A strategy can be defined as a plan of action that is designed to help achieve a predetermined goal, target or objective. In business, a strategy is a road map that is followed by the management to help the organization achieve predetermined goals and objective. An organizations` strategy can be either long term or short term. Drop box Inc is a company that is based in San Francisco, California. It was formed in the year 2007 by two students and its startup capital was funded by an incubation company (James, 2013).
The company offers file hosting services and other services such as cloud storage, synchronization of files, personal cloud and creating software for clients. Drop box works by creating a folder in the computer of a user client and the contents of that folder are synchronized to the servers of Dropbox inc . The company offers clients limited free storage capacity after which paid subscriptions are available with greater storage capacity and additional superior features. Such extra features include remote wipe, sharing controls that are advanced (Quick and Choo, 2013). The vision statement of Drop box Inc is “to become the leading global technology company”. It’s important for the company to put in place strategies that are in line with this vision and that encourage creativity and innovation among its employees.
An analysis of the business environment of Dropbox Inc will evaluate the strengths and weaknesses of the company. There are various strengths that Dropbox Inc has. The company has very highly qualified and experienced staff. This helps the company to be highly innovative and develop new products on a regular basis. Having the right balance between the management and is very important in determining how successful an organization will be(Quick and Choo, 2013).Dropbox Inc is able to attract and retain its employees. This can be attributed to the suitable working environment that the company provides. This can also be due to the motivational and reward criteria that the company uses to reward its employees.
Another strength of Drop box Inc is that it has a very strong and vibrant research and development function(James, 2013). The company has been developing products that are in line with its vision and mission. The company is also very focused on achieving optimum consumer satisfaction. To achieve this, the company carries out thorough market research to determine the needs of the consumers. This helps the company to make improvements to the existing products as well as develop new products that suites the needs of the consumers. The very creative and innovative staff has helped Dropbox to come up with the various products within a short period of time. With the fast rate of change of technology, it’s very important for companies to remain innovative especially for a software development company like Dropbox.
Another strength that Dropbox Inc possesses is that it has the first mover advantage. This is because, it was the first company to start offering the services that it offers and therefore it has an edge over other competitors who may enter the market. The process of storing, sharing and retrieving data using the Dropbox services is easier than the use of other companies to carry out the same function. The ease of usage means that it is more user friendly and therefore more preferred by customers. The fact that Dropbox offers its customers free limited storage space is also an advantage in that the company portrays itself as consumers driven rather than a profit driven company. Due to this, Dropbox is able to endear itself to both new and existing customers and therefore attracts more clients.
There are also several weaknesses of Dropbox compared to most of its competitors in the technology industry. The main competitors of Dropbox are mostly established technology giant companies such as Google Inc,Microsoft and Apple. One of the weaknesses of Dropbox Inc is that there are security concerns on the customers data stored in their servers (Muhammad, 2015). Most customers are concerned that the information that they store with Dropbox may get lost at some point or may be accessed by unauthorized people. This is a very serious concern especially at this period where there is a lot of data theft and other cyber crimes globally. It may lead to the company losing customers.
Another weakness of Dropbox is that its services and products are less integrated to the internet compared to companies such as Google, Apple and MS. Most of the services offered by Dropbox competitors are highly integrated and modeled towards working appropriately using the internet services (Quick and Choo, 2013). This is not the case with dropbox whose most of the products are not internet based. This is a major concern for the company if it is to stay competitive in this market where innovation is the order of the day.
The opportunities that Dropbox can exploit in this industry are many. One of the opportunities is in the research and development function where further research can be carried out to determine various market needs(David, 2013). New products and features can then be development hence resulting to expansion of the company(James, 2013). Dropbox can also focus on capturing corporations and make them its main client. This is informed by the fact that most companies handle bulk data which is sensitive and valuable to the organizations. Therefore, Dropbox can offer these companies storage space in their services and charge them a particular amount of money.
The social media market is also growing at a very fast rate and it does not look like slowing down. Dropbox can therefore develop technology products that are meant for social purposes and the success of theses products in the market can bring major success to the company as a whole. The threats for Dropbox is mainly the high and increasing level of competition in the industry(Betts, 2011). The competitors have financial muscle and are highly innovative and therefore its important for the company to develop the strategies that will help it remain competitive and grow in future. The issue of security on customer data is also a concern with the increasing cyber crime cases(James, 2013). Some large companies such as Yahoo have lost huge volumes of data to hackers and therefore its important for the company to enhance security of its servers in order to increase the confidence of the consumers and avoid being a victim of data theft.
Strategies that Dropbox should apply for the period between 2017 and 2027
The above analysis of the internal and external environment of Dropbox is important in coming up with strategies that will help the company become sustainable and grow in future. This report evaluates the strategies that dropbox should use in order to navigate the tricky and highly competitive technology industry for the next one decade.
One of the strategies that Dropbox should apply in order to grow and become more competitive is the differentiation strategy. The company should seek to make its products unique and superior than that of its competitors (Hitt, Ireland and Hoskisson, 2016). Since in this technology industry, the needs of customer are specific and the level of competition is very high, this strategy will be very effective for Dropbox. Since Dropbox has highly innovative employees, it’s important that the company focuses its resources to research and development. The research and development function should continuously come up with new products that are unique from those of the competitors(Caviglione, 2016). For example, a product like the dropbox mobile app should be differentiated from other mobile apps that perform the same function. This can be done by creating additional features to it or by making it faster and more effective. Its sharing speed can be increased to the extent that there is no competitor mobile app such as flashare that rivals it. Differentiation of these products will mean that Dropbox will have the effect of attracting more customers to buy the products.
