Oracle Attempts to Consolidate the Software Industry

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Presentation transcript:

Oracle Attempts to Consolidate the Software Industry Oracle announces acquisition of Seibel Systems for $5.3 billion in cash and stock in late 2005 Oracle had completed 7 acquisitions prior to Seibel acquisition Oracle’s intensified focus on business applications software reflects substantial changes in its operating environment

Case Study: Oracle Attempts to Consolidate the Software Industry 1. How would you characterize the Oracle business strategy (i.e., cost leadership, differentiation, niche, or some combination)?

Case Study: Oracle Attempts to Consolidate the Software Industry Cost leadership as Oracle seeks to Add revenue with little additional cost Grow revenue through cross-selling Achieve economies of scale through better operating facilities utilization Achieve economies of scope by closing duplicate G&A, R&D, and sales and marketing departments Niche as Oracle focused on increasing share of business application software market Differentiation as Oracle attempted to differentiate itself by developing the ability to offer a range of integrated business software applications (similar to Dell, HP, and Xerox more recently)

Case Study: Oracle Attempts to Consolidate the Software Industry 2. What other benefits for Oracle and other competitors such as SAP do you see from further industry consolidation?

Case Study: Oracle Attempts to Consolidate the Software Industry Additional pricing power by reducing the number of competitors Depriving competitors of potential customers

Case Study: Oracle Attempts to Consolidate the Software Industry 3. Conduct an external and internal analysis of Oracle describing those factors that may have influenced the development of Oracle’s business strategy?

Case Study: Oracle Attempts to Consolidate the Software Industry External analysis Oracle’s core database products, which accounted for 70% of firm’s revenue) achieving market saturation Customers want vendors providing full range of integrated software products Internal analysis Oracle’s core competency is developing database software ( a niche product) Oracle’s products based on proprietary software that doesn’t easily integrate with other software products Conclusion: Oracle not well positioned to meet changing external trends

Case Study: Oracle Attempts to Consolidate the Software Industry 4. In what was the Oracle strategy targeting key competitors?

Case Study: Oracle Attempts to Consolidate the Software Industry Oracle’s strategy targets competitors by eliminating partners with whom competitors had worked to augment their product offerings to customers (e.g., IBM and Seibel).