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The firm that I have selected in my assignment of strategic leadership and business transformation is a multinational company SUNGARD, which has revenue of approaching 6 Billion $(as of 3rd qtr 2009). It features in the fortune 500 list by Forbes at a respectable rank of 380. It had 21,500 employees as of 2009.
SunGard is a multinational company based in Wayne, Pennsylvania, which provides software and services to education, financial services, and public sector organizations. It was formed in 1983, as a spin-off of the computer services division of Sun Oil Company, during a period of low crude oil prices. The company has more than 25,000 customers in more than fifty countries. The name of the company originally was an acronym which stood for Sun Guaranteed Access to Recovered Data, a reference to the disaster recovery business it helped pioneer. Based on its strong performance SunGard has moved up to 380 in the Fortune 500 list in the year 2010(forbes 2010).
SunGard has historically grown by acquisition. Past mergers include Performance Pathways, Vericenter, InFlow, Strohl Systems, Comdisco Continuity Services, and Guardian it PLC on the availability side, Systems & Computer Technology Corp. (SCT) on the higher education side, and GL Trade, MINT, TRAX, CARNOT AG, Front Arena, Martini, Monis, APT, Reech, VPM, Phase 3 Systems, Infinity, Decalogue and Opus on the (primarily financial) software and processing side. SunGard has completed more than 150 acquisitions over the past 20 years.(Company website)
Now that we are sufficiently aware of the company profile and other niceties, I will move on to describe how I have approached this assignment. In this assignment, I will take specific generalization on the organizational structure and inner working of the company. Based on my analysis of my understanding of how the company functions, I will base my recommendations as an analyst and will focus my recommendations on what I have learnt from the various models that make strategic planning easier. These being the various analytical tools such as SWOT analysis and PESTEL they will be analyzed in the further discussion. These analytical tools will form the first part of my analysis of the company. This will be closely followed by the recommendations and future plans as well as the fields the company can look forward to succeeding in. this will involve all the market influences as well as the removal of those redundant components of the company that may or already have become a liability.
The last and final part of this assignment, I will present the reflective journal that will include my views and analysis reasoning about the company and enlist my thoughts about the assignment as a whole.
Below we shall see the capability model of the company Sungard.
Capability And Performance Model of SUNGARD:
The company info in the introduction was a brief overview of the entire company listing. To break it down, we shall renew our view of the company. SunGard provides software and processing for financial services, higher education and the public sector. It also provides continuity-assurance and production data center hosting services to enterprises of all types.
To summarize the various services of SunGard, we will address them by the groups in which category they belong. Basically SunGard has four basic services and functional systems. To enumerate them is as follows:
SunGard Financial Systems provides mission-critical software and IT services to institutions in virtually every segment of the financial services industry. These solutions meet a multitude of needs, but support a common aim: to help drive our customers' unique business strategies-whether that means increasing efficiency, improving customer service, complying with regulations, or capturing growth opportunities through innovation.
SunGard Availability Services is the pioneer and leading provider of information availability solutions. In 1978, SunGard invented the business of disaster recovery, which has evolved into availability services.Â SunGard now offers a complete range of information availability solutions that include managed IT, professional and business continuity services. SunGard also has technology and systems management services for application and data center outsourcing, as well as business continuity consulting services and planning software.
Sungard Higher education involves interaction with the educational system in a greater deal of exposure and it offers help to colleges and universities all across the world streamline their processes and enhance education.
As can be surmised from the information provided, we see that sungard provides services across a diverse range. It has a very wide customer base and enjoys a very widespread penetration in markets. This informs us that the company has a strong horizontal integration across its reaches.
We shall have a look now at the PESTEL report of sungard. PEST is an acronym for Political, Economic, Social and Technological factors, which are used to assess the market for a business or organizational unit. Kotler (1998) claims that PEST analysis is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. The headings of PEST are a framework for reviewing a situation, and can in addition to SWOT and Porter's Five Forces models, be applied by companies to review a strategic directions, including marketing proposition. PEST or PESTEL (I have given a PEST) will streamline our discussion towards a more systematic approach towards SWOT analysis.
