In the technology Industry, changes are the daily occurrence and they always bring about improvements and increase the clientele base. It is for this reason that two of the most influential firms in global technology decided to acquire new firms. Oracle Inc and SAP are two of the most influential and well-established firms it the global technology industry (Stone, 2004).
Oracle Inc is a multinational company that has been around in the technology industry for the longest time. The company specialized at first in making computer hardware however in 2004, the company acquired Sun (Stone, 2004). This is a company that deals in the development of software. It allowed the Oracle to be able to penetrate into the enterprise application market. The market for the company’s products increased as the clients were able to purchase the hardware with the already installed software.
SAP is a company that initially dealt in the production and sale of software, but with time and after the acquisition of Sybase, it ventured into the sale of computer hardware. SAP is a company known for consistency and it deals with its products (McDonald et al, 2006). The acquisition of the company was a counter-reaction to the acquisition of Sun by Oracle Inc.
Oracle Inc and SAP were companies that related very well because they were all in the technology world but in different areas. Oracle Inc dealt with hardware while SAP dealt with software. However when Oracle Inc acquired Sun and ventured into an industry dominated by SAP rivalry started. This led to competition for both hardware and software markets (McDonald et al, 2006). The companies are now dealing with both markets and continue to acquire more companies in an attempt to outdo each other.
The two companies are very similar; this is because they adopted a change by acquisition of other companies, in order to venture into a market where the product they produced initially can find a bigger clientele base.
In the competitive world of technology and software development change is a constant and real factor and flexibility is necessary. This is the reason as to why in 2009 Oracle Inc, one of the leading firms in IT bought Sun at $7.4billion. This was to combine the two in order to increase the market share control of the firm in the industry and to increase their client utility level (Ries, 2013). In the same industry, a competing firm, Germany’s Sap, bought a California based company that deals in software, Sybase, at $5.8billion (Inc. Kogent Learning Solution, 2011).
The two companies were able to acquire companies that deal in software in order to increase their clientele base and market share control. Once the companies acquired the software companies, they were able to offer their customers more and better services. This is because the customers could be able to access their services via smart phones. This was a response to change in technology and consumer taste and preference.
In any industry, when a company makes a major change, it is taking a big risk. At times it stands losing millions of dollars so the question is: why should the company take the risk of changing?
The main reason is to increase the profit margin. This is because changes in the business are inevitable because there are changes in consumer preference with time. At the same time increases market share-control. This not only increases the market and clientele base for a company. It also creates the insistence aspect in the clients, this means demand will no longer be responsive to increases in price and this is the same as being at the top of the pyramid in the industry.
The acquisition was not to allow for SAP to venture into a new market; this is because Sybase has a small market share especially on database. It was simply to offer the clients of SAP a new improved option and expand in-memory to the already existing applications. This would increase consumer utility and create insistence. But the acquisition meant that Sybase would be no more as it would become part of SAP. The fact that the two companies are from different countries, was a breakthrough in the global market, however in the American market, there was a decrease in popularity (Information Week, 2010).
b). Internal Change: Administrative Structure
There will be an incorporation of both working cultures. The employees from both companies were brought on board; this is because there was need to have all the necessary knowledge and experience combined (Thomasch, 2009). New contracts for the employees from Sybase were drawn up under the new management.
a). External Change: Market Structure
Sun is famous for production of hardware. The acquisition exposed Oracle to a new market; this is because it was formerly famous for the production and sale of software. Diving into a new market led to drastic changes n the strategies employed in marketing and sale. Oracle Inc made the two a pair, in order for a client to purchase hardware; it had to come with the software. Software was to be sold to already owners of the hardware.
b). Employee resignation and shift in production
Due to the acquisition most of the employees from Sun resigned, this was inclusive of the CEO and the engineering team. This led to great shifts in the production and sale of the products. At the same time it became a challenge to be resolved up to date (Thomasch, 2009).
a). The Similarities
Both companies deal in the IT world. They offer software and applications to be used in increasing business transactions by customers. They have e-business as their main basis. They have also improved and increased in capacity and market share by mergers, acquisition and partnerships (Inc. Kogent Learning Solution, 2011).
b). The differences
The change will be as a result of a well planed and strategically placed plan. It is due to pressures from the external forces like change in market and consumer preference and internal forces like change in employee and management structure, or even improvement in innovation. These forces will be directed at the managing team and there is need to come up with the best alternative to navigate through the forces and come out victorious.
