CS782 Understanding Business Models

Write the following five sections about the company you chose in at most 10 pages of 12-point type. You may follow this with appendices if you wish. Appendices will be read only as needed by the reader and the evaluation is not based upon them. Respond to the bulleted points where relevant and use your judgment as to their relative importance for the business that you have selected.

Describe key aspects of its business model. 

Keeping the following questions in mind will help your response.

• What's the name of the company, how large is it, what industry segment is it in, and what does the company do?
• Is the company primarily a product or a service business, or some kind of hybrid?
• What are its offerings (i.e. its products and/or services)? What is its market position? What are its value propositions (perhaps offer-specific)?
• How does the business earn revenue (including the pricing of its offerings) and make a profit?
• What other features of its market model, operational model, or financial model are significant, unusual, or distinctive?
• Does the organization follow a cloud computing model? Are there aspects of those models in the organization that you choose?

Introduction

Information Technology is the key driver for modern business across the globe. Any organization that aspires to gain competitive advantage in the market has to consider technology implementation (Dodgson, 2018) Technology makes it possible to expand business operations beyond the borders. Through adoption of technology in business operations, it has been possible to diversify business from one sector to another. A good example can be deduced from many of the electronic manufacturing businesses that are able to diversify their business to installation and testing of products at client’s site. In this regard, understanding the need for IT and the advantage it offers to business, organizations have been able to rely on technology to boost their business. With suitable IT infrastructure and expertise, organizations are able to identify business need, analyze and make informed decisions on the need to implement any service delivery. In order to succeed in business, understanding of business setup is very important. It helps management to plan on investment, business diversification measures as well as evaluate possible challenges hindering business growth. In some cases, organization implement technology into their operations to streamline business operations, capture more customers, improve service delivery, diversify business operations or globalize business (Craighead et al., 2011). Technological incorporation into business makes it possible to run business efficiently and capture more customers’. With large number of customers’, organization can be regarded as dominant in the market which in turn results to higher profit margin.

Business Model

Atlassian Corporation Plc is based in Australia and focuses on development of software. Its products are diverse in use as it captures software developers, content management applications as well as project managers’ applicable tools. It is one of the biggest firms across the globe because it is part of Silicon Valley hub. Majorly, Atlassian Plc is service industry with its major specialization being on application development to help other firms incorporate and implement IT infrastructure (Zott & Amit, 2010). Being an international Company, it is quite challenging to determine the exact size of the Atlassian. It mainly specializes in software development for use by organizations as well as applications that support development of other software. Due to diversification, its operations cuts across different business models such as financial model and operational model. These models would be used to help analyze Atlassian operational strategy, market diversification and cooperate strategy.

Market-Oriented Business Model

Atlassian specializes in service industry by developing applications that can be used by other organizations to support their business operations. As a service firm, it tries as much as possible to make sure it provides the best services to its customers (Casadesus-Masanell & Ricart, 2010). Having a foot in Silicon Valley offers an opportunity for Atlassian to learn from advanced IT technicians.

Organizational focus is to provide efficient services to all its customers. Atlassian does not focus on specific market segment but entire market that require Information Technology incorporation. It mainly targets standardized mass-market in service industry. It is regarded as large market because it captures both large firms and small customers such as application developers. Similarly, it diversifies its services by supporting mass customization in both small and large markets (Zott & Amit, 2010). This is clearly exhibited through support accorded by Atlassian to other organizations that operate across the globe. Some of the large organizations with special service requirements approach Atlassian to get specialized software development as well as customization. Finally, it has to factor some of its small customers such as individual application developers. It has to make sure any platform that supports other application development is convenient and efficient for use. This diverse market share makes it possible to generate enough revenue to supports its operations.

