HI6006 Analysis of Business Strategy of Atlassian Plc: Case Analysis and Strategy Models Assessment Answer
ANALYSIS OF BUSINESS STRATGIES
The study mainly analysed the business level strategies of the Atlassian Plc from a case analysis. The SWOT analysis, TOWS matrix and the Porter model critically analyze the business level strategies in an efficient way. The major strategic issues of the organisation has been analysed in the study those are lack in collaborative work culture and pricing policy of the organisation. Effective recommendations have been given to nullify the effects of the issues.
In this world of globalisation it is seen that competition is increasing in a rapid manner. The business process of the organizations should be adapted according to the latest trend by analysing different business strategies in an efficient way. The critical analysis of the business strategies helps in identifying the proper lacuna of the organisation so that effective solution may be formulated to mitigate the lacuna in the business level structure in an efficient way. It has been seen that almost 20 % of the profit is dependent on the business level strategies of the organisation. It is essential to identify lacuna by the help of some specific tools.
In this report, a case analysis is present and the strategies issues faced by the company will be depicted in the report in an efficient way. Moreover, the different strategic tools and concepts like the SWOT analysis and TOWS matrix will be used to analyse the strengths weaknessess and opportunities threats that exist at the business level for the company. Furthermore, Porter’s Generic forces will be used to analyse in detail the business level strategies including product differentiation and cost leadership in the market. Moreover, recommendation to improve the business level strategy of the company will be given.
The Atlassian is a public sector software company that is founded in Sydney and currently headquartered in Sydney. They mainly focus on development of the software that includes Jira , confluence and Hipchat. This software includes inventory management and content management systems for different organizations. The total revenue of the company is almost 1,210 million dollars, number of employees has increased, and at present, it is almost 3,616 (Atlassian, 2019). The organisation has performed venture capitalism and slowly it has enhanced its business in an effective manner in Australia. It is one of the major software development firms with good product differentiation strategies in the market. One of the major important factors in the Atlassian Company is that it has grown as an organisation with a strategy complete focused on innovation resulting in very good and useful software development according to the exact requirement of the market. The company relied on the flexible structure and innovative work environment.
Identification of strategic issue of the company
The business level strategies of the Atlassian organization includes focusing on the research and development to formulate innovate software that helps the managers of the client organisation to effectively manage inventory, content and other business operation in an efficient way. According to the case details it seen that work culture and work environment of the Atlassian organisation is very much flexible with very good collaboration within the developmental team, sales team and research development team. However, since the business has grown and now it is one of the big organisation it is very hard for the management to maintain the same flexibility as collaboration is becoming difficult with more departments and enhancement of work load. This is one of the strategic issue needs to be encountered by the top management. If collaborative work environment is not there then it will hamper the productivity. Furthermore, one of the pricing policies is becoming one of major concern for the company as competitors are rising with low cost products in the market.
Analysis of the Business level strategies
The SWOT analysis is one of the most important tools that help in analysisng the internal strengths and the weakness of the company. Based on the SWOT the restructuring of the business strategies of the Atlassian organisation is to be done.
- Returns on Capital Cost: The Company focuses on the innovative development of software’s. The new projects developed by the organisation are implemented perfectly with high returns (Nash, Manning, and Heiser, 2019).
- Effective consumer satisfaction: The customer relationship management is done effectively by focusing on every detailed requirement of the consumers.
- Strong distributer networks: The distributor network is very large and it includes a strong positive relationship with the Atlassian that helps to enhance business in the domestic and in international market (McDONALD, 2016).
- Excellent display of skills in new market: The business strategies of the organisation involves the use of the excellent human resource management and competency to develop and build extraordinary software’s to catch the target segment in the new market areas in an efficient manner.
- Less profitability ratio: It has been witnessed that the Atlassian Plc focuses on research and development that enhances the overhead cost of the product development. However, to gain market sale price is set at marginal market price that decreases the profitability ratio.
- Enhanced Attrition rate: After the company is growing the collaborative work, environment has been reduced. This is resulting in high attrition rate of the organisation compared to its rival organizations (Zhang et al., 2016).
- Allocation of the budget in an efficient manner: One of the most effective components is the allocation of the budget that is to be done properly to maintain holistic performance.
- Strong economy: At present, the economic condition of the Australia is stable with low inflation rate that should help in enhancing the business for Atlassian.
- Good cash flow in market: In the technology and software industry, the cash flow is free and the organizations may perform ventures and collaborative business to enhance their profit level (Phadermrod, Crowder, and Wills, 2019).
- High demand: At present due to enhanced digital market demand for innovative software in enhancing in the market.
- High rate of competition: The technological market is very much lucrative so many small organisation with low manufacturing cost are rising and giving high level competition to the organizations.
- New laws regulation: The new patent laws and business laws are formulated so the software organisation has to formulate business strategies complying with the laws (Lemieux, 2017).
TOWS analysis helps in evaluating the business strategies and its current performance according to the opportunities s and threats present in the market.
Atlassian has a strong focus on innovation that can be considered its major strength. The market has high demand with low inflation rate so it is better to allocate budget smartly and develop product according to exact need of the clients (Jibai, Alaaraj, and Issa, 2018).
