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Case Study - Adobe

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kenneth mazo

on 17 September 2013

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Transcript of Case Study - Adobe

Case Study - Adobe Systems Inc.

Presented by: The A-Team

What can be learned by comparing major industry competitors?
Large Corp to Individual Users

Software Industry

Divided into six business segments
Creative and Interactive Solutions
Digital Media Solutions
Knowledge Worker
Enterprise
Omniture
Print and Publishing
Conclusion
Adobe has to continue to be forward thinking and define the industry standard in order to maintain its market dominance
Adapt to increased online dependence
Contend with growth of mobile computing
Be trailblazers with innovative products
Mergers, Acquisitions, & Partnerships
Over priced products compared to other competitors
Battle for Market Share
Microsoft offer similar products
Silverlight vs. Flash
IBM entrance into software market
Coremetrics vs. Omniture
Quark leader in interactive solution
Adobe’s InDesign product struggles for acceptance over already known product
New Markets
Acquire Macromedia in 2005 (Animation Tool)
Acquire Omniture and Day Software (Marketing Management and analytics solution software)
Mobile broadband explosion
Pricing
Need for adobe to continue to innovate and be creative
Name brand allows for expansion and continued success
Licensing
Pirated material threatens Adobe’s bottom-line
Reliance on other companies need for operating systems
Apple and Jobs vs. Adobe Flash
Founded
In 1982 by Charles Geschke and John Warnnock
Solutions
Design high end solutions for digital marketing and digital media content
Revenue
FY Ended November 2012- $4.4 billion. Half from outside the United States
Stats
Over 90% of the world's creative professionals use Photoshop
More than 5,000 of the world's top brands use their digital marketing solutions
Deliver more than 460 billion marketing campaign assets each year and measure over six trillion transactions a year on the web.
Quick Facts
Business Environment and
Strategic Implications

Positive Trends
Sociocultural trend of increased online dependence
Greater personal consumption
Social networking, online news, and TV
Modern business use
An increased need for digital media
Multinational operations
Technological trend of cloud computing
Internet based computing
Strategic Implications
Development of Creative Cloud and Marketing Cloud
Larger sales outside of the United States
Primary Challenges
Works Cited
Short product life cycles
Consumer expectations for continuous advancement
It's become harder to stay ahead of the technology curve
Technological trend to move towards more mobile computing
Desktop market being challenged by mobile products
HTML5 and developing Internet standards
Adobe AIR entry into the mobile market
US economy
Financial crisis leads to less consumer spending on high end software
External Environment
General Environment Analysis
Industry Analysis
Competitor Analysis
Internal Environment
Innovation, R&D
What does Adobe need to keep innovating
Should it be a "First Mover"?
Mergers, Acquisitions, & Partnerships
Pricing & Licensing
Should prices stay the same?
What are the risks if it does?
Creative Cloud
Geographical Locations
Located in 34 Countries
North America
Europe
Asia/Pacific

Largest consumer base in U.S.
Corporate Level Strategy
Corporate Level Strategy

Mission Statement
"Adobe's mission is to be the premier provider of products and services in the information age for professional publishing solutions, business publishing solutions, document solutions, and digital imaging solutions in the company's addressed market segments..."
Markets & industries
1. Creative & Interactive Solutions
Advertising
2. Digital Media Solutions
Professional Imaging
3.Knowledge Worker
Basic Business
4. Enterprise
Large and Multinational (Connect)
5. Omniture
Online Business
6. Print & Publishing
Application development

Business & Product Strategies
Debt-to-assets
Adobe: .1512
IBM: .279
Oracle:2.103
Microsoft:.098
Debt-to-equity
Adobe: .2263
IBM: 1.92
Oracle: .37
Microsoft: .1976
Long-term debt-to-equity
Adobe: .2246
IBM: 1.277
Oracle: .3096
Microsoft: .1614

Leverage Ratios
ROCE: Return On Capital Employed
Innovate and Adapt
Quality employees
Constant software redevelopment
Market dominance due to lack of proper substitutes
Flash player: installed on over 98% of internet enabled desktops
Photoshop: over 90% of creative professionals have it installed on their desktops
Growing flow of licensing revenue
Diversification of Products
Expansion and risk-taking
Multi-channel marketing
Customer experience management
Began with only three software programs
Acquisitions
Adobe
Has grown into one of the largest software companies in the world.