Product positioning has been one of the main challenge that face Atlassian due to competition from other firms. To make its services stand out uniquely in the market, Atlassian tries to understand the nature of service required by each client. It is through learning customers’ needs and requirements that makes it possible to satisfy customer needs, hence large number of clients. To make its service stand out uniquely from competitors, a follow up is done frequently to make sure services are up to date. This helps organization determine areas that require improvement and even extend service delivery to areas that do not require additional resources (Seelos & Mair, 2007). Once customer establish such commitment from the service provider, customers’ find it much easier to seek for more services. It earned a good reputation in IT service industry after winning some global awards as one of the best technology service industry. Its products are globally used by many organizations and individual consumers. Its consumers’ range from small scale to large scale consumers. Large organizations to individual managers make use of Atlassian products to accelerate their business success. With diverse technological requirements, it would be very difficult to establish a common product to all customers (George & Bock, 2011). However, some of the products have been accepted across the globe and are being used by various firms. Specific customer requirements make Atlassian service a custom with aim of meeting individual needs.

Quality service delivery to customers’ is the key aspect by any service provider and Atlassian is not an exception (Boons & Ludeke-Freund, 2013). Quality service delivery has made Atlassian a hub of technological innovation and implementation. Each service offered has been commensurate to the cost of acquisition and maintenance from customers. Further customer’s requirement analysis and continued advancements on technological infrastructure makes customers’ feel more secure. Besides, advice on need for improvement to keep business operations save has been one of free service delivery to customers’. Acting as a technological researcher and advisor with no cost makes many organization outsource services from Atlassian. Once organization approves the need for improvement, Atlasian comes in to implement the required changes. Through such technicality in the market, it has been possible to retain and attract many customers’ (Seelos & Mair, 2007). Many firms’ have been recommended for Atlassian services by friends due to quality and its nature of service delivery. Customers’ value such services because many other organizations in the same industry generate revenue on such services but they are offered for free from Atlassian.

Competitive Forces and Challenges

Industry is composed of many firms that poses operational competitiveness to each other. Competitive market is usually termed as heathy to customers’ because they have a pool of service provider to choose when in need of service (Johnston & Girth, 2012). Competition presents some challenges to any firm in the industry forcing them to seek for avenues to gain competitive advantage. Some of the challenges that firms face are; completion from new and existing firms, threats from entry of new firms and availability of existing services from which customers’ can choose from. To analyze market structure and the forces that drive technological industry, it would be important to analyze porter’s market forces (Zahra, Wright & Abdelgawad, 2014).

Porter's five Competitive Forces

Porter’s Five Model is used to describe some of the threats and challenges that an organization face in its operations (Dobbs, 2014). Being in one of the most competitive industry, Atlassian Plc must be able to use porter’s model to define and align its business strategy. The first porter’s force is the threat of having new entrant in technology industry. Once new firms’ ventures into the market, existing firms are faced with threat of being forced out of market (Helms & Nixon, 2010). To make sure an organization remains relevant in the market, it is a requirement subject organization focuses its attention into customers’ aspect. If existing firms do not have strong protective market entry barriers such as patents, economies of scale and government policies, subject organization should strive hard to maintain required profit margin (Burns & Dewhurst, 2016). New entry into the market creates a strong competitive environment which requires intensive analysis of the market to evaluate possible areas of capturing specific market segment (Dulcic, Gnjidic & Alfirevic, 2012). Considering available competitive market in the industry, Atlassian should strive hard to capture large market segment as well as position its products in the market. It is quite clear that Atlassian has been facing and still continues to face entry of new firms into technology industry.

The next porter’s force facing Atlassian is the threat of substitution from many other existing firms which are striving hard to position themselves in the market. Organizational verge of service substitution arise if some aspects of services offered by subject organization do not meet required standards. According to Tavitiyaman, Qu & Zhang (2011), other factors that may result to service substitution are price, customer relations and attractiveness of the market. In order to make sure Atlassian service remains the best in the market, it has been liaising with all its customers to make sure they offer best services. Customer satisfaction has been the key focus by the organization in its bid to capture large market as well as offer quality services (Yunna & Yisheng, 2014). It is important for an organization to understand some aspects that makes it possible to attract many customers as well as retain them. It is only through creating competitive strategy in the market that an organization is able to position its services and capture profitable market. Service substitution is a real threat that Atlassian is currently facing from other organizations. With entry of new firms in the market, substitution becomes a real threat if Atlassian services do not match market requirements.