The profitability of the organisation is low compared to other competitors. However if smart budget is done the economic condition is good with market demand so profitability should be enhanced if collaborative work is performed (Al Salmi, and Hasnan, 2015). The organisation may divided into small unites to govern its business process in a smooth and effective manner.
One of the major strength of the company is formulation of excellent business strategies to capture the new market. However according to the strengths of the organisation one of the major important point is the rise in competition that effects the business operations (MZ, SA, and Saliluddin, 2019). However, marketing plan may be developed and coloration may be done to nullify the competition of Atlassian.
Major weakness of the company is that after its growth collaborative work culture has decreasing that is resulting in high attrition rate (Gottfried et al., 2018). Moreover, competition is increasing and legal structures are changing. These issues need to be focused in an efficient way by Atlassian. One of the major business strategies may be to divide teams in to subunit and delegate jobs to the team according to their own strength. Moreover, there might be a centralized reporting system so that unity in business process may maintain.
Porter’s Generic Forces
Michael Porter has taken into account different aspects of competitive business into consideration and demonstrated four different strategies that can be used to make sure that a business is on its way towards development by all means. The generic strategies are described as follows and they can be great options for Atlassian if the end goal is to make sure that they address the current issues and be more competitive in the Australian market.
- Cost Leadership – The first strategy in this case is cots leadership and the aim is to make sure that the pricing of the organization stays competitive. One of the activities within this particular strategy is to make sure that the target market is chosen carefully and that market is offered the lowest possible price in exchange for a particular commodity or service which is available in the market. This makes sure that revenue is very high and the situations were competitors are coming into the picture are handled carefully. The other option in this case is to keep the cots as low as possible and make sure that an average price range is kept for a large target market (Gul, 2017). In both the cases, the organization that will apply this strategy will have to make sure that it controls its costs in an effective manner.
- Differentiation – Any organization can face situations in the market where there are producing the similar product or service that is produced by other firms as well. This strategy requires you to create a product that has features like no other. Aspects that are rare in other services and brands must be incorporated in this while designing the commodity or service (Oloko, 2017). The market that should be targeted in this case must have a very high demand in order to make sure that the revenues are also shooting above desired levels. However, it must be taken into account that when using this strategy, the organizations must be able to ensure that the data that goes in designing the new products or services is the result of good research and development activities. It is argued that in this strategy, the operating costs go high and as a result, the pricing is affected. High prices can be a factor that can harm the competitive steps taken by the firm and thus, this can be reason why organizations are circumspect before using this strategy (Feiler, 2015).
- Cost Focus – The strategy of cost focus comes into action when the firm makes up its decisions of targeting a market that has little or no competition. In popular terms this is known as niche market and in this niche market, if the firm is able to offer the lowest price possible, then, there will be situations where the firm will witness monopoly and thus the revenue as well as the profits can surely rise above expectations. However, in this situation as well, the main objective must be to keep the cots at a manageable rate and this will be achievable as there is not so much completion and no such preventive measures will be needed.
- Differentiation Focus – The organizations in this case can target a market with low competition and make sure that it offers the most unique products and services available in that market. In this case as well the focus should be to make sure that research and development is being done properly so that the features that have been incorporated in the products and services are aligned with the consumer demands. The differentiation focus makes sure that there is less pressure in the research department as the main target is to understand the needs of the consumers are there are no competitors on whom research must be done (Cipi, 2015).
Application of strategic model
The strategic model that has been discussed above can be regarded as an aspect that can be useful for the likes of large firm such as Atlassian due to the fact that it will help them to address the stiff competition that they are facing from their Australian rivals. However, as mentioned before, there are four strategies present in the Porters Model of generic strategies and thus the most apt tactics must be applied for the best results. Ad per the case study, the organization in this case is facing a situation where the organization is not being able to invest a lot of money in the research and development functions as the operating costs are shooting up. Thus, it can be said that there is very little scope for the organization to carry out research work in order to effectively understand the demands of the consumers and introduce new features in their software (Neubert, 2017). The options of Differentiation and Differentiation Focus is cannot be exercised in these conditions.
The organization in this particular case study is facing problems of competition and increased costs. They are also facing a situation where the firm is not being able to manage different groups that have been created as the firm has grown in size. The following recommendations however can be followed to address the issues.
- Creating Budget – The organization can make sure that it is following strict budget that enables them to operate according to their wish of being able to levy a competitive price.
- Investment in Promotions – The organization can apply most of its workforce and capital in making sure that it is able to promote the services and commodity that it has to offer and this will be resulting in increased sales.
- Appointing Departmental Heads – The appointment of departmental heads will be very helpful to manage a large workforce and it will be a step forward towards effective human resources management. The employee needs can also be connected easily with the organizational management.
In order to understand and makes sure that a firm is running on the right policies towards development, it must be made sure that the right strategic paths are chosen and the study conducted above was a great help in understanding that the business strategies are most revolving around the choices of the consumers and thus they are the main stakeholders who determine an approach towards business.