The need for change will be a constant factor. This is because the industry is dynamic and is greatly influenced by the changes in technology. The management team will have to come up with an organizational culture that embraces flexibility. Designed to adopt to any changes in the industry. This means there must be clearly set practices that are capable of ensuring that with every change in the industry the steps taken will lead to an improvement in the organization.
The management will ensure that with time the firm grows to be strong enough to handle any change in the industry. This will be by training staff and creating better strategies to handle change. Adapting to changes will be easier as the firm will have grown and developed in that environment.
Part 3: Diagnosis
A diagnostic model is used to come up with the best actions to be taken by a company in order to meet the needs. Different companies in different industries will have different diagnostic models (Rupp, 2010). The model is usually based on the proper analysis of the firm and its environment, identification of the key variables and proper research into the factors affecting the company (Harrison, 2005). This is followed by the interpretation of data and statistical analysis that allows for a proper conclusion.
Oracle Inc is a company that has been around for years and was once the biggest company in terms of capacity and revenue in the industry. However poor marketing strategies and managerial decisions have made it to be surpassed by other more recent firms. SAP is a firm that is based on bureaucracy but down the years there have been many mistakes and errors made that have cost a lot of time and money. The two companies are trying to come up into the market, but there is need to ensure they are healthy commercial enterprises that will not succumb to economic factors of the business cycle (Samson, 2012).
An efficient diagnostic model for the two companies is the four frames of the organization model. It is a holistic model that takes a pragmatic analysis at the business and is time efficient.
The four frames of organizations model is meant to ensure that all aspects of the firms are well catered for. It analyzes the following four sectors of the firms:
This focuses on the structure and functioning of the firms in the following areas:
Application in Oracle Inc.
Oracle Inc is a dynamic organization that can easily adopt changes; however there are areas that can be improved like:
Application for SAP
Both companies have strengths and weaknesses that need to be worked on
Oracle Inc – efficient production and operational methods that lead to increased and quick changes. The company also deal in both sale and production of software and hardware, venturing into a market of one aids the sale of the other as they go hand in hand.
SAP Inc – more practical and applicable software that are easily used by people. This is due to consistency over the years, simple and efficient improvement are made on the product and increases their efficiencies. This makes it stable.
Oracle inc- unpredictability of the company due to drastic changes over the years; this has made the company to experience losses. There is also the issue of employees resigning from firms once the company has acquired it. This can be prevented by expansion of the firm by partnership and not acquiring the firms.
SAP Inc – bureaucratic processes in decision making makes the company to be less flexible in a dynamic and ever changing environment (Pahl, 2009). This creates inefficiencies in production and increases both explicit and implicit cost.
Oracle Inc – venturing into the hardware and software markets opens doors to more partnerships with other firms and increase in revenue. The software creates a promotional package for the company’s products and can be used as a marketing strategy.
SAP Inc- specialization in their product has created and established a good clientele base that is at the insistent point (Pahl, 2009). This is a signature move for them and allows the company to become the leader.
4.4 Threats
Oracle Inc- strict competition from other firms like Microsoft and IBM, this has led to decrease in the market share control from 2005. The negative image created by the rivalry has decreased the number of employees willing to work for the company. This was clear from the resignation of directors and managers from an acquired company
SAP Inc- law suit that has led to a claim of $1.6billion dollars from Oracle Inc. This, plus the time used for the trial has decreased performance and production in the firm.
Potential area of resistance is usually in the internal part of the firm. This is because with time the firms have formed a work culture that is about to be changed (Samson, 2012). There is also the aspect of different strategies to be used and this will mean that new employees will have to be taken on board.