The third Porter’s competitive force is on competition from its rivals either new firms or existing ones. Technology market is currently flooded with firms that offers almost similar services. Availability of many service providers gives an opportunity to customers’ to choose best services with low cost of operation from a pool of service providers. Competition is usually initiated by existence of many competitors in the industry offering undifferentiated services resulting to reduced attractiveness in the market (Indiatsy et al., 2014). With possibility of reduced market attractiveness from high competition, Atlassian tries to offer unique services to its customers’ in a bid to satisfy its customers. Customer satisfaction is the key to service positioning as well as market dominant. Therefore, by offering unique services to customers’, it has been possible for organization to secure market dominant.

Competitive challenges as a result of change in business environment

Business operations are controlled by market forces that are used to determine operational strategies. Business environment is one of the key determinant in business operations. According to Naidoo (2010), some of the business environment factors are government policies, economic and market forces. In this regard, Atlassian is likely to face dominance regulatory from government. In cases where organization dominates market, government tries to regulate such dominance in order to allow free market operations. Government regulations on dominance are set in such a way that, no organization is to hold a market share beyond certain limit. Dominant has some effects such as monopoly introduction in the industry which makes it difficult for other firms to access market (Epstein, 2018). On the same note, to minimize market dominance government can decide to segment dormant organization into departmental operations. This happens in cases where organizational department are large enough to operate as dependent entities. Similarly, economic changes are quite challenging in business operations as they result to changes in business operations. Economic changes might be influenced by factors such as inflation, high domestic borrowing, weakening of domestic currency and increase in cost of living (Park, Sarkis & Wu, 2010). Changes in economic factors can be attributed to tough economic times or ease of doing business.

Competitive Strategies

Organization should be able to address most of the issues that make business operations challenging. The issue of new entrant into the industry are mainly addressed through service positioning. According to Casadesus-Masanell & Ricart (2010), positioning of the product helps organizational service feature out in the market despite existent of similar services in the industry. Some of the service positioning strategies are offering free technical services to organizations. Once implementation is justified, Atlassian takes over IT infrastructure implementation, hence high market share than its competitors. Quality services offered by the firm makes it possible for Atlassian services to be unique and demanding from many existing and new customers. The nature of service delivery makes it difficult for the customer to opt out of services once contact has been signed. Next, challenge of service substitution can only be solved by offering unique and quality services to customers. Distinguished services from an organization makes its services more demanding in the market. Once quality of service is acceptable in the market, customer satisfaction is guaranteed which is a surety of competitive advantage in the market (Brandenburger & Stuart, 2016). Additionally, competition from rivals can be solved by offering quality services. Finally, business environmental factors has been resolved through aligning business operations to government procedures and devising strategies that offer operational advantages. Atlassian has separated some departmental operations from the other sectors in the organization to align with governmental requirements on dominance. Economic changes operational challenges have been resolved by adjusting operational costs to help organization realize nominal profits. It is obvious that Atlassian strategies have been working tremendously and it will continue to uphold. These strategies would continue to hold because they are always addressing customer’s need rather than service provider.

Business Model Evolution

Business evolves in cases where diversification is possible. If there are some avenues through which business can expand its operations, business is said to have potential to evolve over time. Some of the possible ways through which Atlassian can evolve are; positioning its services to attract more customers. Product positioning gives organization an opportunity to make its service well known to many consumers (Demil & Lecocq, 2010). In this case, product positioning is one of the way through which Atlassian can expand its business model. This strategy helps organization to capture many consumers of the organizational service. Similarly, to expand business model, organization should put up measures that helps to sale extra services to already existing customers. This can be done by researching and adding some features that captures attention of potential consumers. Additionally, it would be possible to expand business model by adding more delivery channels in order to reach more consumers. Organization can be facing growth limit by failing to tap new service delivery channels (Bohnsack, Pinkse & Kolk, 2014). Atlassian can tap new delivery channel opportunity by initiating online delivery of its service to customers worldwide. Online delivery to an organization such as Atlassian is a hidden opportunity that can be tapped to expand business model by capturing more customers. Through new delivery channels, it is still possible for an organization to expand to new territories. New territories help organization to attract more customers which in turn result to higher profit margin.

