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Adobe Systems Inc.

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Alex Nevader

on 5 September 2012

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Transcript of Adobe Systems Inc.

Group 1:
Alexander Nevader
Kristen Carmichael
Chelsea Ouimet Adobe: External Analysis Online dependence for the modern corporation
Companies expanding their multinational operations
Greater media use of Internet
Market and opportunity exists for digital content to grow
Financial crisis
Users (individuals & businesses) are tightening budgets
Poor financial condition of Adobe’s state of incorporation: California Key Strategic Issues 3D film & video as possible new market
Popular trend toward digital content for artists to express themselves
Need for modern businesses to have a well-developed online presence

Our analysis shows that Adobe will have to change their strategies in light of these events Key Strategic Issues - continued Financial Analysis 1982 John Warnock and Chuck Geshke Unmet needs in Technology sector
2005 Macromedia Innovation in design and multimedia Case Analysis 1:
Adobe Systems Incorporated Submitted to Dr. Elie Chrysostome
September 5, 2012 State University of New York- Plattsburgh School of Business and Economics MGM 490B: Fall 2012 General Environment
Physical Environment
Industry Analysis
Five Forces Model
Competitor Analysis External Analysis Primary users of Adobe’s products vary from large corporations to individual consumer users
Customer base is across multiple segments:
Professional design users
Publishing, Advertising
Financial services
Educational institutions
General businesses
Home computer users
Prime market is United States; however Adobe is used globally and is growing in emerging markets
Demographic Segment
United States recent economic downturn

European sovereign-debt crisis

Adobe’s home base of California is at risk due to their budget deficit and unstable economy
Economic Segment
Pricing policies in international markets leads to consumers paying up to twice as much as US consumers

Increased piracy of Adobe products Political Segment Move toward greater consumption of online content among younger generations

First generation of Americans that grew up with the Internet are moving into adulthood

Print material utilized less Socio-cultural Segment
Three-dimensional (3D) film and video

Digital content popularity

Growing necessity for businesses to have an online presence

Rapid rate of change associated with the technological world Technological Segment
Emerging markets such as Europe, the Middle East and Africa contribute substantially to revenues

Increased economic interdependence Global Segment
Individuals and businesses increasingly rely on the Internet

Well-developed online presence for businesses is essential Physical Environment Segment Five Forces Model
Some Adobe products face new entrant threats

Adobe is considered a powerful first mover in the industry

Adobe has managed to successfully acquire some new entrants that have come into the market Threat of New Entrants Original Equipment Manufacturers (OEMs) of smartphones, tablets, cameras and other hardware

Pay-as-you-use software (cloud computing)

Gimp (free photo retouching software)

Kompozer (web authoring system)

Inkscape (open-source vector graphics editor) Threat of Substitute Products Adobe has to fight to stay on top as an innovator

Apple is quickly gaining market share with products like iPad

Highly competitive as there is a shift from PCs to mobile devices

Steve Jobs’ letter to the public criticizing Adobe Flash Rivalry Among Competing Firms Competitior Anlysis Focused on operating systems and desktop software
Competes with Adobe on similar products
Partnered with Adobe on social media sites YouTube and MySpace
Both Adobe & Microsoft are exploring concept of hybrid technology (combines power of desktop with web style mulitmedia)
Microsoft would have to heavily invest in professional designers to strengthen its place in the design industry
Adobe’s products can run on many types of operating systems as opposed to Microsoft Microsoft Like Adobe, IBM has acquired other companies to increase its market share
Working to strengthen its position in enterprise marketing management software
Adobe is also trying to expand beyond their niche of graphic design
Adobe is focusing on web experience management
IBM is focused on cross-channel and multi-channel enterprise marketing management IBM Quark is heavily focused in the desktop publishing market
Adobe continues to compete with Quark in creative and interactive solutions
Quark has an established industry infrastructure built around the utilization of some of its products
Quark’s clients would endure significant costs if they switched to Adobe InDesign
Adobe relies on its innovation, strong brand identity and improved integration Quark Apple integrates its digital imaging features with its operating system
Other OEMs also try to differentiate their product with free digital imaging software
Adobe faces stiff competition in digital imaging solutions
Adobe heavily relies on the online advertising industry’s use of Flash for video advertising
Apple strongly criticized Adobe’s Flash product
Adobe is still strong in this market due to high brand awareness and positive recommendations by market influencers Apple, Corel & OEMs 30 Years of high-end design software