Another area is the market diversification, this is a costly activity and the business may fear losses that can be experienced. The market may not be receptive of the products due to insistence to substitutes from other firms.
There is need to analyze the firms holistically. It is the only way to be able to solve age old production, marketing, managerial and acquisition problems that lead to inefficiencies in the long run for the companies (Samson, 2012).
Proper projection of the future expectation while using data in the current regime gives a clear and pragmatic outline of the company. This is what is required for both firms.
Timeline of communication
Communication is one of the most important aspect of any company. This is not only because it enhances coordination but because it improves relations (May, 2010). The timeline of communication in the companies was dependent on the following:
If the message to be passed required to be repeated the timeline would be often and would be structured in a way that it would reach all employees.
The audience would also determine the frequency of the message, for instance a message to all employees would be repeated , however if the message was meant for the board members it would be discussed in a meeting and that would be the final time unless revisited for special reasons.
Type of communication
This would most of the times be used in meetings and when addressing large number of stakeholders. It was also used when the communication did not require to be referred to in the future.
This is in form of contracts, memos and letters written to the different stakeholders of the companies. This would form part of the communication to the media and to stock market to trade shares.
Rationale
This would be done mostly as written communication (May, 2010). This is because it forms part of the data required to analyze the company. When the companies were acquiring the other smaller companies there had to be well spelled out and written documentation to legalize and proof the actions.
This is mostly done i the form of oral communication. Written documentation is not required in this case at all.
At least 4 Communication pieces listed on spreadsheet
First communication piece
| Topic | Venture into a new market |
| Frequency of Timeline | Often |
| Stakeholder | Stakeholders and board members |
| Purpose | Investment |
| Communicator | CEO of company |
| Message | Acquisition of a new company |
| Author | HR director |
| Delivery method | Board Meeting |
| Measure | Willingness to invest |
Second communication Piece
| Topic | New products and methods |
| Frequency of Timeline | Once |
| Stakeholder | Employees |
| Purpose | Employee training |
| Communicator | HR Director |
| Message | Production of hardware and software |
| Author | HR Director |
| Delivery method | General employee meeting |
| Measure | Willingness to learn new methods of production |
Third communication piece
| Topic | Increase in market |
| Frequency of Timeline | Frequently |
| Stakeholder | Customers |
| Purpose | Increase in sales and revenue |
| Communicator | Marketing Director |
| Message | Introduction of new products into the market |
| Author | Marketing team |
| Delivery method | Advertisement |
| Measure | Increases in sales, revenue and market |
Fourth communication piece
| Topic | Acquisition of a firm |
| Frequency of Timeline | Once |
| Stakeholder | Company to be acquired |
| Purpose | Acquisition of a firm |
| Communicator | Assistant CEO and company lawyer |
| Message | Increase in market share control |
| Author | Assistant CEO |
| Delivery method | Meeting with board members of the company to be acquired. |
| Measure | Signing of contact into agreement |
Your analysis of the actual communication plan as seen from the “public eye”
Communication is based on the model and structure of a company. When it is well executed the public will hardly hear of any disagreements however when improperly handled there are always public exposés.
The model of communication should be based on the hierarchy pyramid. This means that the junior employees will not know a lot about the company and therefore not much can leak to the public.
During the process of acquisition and mergers, there is usually a lot of speculation and uncertainty, this was a lesson well learnt by Oracle when it acquired a company and almost three quarters of the labour force walked out. This was viewed by the public as a poorly planned step. For this reason the junior employees should be addressed after the finalization of a contract to ensure that they are also on board and that they do not walk out.
Mass media has a very big impact on the performance of any firm. When the PR of a company is tarnished by media it loses market, investors and even partners. This can be losses and can lead to further selective discrimination from the public in terms of purchases and consumption of goods.
References
Ferguson, S. D. (1999). Communication Planning: an Integrated Approach, Cambridge University Press, London
Communication should be a continuous process in any business enterprise. It should be integrated to be able to reach all the targeted audience. Communication of the same message to different people should not be done by embracing a one size fits all. This is because different people in an organization have different reasons for being there.
