CORPORATE VENTURE

Executive Summary

While basing on the theoretical concepts of corporate entrepreneurship and the company analysis of Atlassian, the present work creates a corporate venture plan for the company. Even though the company’s industry seems competitive, it offers attractive opportunities which it can utilize to increase its product portfolio. In addition, the plan is expected to take advantage of its established presence in the market and of its customer base, consequently creating competitive superiority. It is important to highlight that in the present hyperglobal competitive markets, corporate entrepreneurship is inevitable for firms to remain competitive and viable.

Table of Contents

Introduction 4

Theoretical concepts 4

Corporate venture plan 7

Conclusion 13

References 14

 

Corporate Venture

Introduction

In any firm, there are different types of plans, including staffing plans, sales plans and marketing plans, among others. Plans, according to Wadhw Phelps and Kotha (2016) can either be strategic or operational. In addition, they can also be a long or short term. Irrespective of their area, different plans have the drive of providing direction and organization for the accomplishment of any organization in a fast evolving, hypercompetitive global market. A business plan for a corporate venture is a text that describes all the applicable peripheral and internal elements that are involved in the launch of a corporate entrepreneurial venture. As pointed out by Light (2015) it involves an incorporation of several practical plans, which address long and short termed decisions. In this regard, the present work provides a corporate venture plan for Atlassian.

Atlassian is an enterprise software plans involved in the development of produces for software developers among other corporate individuals (Bass, 2016). It is well recognized for its subject in tracking application, Jira and for its functional team. It is worth mentioning that despite its popularity in project management and chat apps including HipChat, the company doesn’t run on sales quotas and end-of quarter discount. As a matter of fact, the company lacks a sales team. Originally an incongruity in the IT and ICT world, the company has gradually been labelled as a beacon for other business that are depending on the world of mouth to create huge market shares.

The way in which technology firms sell their software has been altered drastically in the past decades. The accessibility of open source replacements has made conventional brands and upcoming contestants in the game to provide more free trials and online promotion among other products. The move has, however worked to the advantage of the company since in 2015, it announced a sale of $320 million. In addition, in the same year, it made its initial public offering on the NASDAQ stock exchange that placed its market capitalization at $4.47 billion (Bass 2016).

Theoretical concepts

Different scholars have conventionally comprised the ground in order for firms to preserve and achieve competitive superiority, they should develop a justifiable competitive advantage (Wagner and Hollenbeck 2014). The cogency of the concept that competitive superiority is sustainable started to be examined towards the close of the previous century as the twofold forces of technological change and globalization amplified antagonism and eroded bases, in some cases long recognized one, for competitive advantage. As pointed out by Christensen (2013) individuals started to regard innovation as a characteristic feature of effective management practices and the ground that competitive superiority must be transformed substituted the ground that sustainable advantage is justifiable. The necessity for restitutions made many scholars and managers to deliberate how the entrepreneurial courses must be ratified in reputable organizations with the aim of achieving and preserving competitive advantage. Ultimately, the birth of Corporate Entrepreneurship.

According to Barrett and Weinstein (2015) corporate entrepreneurship purposes to reinstate established organizations, hence facilitates their survival and cheapness by using various innovation-based initiatives. Over the past decade, the latter’s scope has significantly stretched out. Some of the early authors often adopted abstruse sights of the sphere of corporate entrepreneurship in a way that what was considered entrepreneurial about the occurrence under study was either not explicitly defined or was not differentiated from other occurrences which were frequently related to innovation within organizations (Barrett & Weinstein, 2015). The insights of Burgers and Covin (2016) added the needed lucidity to the matter of corporate entrepreneurship sphere by backing that the latter should be viewed as including two sets of occurrences which include cooperate venturing that entails the creation or rather the birth of new businesses within current organization and strategic renewal that entails the transformation of organizations through the renewal of key ideas and concepts on which they are built upon. Corporate entrepreneurship was later on defined as the process where individuals in relation to an existing organization create a new organization or instigate renewal or innovation within the organization. Synonymous with the latter view, Dess et al (2003) claimed that corporate entrepreneurship entails both strategic renewal and corporate venturing but also recognized the concept of innovation, that is the introduction of an original idea or invention into a commercially serviceable form, which is not only new to the market but also has the capability of changing the competitive environment and the company.

The most current conceptualizations of corporate entrepreneurship have further extended its sphere. Several scholars suggest two categories of occurrences that represent the sphere of corporate entrepreneurship, including corporate venturing and strategic entrepreneurship (Morris, Kuratko & Covin, 2010). While corporate venturing refers to the similar new business phenomena that was mentioned in previous typologies, strategic entrepreneurship category of the latter refers to a range of concepts of the specific phenomena which include strategic renewal and according to Oakey (2015), Schumpeterian disruptive innovation among others. Furthermore, as pointed out by Morris, Kuratko and Covin (2010), strategic entrepreneurship under the corporate entrepreneurship construct both acknowledges the Schumpeterian disruptive innovation and the procreative that creates new businesses, which can be a characteristic in break-through innovation where companies struggle in the execution of new prospects when faced with improbabilities in different ways. To be specific, the strategic entrepreneurship class of the corporate entrepreneurship comprises a various initiatives that do not essentially include the addition of new businesses to the corporation. The well-known forms of strategic entrepreneurship, which include organizational rejuvenation among others, entail innovation, which is imperative for competitive advantage.