Organizations internal processes are meant to make operations effective to both customers and employees. Some of the aspects that should be considered to make organizations internal processes more efficient are; reducing customer’s response time. Communication is a key factor in customer satisfaction because it makes customer feel considered by the service provider (Schneider & Spieth, 2013). Next, to improve internal processes, organization is required to increase internal business coordination processes. Smooth functioning of all departments in an organization results to efficient service delivery as well as increased production. The last aspect of increasing internal processes is through expansion of customer loyalty. Customer loyalty results to increase in arte of service consumption which in turn results to more sales. Expansion of service delivery to new market can be done by launching new products, coming up with new delivery channels, reaching out to untapped markets and partnering with other firms while piloting services to new areas (Teece, 2010). All these aspects would be geared towards profit maximization.

There are several ways through which an organization can expand its business operations into new markets. These can either be; geographical extensions which involves introducing a new brand of service into entirely different region. The other aspect is line extension which involves adding new brand of services into already existing ones. Atlassian can come up with new applications which have not been developed in a bid to capture more customers. This is usually done once a service brand has gained complete loyalty from customers (Doz & Kosonen, 2010). Moreover, category extension is an important aspect indented to complement services by extending some brands apart from already existing ones. Lastly, market extension is quite possible in cases an organization is planning to introduce totally different category of product in to its existing market. Usually, organizations extend to new lines of business in order to capture more customers, generate more revenue as well as maximize profit margin.

Best IT-Supported Proposal

Business operations involves several processes such as service production and delivery of service to customers for use in their business operations. In modern business world, organizations are taking technological advantage to make business operations more effective and efficient. Technology adoption is primarily meant to increase production rate, deliver services in an effective manner and maximize profit generation (Dao, Langella & Carbo, 2011). The best IT business proposal that can be adopted by Atlassian is on delivery channels. Being in IT service industry, adopting online delivery of its services would be quite convenient. It is quite possible to expand its business operations worldwide while operating from single office. Online delivery channels can involve creating a platform where users can download any required application. By downloading, user will be required to sign up with correct details, make payment online and delivery would be instant upon completion of all these processes. Online delivery channels would make it possible for organization to capture large market share by extending its services across the globe (Craighead et al., 2011). Customers would be able to get services at all times and from anywhere across the globe. This would increase customer satisfaction as well as customer loyalty. Customers are most likely to get services from an organization which is available for support anytime, services are accessible from anywhere and delivery is prompt.

Delivery channel proposal can only be achieved by creating platform which is integrated to support all required processes. The proposed platform would include product module, payment module as well as delivery channels. This would help any user to access all required services more effectively and in efficient manner (Craighead et al., 2011). Further, IT incorporation would help Atlassian to increase its sales by extending market coverage. Increase in market share results to increase in sales, hence higher profit margin. It is apparent that many organizations in the service industry have been facing distribution problem and online delivery seems to be probable solution. In this regard, online delivery channels would be used to add competitive operational advantage to business operations.

Conclusion

Technology has been used by many firms as a tool to gain competitive advantage in the market. There is no doubt that, it has accorded organizations such as Atlassian operational advantage by using it to diversify business. It has helped organizations to create new business model as well as advance existing models in the industry. It would be worthy to note that without technology incorporation in to business, it would not have been possible for Atlassian to make such great milestone in the industry. To make evaluation of any market successful, organizations such as Atlassian have been using Porter’s five forces model. It has been used to identify viable market models as well as analyze threats and opportunities in each market segment. Some of the Porter’s five forces applicable in this case are; new market entry, possibility of having close substitute on available services and competition rivalry between existing and new firms. Competitive strategy adopted by the subject company are; product positioning, focusing on customer satisfaction and increasing service delivery efficiency. Business model evolution occurs in cases organization is planning diversification. This can happen in cases of new product in the industry, business expansion or adding more features on existing product. IT has been adopted into the business and still can be used by Atlassian to introduce new delivery channels. Online delivery of services would be one of the strategies an organization can use to reach new market and increase efficiency of service delivery.

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