Harrison, I. M. (2005). Diagnosing Organization: Methods, Models and Processes, MA Harvard University Press
The book looks at the different ways in which an organization can be able to take an analytical look at its operations and pull out the one area that slows them down. According to the book, most of the methods used to diagnose company problems are usually general and they do not narrow down the problem to be exact. This leads to diagnosis of several problems with the same corrective measures that do not work for all of them.
Inc. Kogent Learning Solution. (2011). SAP, Handbook, Columbia Publishers
SAP as a company has a very organized and well structured administration and production process. This is because its products are very unique. For over the years the company has embraced a signature product and worked on it.
Information Week. (May 10, 2010). SAP Buys Sybase for $5.8billion. (Press Release). Retrieved 13 May 2010
Acquisition of Sybase by SAP was a huge step by the company. This is because it brought about major changes in the industry. It increased its own competition advantage and posed as a great threat to the then expanding Oracle Inc.
Levy, A. Merry, U. (1986). Organizational Transformation: Approaches, Strategies and Theories, Aviation Publishers
It is based on the transformations that organizations go through in every stage of expansion and acquisition. The problems and most mistakes made by managers and the diagnosis best suited for most of the errors.
May, G. (2010). Strategic Planning: Fundamentals for Businesses, Macmillan Publishers
Communication in a business is not all about the message; it is also about passing the relevant message to the relevant people in the most convenient way. Poor communication can be also in the feedback mechanism; this is because most businesses do not allocate any channel in which their message can be responded to.
McDonald, K. Wilmsmeier, A. Dixon, C. D. (2006). Mastering the SAP Business Information Warehouse: Leveraging, Grapevine Publishers
SAP is a business enterprise that is predictable and has a linear relationship with all the inputs and output for this reason; it is easy to master the products. SAP has leverage of consistency over the years and this gives it a competitive advantage over the other companies as its products can be easily used by the consumers.
Pahl, N. Richter, A. (2009). SWOT Analysis: Idea, Methodology and a Practical Approach, Bell Publishers
Swot analysis is easier written down than implemented in the daily commercial activities, the book analyzes an applicable look at the internal and external environment and deciding the best moves to make and what to get rid of. In a nutshell SWOT is applied in everyday activities but it is usually not well structured.
Ries, S. (2013). Oracle Database 11g Database Administration, Springer Publishers
Oracle Inc is a dynamic company that easily adapts to new taste and preference of clients. This is the reason as to why11g Database Administration was a major milestone step in the right direction of increasing consumer utility.
Rupp, A.A. Templin, J. Henson, A. R. (2010). Diagnostic Measurement: Theory, Methods and Applications, Oxford University Press, New York
Improvement in performance is relative to the methods used to diagnosis the weaknesses that companies may have. Difference in structure of a company calls for different methods and application in solving similar weaknesses. The applications should at all times be tailored to suit the company.
Samson, D. Daft, L. R. (2012). Management, Random House Publishers
Management should be very influential when it comes to bringing about the necessary change required. This can be by making decisions that will not only allow for change to be adopted in the company but also a change mechanism that ensures there is a smooth transition at all times.
Stone, M. F. (2004). The Oracle of Oracle: The Story of Volatile CEO Larry, Colombia Publishers
It offers the story of the founding father and CEO of the company. The reasons behind every decision made and the lessons learnt from all the mistakes in the past years. The book also focuses on the strategies applied by the company in an effort to keep its commanding position in the industry despite the challenges and increase in competition.
Thomasch, P. (August 20, 2009). Oracle Wins E. U Approval to buy Sun Micro-System, Reuters. Retrieved 2009-08-30
Oracle Inc had been for long trying to get the European Union to agree for the company to finally sign the agreement. However there were several issues when it came to the two companies coming together. The EU thought that it would lead to a monopoly especially given the fact that the two companies commanded substantial market share control. The contract was later allowed to become valid.
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