As the conceptualizations of the corporate entrepreneurship domain have increased throughout the years, as pointed out by Morris, Kuratko and Covin (2010), concern in related phenomena has paralleled the conjectural developments of the latter. The concepts include corporate venture capital and entrepreneurial orientation. Corporate venture capital as pointed out by Morris, Kuratko and Covin (2010), are used in financing internal entrepreneurial activities, however, they are more commonly used when one wants to get an equity interest in or ownership in a new venture that originates externally. Entrepreneurial orientation on the other hand drives specific acts of the corporate entrepreneurship and is commonly abstracted as either the simultaneous display of behaviors that reflect risk taking innovativeness and proactiveness or rather as the sphere of activity which entails the dimension of innovativeness, proactiveness, independence and competitive fierceness. Jointly, the previous annotations on the extensive scope of corporate entrepreneurship and its associated singularities suggest that the latter area is of scholarly inquiry which welcomes new insights from diverse standpoints on the matter of how established organizations might respond best to entrepreneurial necessities they face and the various opportunities that they are confronted with. It is nonetheless important to highlight that according to Morris, Kuratko and Covin (2010), corporate entrepreneurship could be a major source of competitive superiority.

Corporate venture plan

The opportunity

As highlighted by Digital Technologies (2017), Australia has a growing, multi-faceted computerized economy that has an e-prepared government, enterprises and purchasers and a proficient and inventive ICT R&D area. The demand for digital technologies and the creation of opportunities, including cyber security and data centres within the country is driven by its need for efficiency in service provision and the need for economic transition. Evidently, the company has succeeded in some of the ICT and IT domains. Nonetheless, with the present hyperglobal competition, the need for corporate venturing is inevitable. As the information technology space is overwhelmed by cloud revolution among other aspects, big players are pouring dollars in billions to not only increase their scale but also their attractiveness in the cloud space. For instance, in the financial year 2Q17, Oracle dedicated more than $1 billion in the construction of data centers (Shields, 2016).

As pointed out by Snir (2015) the next big prospect is focused on opening the public cloud infrastructure for organizations that are locked out of this phenomenon and who are missing out on the clear benefits of the infrastructure as a services model such as better economics, agility, leverage of resources and a pay per use model. The advantages of being able to penetrate into public cloud are well known. The application are numerous: among them is cloud bursting which helps companies that require more resources than what is available in small data centers. One important thing to note is for one to be successful during the early stages of investment in data centers, they have to acquire experience and expertise in the domain. According to the scholar, for companies that are partnering with big players in the IT sectors, characterized by a good track record, acquire a competitive advantage (Snir, 2015).

Exit strategy

Various customers acquire a majority of data centers as support activities. The acquirer herein will be required to divest non-core activities including retaining primary businesses such as cloud computing among others. Exit scenarios for the company and its shareholders include; regional subsidiary of data centers on a long term basis and merger with similar diversified service portfolio

Competition

Data center market place in Australia is dominated by Equinix Australia data centers where more than 700 companies reside in its colocation amenities while taking advantage of the digital ecosystems to foster their growth and create value. The facility hosts a growing electronic payment industries including network providers and banking. In addition, emerging services including online gaming while capitalizing on the interconnectedness deliver superior services and therefore the competition is expected to be stiff. Nonetheless, basing on its well established brand name and satisfied customers, the company can effectively compete with the latter.

Revenue model

The company will possess an expanded and distinguished twofold revenue model basing on its business activities that are vertically integrated. It will generate revenue via commission from the sale of its products.

Entry strategy

The company will endeavor into the data center domain through creating its own data center through increased capital expenditures. The company will therefore come second in line after Equinix.

Proposal

The company possesses a distinctive presence in the market and positioning owing to its vertically diversified business undertakings. In addition, it operates in one of the fastest emerging sectors. For it to reduce the market risk, the company will begin with, its customer base, which, according to Bass (2016), is largely promising,

For the company, in order to get a huge market share and improve its brand equity, it will entirely focus on growth capital. Consequently, this creates a striking investment prospect for the potential investors to fully take advantage of the opportunity by investing in a differentiated business model having an enormous national and international presence. Bass (2016) reported that the company wants to be highlighted in the USA stock exchange. Generally, the company will utilize the external capital funding for the creation of data centers.

