Case 1: Software Growth Case 1: Software Growth

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Brief overview: This is a growth strategy case, which requires the candidate to focus on various segmentation dimensions and develop a focused strategy for the client

The Problem and Background

Global Software Group (GSG) is a large, publicly traded software services company. GSG’s current portfolio is comprised of four major product groups: Universal Desktop Software (UDS), Productivity Pack (PP), Business Infrastructure Suite (BIS), and Business Solutions Suite (BSS). It has been facing slowing growth and lagging stock performance lately. Its international business is growing well, but its European operations have been lagging, even though they represent over a third of its sales. 10% CAGR up to FY 2001 has slowed now to 3% CAGR since then. Europe is approx €3.6 bn. out of €10 bn. in annual revenue.

Your task – 1

GSG has engaged A.T. Kearney to develop a strategy that will restore its top-line growth for Europe.

Data to be provided (during the course of the interview)

Product groups

There are four major product groups: Universal Desktop Software (UDS), Productivity Pack (PP), Business Infrastructure Suite (BIS), and Business Solutions Suite (BSS).

Product Group

Europe Revenue (€M)

Customer Base

Growth

  • UDS

 477

 Individual and  Businesses

 Low Potential

  • PP

 1,566

  • BIS

 145

 Business only

 High Potential

  • BSS

 1,378

Total

 3,567

 

 

 

UDS and PP are established, well-penetrated products with larger share of revenue but are not expected to provide growth. They are treated as industry standards. These products are industry independent and require little to no implementation support.

Product growth

BIS and BSS are growing products with approximately 80% of the growth in the next 3 years coming from these product groups. BIS and BSS were subsequent additions to the product portfolio and face substantial competition from global software and hardware vendors.

Expected Response:

  • The interviewee should recognize that there is opportunity within the “Business” product groups
  • The interviewee should then look to further drive towards identifying specific opportunities related to “business” products

Your task – 2

Is GSG looking at the overall market in the right way? How else can you segment this type of market?

Data to be provided (during the course of the interview)

Customer based Segmentation

Historically, GSG has segmented the market by product. However, there is a hypothesis that there are better, more meaningful ways to segment the market.  

Current Market

 

2005 GSG Revenue

2005 Software Spend

2005 IT Services Spend

Total IT Spend

Small & Medium Sized Businesses

 0.7B

 9.3B

 53.5B

 62.8B

Large Corporations

 1.2B

 20.3B

 60.2B

 80.5B

“Future Market”

 

 2010 Est. Software  Spend

 2010 IT Services Spend

 Total Size

 Percent Growth Since 2005

 Small & Medium Sized  Businesses

 20.0B

 92.0B

 112.0B

 78%

 Large Corporations

 34.0B

 63.0B

 97.0B

 20%

 

 

 

 

 

Past History

In the past, GSG had all but shunned the small business market in favor of the larger enterprise segment.

Competition

The large business segment is highly competitive with intense competition from large software and hardware vendors.

Expected Response:

There are a number of ways that the interviewee could potentially segment the market. Look for a logical segmentation structure with clearly defined segmentation variables (e.g., vertical markets, business versus consumer, geographies, buying behaviors, etc.)

  • The interviewee should ask for the data related to the revenue growth projections associated with each of the two business segments
  • The candidate should be able to see that small businesses are a better target for GSG

Your task – 3

Is there a way GSG can prioritize which small businesses to go after?

Data to be provided (during the course of the interview)