Mergers and Acquisitions
Elimination of competitors
Discontinuation of products
1992: OCR Systems, Inc.
1995: Aldus Corporation
1999: GoLive Systems, Inc.
1999: Business Catalyst
$17 billion company and industry
leader for over 30 years
Pricing and Licensing
Adobe: 12.85%
IBM: 28.98%
Oracle: 21.18%
Microsoft: 24.9%

What can be learned by comparing major industry competitors?
Number of Employees
Adobe: 11,000
IBM: 388,000
Oracle: 85,000
Microsoft: 90,000
Hitt, Michael A., R. Duane. Ireland, and Robert E. Hoskisson. Strategic Management: Competitiveness & Globalization. Mason, OH: South-Western Cengage Learning, 2013. Print.
http://thenextweb.com/insider/2013/05/06/after-nearly-10-years-adobe-abandons-its-creative-suite-entirely-to-focus-on-creative-cloud/
http://www.zdnet.com/is-adobe-creative-cloud-attracting-indian-smbs-7000020578/
http://wwwimages.adobe.com/www.adobe.com/content/dam/Adobe/en/company/pdfs/fast-facts.pdf
http://www.adobe.com/company.html?promoid=JOPDG
http://lifehacker.com/what-photoshops-move-to-the-cloud-actually-means-for-y-494225482
http://www.salesforce.com/uk/socialsuccess/cloud-computing/why-move-to-cloud-10-benefits-cloud-computing.jsp
Innovation
Diversification
Acquisitions
Leverage Ratios
http://markets.ft.com/research/Markets/Tearsheets/Financials?s=ADBE:NSQ&subview=BalanceSheet
http://markets.ft.com/research/Markets/Tearsheets/Financials?s=MSFT:NSQ&subview=BalanceSheet
http://markets.ft.com/research/Markets/Tearsheets/Financials?s=IBM:NYQ&subview=BalanceSheet
http://finance.yahoo.com/q/bs?s=ORCL+Balance+Sheet&annual
https://www.google.com/finance?q=NYSE:ORCL&fstype=ii
http://www.pcworld.com/article/2039593/adobe-continues-social-push-acquires-mobile-app-agency.html
http://techcrunch.com/2011/11/11/why-mobile-flash-died-an-adobe-employee-speaks-out/
Gross Profit Margin
http://www.zdnet.com/adobe-marketing-cloud-keeps-focus-on-mobile-with-latest-update-7000020428/
http://www.cmswire.com/cms/web-cms/web-cms-adobe-buys-day-software-for-us-240-million-008168.php
http://www.adobe.com/aboutadobe/pressroom/pressreleases/201101/011811AdobeDemdex.html
http://www.pcworld.com/article/245198/adobe_buys_efficient_frontier_to_boost_its_online_advertising_capabilities.html
http://usatoday30.usatoday.com/money/industries/technology/2005-04-18-adobe-macromedia_x.htm?csp=34
Best Products or Low Costs?
Product Differentiation Strategy?
"producing differentiated goods or services for which customers are willing to pay a price premium"
"producing standardized goods or services at costs below those of competitors"
Cost Leadership Strategy?
Adobe: 87.38%
IBM: 48.55%
Oracle: 39.61%
Microsoft: 73.99%
Premium Pricing
Superior Products
What do you think?
Quality vs Quantity
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Product Diversification
2005: Macromedia
$3.4 billion
2009: Omniture
$1.8 billion
2009: Omniture
2010: Day Software
2011: Demdex, Inc.
2011: Efficient Frontier
2013: Neolane
Diversification
Has achieved dominance over entire
product ecosystems
Where are the contenders?
Company values and culture
Full transcript