First mover - avoided competition

Acquires any competition that develops

Designs and markets to professionals Case Overview: Introduction Main Products Constant updates for new and existing software

Software indispensable

Extensive support networks Activities Set Standard for communication and collaboration
Four core values:
Involvement Adobe's Culture Internal Analysis Tangible & Intangible Resources

Core Competencies – Value Chain

Competitive Advantage

Performance Appraisal Internal Analysis Financial Resources
One third of financing comes from debt
Not highly leveraged
Current ratio 3.01% as of December 3, 2010
Good liquidity
Operating margin is profitable
Organizational Resources
6 Senior Vice Presidents Tangible Resources Physical Resources
Main Corporate Headquarters in California
Operates in 34 different countries
Technological Resources
Pioneering Software
Licensing Tangible Resources Human Resources
Innovative employees
Ideas come from everyone
Innovation Resources
The best of the best employees
Intellectual assets
Reputational Resources
Brand Loyalty
Positive recommendations Intangible Resources Value Chain Value Chain (Primary) Value Chain (Primary) Human Resources
CEO Shantanu Narvayen
6 Senior Vice Presidents
Programmers Value Chain (Primary)
Intellectual assets
6 different products/services in 34 different countries supporting over 1 trillion users Value Chain (Secondary) Marketing
Professional design use
Educational institutions
Home computer users
General business
Business improving general business functions
Follow-up service
Product support networks and services Value Chain (Secondary) Management Information Systems
6 reportable products and services
Creative Solutions
Digital Media Solutions
Knowledge Worker
Print and Publishing Value Chain (Primary) Diversified product lines

Largest software company

Innovation strategy

Brand loyalty Competitive Advantage Financial Analysis
SWOT Analysis: Adobe Systems Inc.
Adobe is competing to stay on top as an innovator and leader in the fast-moving and ever-changing technological industry. General Problem Statement
Merge with Microsoft

Expand on existing markets of individual consumers

Enter into the market of 3D film & video

Focus on all-encompassing needs of the modern corporation Strategic Alternatives Merge with Microsoft Analysis of Strategy Option 1 Expand on Existing Markets of Individual Consumers Analysis of Strategy Option 2 Enter into the Market of 3D Film & Video Analysis of Strategy Option 3 Focus on More General Needs of Modern Corporation Analysis of Strategy Option 4 Based on our analysis, we recommend:

Strategy 4:
Focus on more general needs of modern corporation Recommended Best Strategy Research & Development related to the supply-chain management needs of corporations

Further develop video-conferencing software and other communication-based software

Improve existing security vulnerabilities in an attempt to counter Apple’s criticisms Implementation: Short-term Diversify their products to include all facets of organizational structure

Adopt marketing strategies to tap into growth potential in emerging markets

Branch software into Apple and other OEMs Implementation: Mid-term Continuous software upgrades & customer support

Become industry leader for management systems in multiple sectors

Increase financial potential through increased customer base Implementation: Long-term No organization is immune to external threats

Staying innovative and remaining an industry leader involves:
Taking risks
Constantly adapting
Anticipating customer needs & competitors’ next moves

Competitors are not just those in the same market, but may include substitutes in the industry Lesson to Learn from Adobe Case Do you think Adobe is in a position of vulnerability? Explain why or why not.
How do you think Apple’s recent growth and success will affect Adobe’s market share in the future?
How do you think Adobe’s relationship with Apple and other competitors will change as technology rapidly changes?
As the shift continues from PCs to iPads, tablets, handheld devices and smartphones, how can Adobe stay relevant? Discussion Questions
Not relevant to Adobe case: Adobe governs the entire product ecosystems and provides the means to create, market and mass distribute Bargaining Power of Suppliers Well-informed consumers

Attractive prices of similar products may lead consumers to switch

Apple refuses to offer Adobe Flash security updates

Adobe content has not been allowed on Apple’s handheld devices or iPads

Software used to create Adobe Flash content is an important component of software sales Bargaining Power of Buyers Threat of new entrants is low for some Adobe products
Power of suppliers (N/A)
Power of buyers is strong
Product substitutes is high
Intensity of Rivalry is strong

Based on the Model of Five Forces ,
Adobe is in an unattractive industry Industry Analysis Conclusion - - - - - - - - - - - - -
Full transcript