sector budgeting, and several other applications as a means to combine analysis methods.