Brand loyalty is also attained by the company if this strategy is implementedperfectly(Ansoff, 2014).Brand loyalty means that once a customer buys a product belonging to Dropbox for the first time, they will find themselves buying many more times. Successful product differentiation for dropbox will also help the company to set up a premium price for its products and services. This will in turn increase the per unit revenue for every unit sold and increased net profit margins. Differentiation of products by Dropbox will also enable the company to create a strong brand which customers can proudly identify themselves with. A strong brand comes with many advantages such as ability to attract and retain employees and high sales volumes (Rotha?rmel, 2017). Proper implementation of this strategy will help Dropbox to become a top brand in the technology industry competing with the likes of Google and Microsoft. The company will also be able to hit high revenue targets and grow in size and global presence. These will be in line with the company’s long term goals and objectives.
Another appropriate strategy that Dropbox should use in its 10 year strategic plan is on the cost and pricing aspect. Dropbox should seek to minimize its costs of production over the course of the next ten years. Minimizing operational costs will be important in ensuring all the costs in the organization reduce(Gaughan, 2017). One of the ways through which Dropbox can reduce its operational costs is by automating all its administrative processes by adopting new technology. Automating repetitive tasks by the company will save the costs of labor that would have been used in paying workers. Dropbox should also minimize the costs of maintaining and running its servers and producing new products. Another means of reducing costs by the company is through cutting its advertisement and marketing expenses. Dropbox can reduce its costs by outsourcing most of the non core functions and activities of the company (Wheelen, n.d.). The company can outsource functions such as accounting, servicing of the companies hardware computer facilities and other non essential activities of the company. This will help the company to reduce costs and help the company executives to pay more attention to revenue generating activities of the company(Roebuck, 2012). This will in turn result to increased productivity.
Marketing costs eat into most the company’s expenses and therefore by trying to use cheaper and effective methods of advertising and marketing which will save the company money and other valuable resources. This step will be important in reducing the overall costs that the business incurs. This will in turn reflect in the prices of products and services offered by the company. The company will reduce its prices when it produces at low costs and therefore customers will buy more of the existing product at a cheaper price (Williams, 2009). This strategy is very important for Dropbox since this industry is very competitive. Customers in this industry are also price sensitive and offering products to customers at lower and affordable prices will help the company to generate more sales. The products offered by companies in this industry are more or less the same and therefore by offering its products at a lower price, Dropbox will be able to outperform its competitors and grow at a fast rate. By the year 2027, the revenues and profit margins of Dropbox will have grown to very high levels.
Another strategy that should be employed by Dropbox to help the company achieve its 2027 strategic plan goals is that of mergers and acquisitions. The future growth of Dropbox will depend on acquisitions that the company will be able to make. This involves consolidation of two or more businesses that are related. The aims and objectives of mergers and acquisitions differ depending on the aims and intention of the buying company or the merging companies(Sherman, 2011). Some of the basic objectives of mergers and acquisitions include increasing the market share, improve profits and increase the companies influence in the industry or gain access to a valuable resource (Vachon, 2008).
Before dropbox makes a decision on acquiring another company, its important for the management of the company to make an analysis and determine the core competencies of the target company. The acquirer should make sure that the target company fits the profile of Dropbox and that it will be a positive addition to the company in all aspects. The company should ensure that it gets value for its money and that the acquisition is in line with the companies` long term objectives. Dropbox should target either horizontal or vertical mergers (Saloner, Shepard and Podolny, 2011). This is because horizontal mergers will help to expand the business and the vertical mergers will compliment the company especially in the area of production.
The main motive for a merger or acquisition for any company is to achieve synergy. This means that the value and performance of the companies will improve when two companies merge compared to when they exist independently. To achieve its growth objectives, its important for Dropbox to acquire other companies that are similar to it. The merging of two companies will help the company grow in terms of assets, expertise and labor which in turn leads to increased growth opportunities(Sekhar, 2011). Through acquisitions, Dropbox will also be able to acquire unique capabilities. The company can also take over the patents and copyrights of the organization it has acquired and therefore use them to profit the organization. Innovation and efficiency will also be improved through this process
Conclusion
The strategy that a company formulates and chooses to implement is very important in determining the growth and strength of the organization in the future. Due to this reason, its very important for a company to put in place the right strategies that will help the organization to achieve its goals and objectives over that period of time. One of the most important strategies for Dropbox is the use of product differentiation and diversification (Freeman, 2010). This strategy will help Dropbox to increase its product portfolio and this will in turn help the organization to expand and increase the sales(Thompson, 2010). Product differentiation will also help the organization to create an identity for itself.
The company will also be able to able to keep up with the intense competition in the industry over the next ten years. Dropbox should also use mergers and acquisitions as a growth strategy. Acquiring other similar organizations will help Dropbox to expand and increase its influence and market share in the industry. Acquiring other similar companies will add into the core competences of this organization and this will help the organization to achieve competitive advantage in various aspects. Cost minimization will also be very important for Dropbox in its 2017-2027 strategic plan. Minimizing costs by Dropbox will help the organization to offer its products at a cheaper price compared to its competitors and therefore the company will be able to compete more effectively. Therefore, its very vital for the company to implement its strategic plan to the letter so as to steer the organization towards the desired direction.
References
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