Due to the fact that Sungard is not limited to a single country, its political evaluation becomes much more complicated.
The current legislation on IT and IT related products are such that most governments promote foreign companies to have a share of the market.
Laws and regulations across many and varied countries do have a detrimental effect on the company prospects. Also handling All these different operations require that the company be as decentralised as possible. It qwont be possible for the company to have central chain of command as then the decision making capacities will be affected and that will make the company have a redundant outlook towards change. TheÂ Monetary Policy Committee (MPC) of various countries will also need to be taken into consideration.
In almost every country, economic trends are such that those services flourish which believe in providing cost effective products and services. General taxation on products has an effect on the ability of a company to provide services at a reasonable rate. IN addition to this, Industry factors such as lesser penetration in markets and international trading factors and policies drive the market forces to have a better effect of moulding businesses as a whole. Several other recent economic factors have come up that lend a better insight into the shaping of the economics of a companies presence ion other countries. And these are that indigenous companies as well as foreign companies are coerced into hiring domestic employees as contrasted with earlier times.
The sociological factors that affect a company are many and varied. Some of the social aspects of a companies presence in a country may include the general perception of the general masses towards the company. Also they include the impact of the company on the social and cultural dynamics of the country. In the case of sungard, the public sector as well as the Sungard Higher learning sector takes care of this aspect of the company.
In the social scenario, Sungard has taken definite steps to ensure that it is fulfilling its corporate responsibility towards the country in which sungard has a presence.
In case of technological aspect, Sungard is one of the leading technology provider company. It is sufficiently tech advanced to not have to worry about other competitors beating it at its game. The main reason for the same being that Sungard provides its customers with custom database solutions to better integrate it with the customer likes and dislikes. Also, it has a professional approach towards building the software solutions.
As seen from the Pest analysis, we are now in a position to elaborate the corporation in terms of its strengths and weaknesses in the case of SWOT analysis. "Â A SWOT analysis should not only result in the identification of a corporation's core competencies, but also in the identification of opportunities that the firm is not currently able to take advantage of due to a lack of appropriate resources" (Wheelen, Hunger ). SWOT analysis has been a framework of choice among many managers for a long time because of its simplicity and its portrayal of the essence of sound strategy formulation - matching a firm's opportunities and threats with its strengths and weaknesses. Central to making SWOT analysis effective is accurate internal analysis - the identification of specific strengths and weaknesses around which sound strategy can be built.
SWOT analysis of Sungard:
Enhanced presence in several countries.
A widespread Horizontal integration of its services.
More than sufficient manpower.
Technologically superior solutions to consumer problems.
Perception of not needing a professional solution to mundane problems
Lesser number of propriety software.
Mindset of Sungard solutions being costly.
Not into varied markets i.e relies on certain core markets to ensure profitability of the enterprise as a whole
Needs to invest in Development of Software building tools.
Needs to grab hold of smaller business markets.
Has potential of being the sole provider for Specific software solutions in esoteric markets.
Current downturn in global economy has led to a lesser demand for IT and ITES.
Newer products have made some products obsolete.
Needs to remove low performing modules.
As observed from the above, Sungard has been a leading provider for IT and IT related products for over 30 years. The core business of the company is the Disaster recovery solution for Databases. The company is ranked in the top 10 Solutions providers segment in the world according to the company's website. Coming to the general demographic of an average Sungard employee, the upside of the employee demographics is that Sungard has a relatively experienced and huge staff and this makes Sungard a forceful company that has a highly skilled and extremely sufficient workforce. Such factors affect the overall profitability and company health. The reliance of Sungard on acquisitions capability as is evident from horizontal integration is one of the key factors that will affect its position in the economic crisis.
Sungard has invested a lot in horizontal integration and this is something that will work out in its favour in the global economic downturn. In the present crisis, the deciding factor is how the company will utilize its resources effectively to acquire profitable businesses will decide in the long run how well the company is capable to survive the backlash.
The many and varied recommendations i as a consulted analyst propose for Sungard to make it out of the economic slowdown are:
Take steps to curtail expenses. This step is taken to ensure that company does not spend more than feasible amount.
Sungard as a company is money wise very stable and it doesnot have many debts. Overall the company is in profit and the revenue it generates is sufficient for it to think about corporate expansionism.
We cant have a single solution to the problems of global finance. Rather, it is a matrix of several steps that have to be taken to ensure that the company not only survives but flourishes. The various solutions proposed by business analysts are cost cutting, labour reduction, removal of poor performing services, emphasis on core competencies etc.
Sungard already has an impressive horizontal integration which means that it is a company that has prospered by acquisitions and integration of many businesses into one conglomerate. There is not much that can be wished from SunGard on the horizontal integration front. However in most of the software solutions that sungard provides, there is usage of third party propriety softwares which include database systems and other modeling tools. To go onto the technical level, softwares such as ones provided by oracle and IBM (database and rational rose resp.) are essential to the production of world class softwares by Sungard. These can be replaced by indigenous software through R&D which will make it beneficial for SunGard in the long run by not paying for the licencing of these softwares.
Due to the Global economic meltdown, many companies may be facing a severe financial deficit as well as a danger of bankruptcy. In my opinion, this is the best time for a company with the muscle of Sungard to look forward to even better horizontal integration. Sungard has an opportunity to incorporate several startups into its conglomerate. It has worked out for sungard in the past and it will turn out for the best in present scenario as well.
Coming to the topic of backward integration, SunGard will do well if it also emphasizes on streamlined backward as well as forward integration. It is a good business model to eliminate bottlenecks and third party businesses to have a chunk out of the profits of the company.
Since Sungard is a multinational software solutions provider, it will be in its best interest to focus on its software development to those branches where it is observed that the development is most profitable. This step may include concentration and expansionism of those centres that are most cost effective to the company.
Also keeping in mind the lower expenditure on IT and ITES due to global recession, Sungard has two options facing them in order to maintain its customer base and profitability:
Reduction of the company portfolio and concentrate on core competencies.
Reduction of the no. of employees for the sole purpose of sustainability.
The above are just a sample of the many solutions that Sungard must look to for its safe and stable future.
The various factors that were analyzed in this report has made it abundantly clear that the various factors that led to the economic meltdown had far reaching consequences and steps had to be taken to ensure that all companies do not face the crisis. Companies had to safeguard themselves from bankruptcy and save the interests of the stakeholders. This economic crisis is a stark reminder of the great depression of the early 1900's. To safeguard the interests of the stakeholders as well as other parties concerned in the welfare of the company as a whole, steps to be taken and the strategic plans to be implemented need to be made on sound information as well as in depth analysis of the external and internal factors affecting the company.
This in depth analysis of the factors and data about the external as well as the internal agents affecting the company need to be examined in a scientific way. Scientific here meaning organised. The various methodologies available to us include PESTEL reports, SWOT analysis, porters five force model and amongst others ansoff analysis. These analytical tools help us to form a generic idea and visualize the company as a whole. These tools also enable us to have a tacit understanding of what goes on inside and outside the company.
Explanation for the recommendations made by me in the assignment are given in the next few lines. First and foremost, the recommendations for the strategies the company needs to follow need to have a solid foundation. The first recommendation is of cutting back on useless expenses. This step is the most straight forward and needs very little explanation. In the economic crisis, revenues fall severely short and due to this companies need to take care that they cut the excess expenses and concentrate on the base issues and functionality that makes the company keep going. The company can look at several options that will cut costs of running without any serious repercussions.Secondly, the debt issue doest raise its head as in case of sungard, however, corporate revenue is one that is a strong point for sungard.
other recommendations include exploring the various generic solutions to the problem of global finance. Other issues include exploring options for removing the reliance on third party software this leads into bleeding of the profits of the company as a whole. Since SunGard is a relatively huge company, it can look at options of expansioism by incorporation of other smaller companies and further enhance its horizontal expansion. similarly backward as well as forward integration may also be looked into.
What i realised after completing this assignment was the complexity of the conglomerate of issues relating to the Strategy making and creation of a suitble plan to overcome serious issues
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