Investment scenarios

  1. Invest fully in the plan with $3million in a 2 phased approach.

Product strategy and description

The strategy will base upon the creation of customized and standardized data centres for the assorted client base across the division. The specified formation of value-based products and platforms, forms the final goal. The company’s projected and forthcoming product collection will base on the mentioned strategies

Service Selection Description
Data center The company will construct cloud for the players in the present markets while taking caution not to break basic requirements including security, consistency and compliance. It will engage in innovation within established market places by supporting virtualized and cloud environments. It will also provide better-quality storage performance, scalability and palpable cost saving to its consumer base while replacing the initially used storage racks.

 

Competitive standing (SWOT)

The analysis of the company shows that one of their core strengths is that their products are highly configurable having a rest API that enables customers to use it with other products. Another strength entails their model of business that includes open sources and low pricing of the product. The company’s marketplace plan is also a chief success since individuals are able to see extreme downloads of paid plugins. In addition since a variety of companies are releasing plugins for JIRA, the company’s consumer base is expected to grow and consequently its revenue. Their products also sale on their own due to their quality and brand name. One of the company’s major weaknesses, however includes the fact that there is no vision for the future. For the past decade, the company has been doing the same set of products. It also has limited funds since for instance, big players like IBM are creating value for their monies due to the creation of hyperscale data centers that require investment in billions of dollars. Nonetheless, the markets offer opportunities such as internationalization, online partner sales, expandability. Threats include copying from competitor firms among others.

The company however has the opportunity of integrating more collaboration tools basing on the fact that they possess an efficient tech talent and a textbook subject management background. Nonetheless, basing on the fact that many companies are coming up with complete stories and that their breadth of products is very less, the company is under a threat. In addition, the biggest challenge of the company would be innovating at scale.

Small, flexibles start-ups according to the scholar usually pride themselves on being the disruptors to the bigger, more established disrupted.  With the company boasting of more than 30 thousand customers, technologists claim that it could easily coast on previous success and rely on having those organizations locked in for now. The big question however is, how do one innovate a company having more than 2000 workers? The company in the previous year spent $58 million on research and development. In addition, it increased its product portfolio by buying and building what it needs. It has also acquired tools as mentioned before like HipChat among others. Bigger purchases are on credit cards which highlights its potential of paying for acquisitions with stock among the benefits of an IPO. Generally, from the looks of things, the company, in the coming decades, is expected to register a positive growth.

Growth strategy

To create a sustainable advantage, we have to base on the company’s competitive superiority and create a plan to make them workable in the imminent or rather convert them into newer advantages

  • Unique services: in Australia, the company forms on of the top players in the IT sectors offering services for companies such as Microsoft among others.
  • Established brand: most of the customers relate to the brand due to their high quality and dependable services
  • Lack of a sales team: this implies that the company can direct the revenues to other development sectors
  • Highly competent team: the company selects the best staff while basing on qualification who are highly innovative

Barriers to entry

The creation of value based proposition. The cost benefit is expected to reduce with time, thus investing further in the creation of a unique and win-win relation with customers will offer barriers to new entrants.

Market Study

Integrated cost synergies centric data center

According to Cisco, on a global perspective, hyperscale data centers are expected to grow by the year 2020. They are expected to account for 50 percent of all the data centers. In short, they should amount to 84 and 86 percent of the public cloud server installed base and public cloud workloads respectively, which highlights why software companies are directing billions-dollar investment in the sector.

Design and development plan

Product’s design

Just as mentioned, the product is expected to replace the use of office space by providing cloud computing services to its users. The data centers are also expected to offer information on different aspects to consumers which can easily be assessed anywhere. The company’s services are expected to upsurge their scale and attractiveness in the cloud space and consequently generate huge revenue.

Marketing strategy

Since the latter relies on free trails and advertisement on websites basing on the fact that it lacks a sales team, the latter two will function as the marketing strategy. Herein, the customers are provided with the opportunity to enjoy the services freely within limited time. The company can target its customer base since they are easily reachable and expand gradually.

Development budget

When it comes to data centers, the dilemma includes leasing or buying a new data center. Nonetheless, since the company should have complete control over operating environment including access among others, it will construct its own data center. Cumulatively, mechanical, network connection, power, data center staffing for a 10 cabinet room includes $900,000 notwithstanding the maintenance fee which are approximately 5 percent per annum of the initial construction cost. The latter, according to the company’s customer base is small. The company needs to have at least 10 of such facilities. While basing the company’s last year’s budget where $58 million was dedicated towards innovation, funding the project would present a little strain on the budget. Nonetheless, prior to the construction of the data centres, the company should lease properties on a short term basis, while attracting the consumers of its new services. The response from the customer will determine whether the project should be considered as long term and therefore the need to acquire its own premises.

Operation plan management                                                                                                              The creation of the data centers prompts the need for an establishment of a new department where a manager will monitor the staff, oversee the on-site maintenance and equipment optimization.

Financials

The increase in revenue for the company will be as highlighted

Revenue and growth statistics (2017-2020)

 

 

 

 

Conclusion

As evident, even though the company seems to be performing well aspects such as competition and saturation in the near future make the corporate venture inevitable. The well laid plan highlights how the company can take advantage of the presenting market opportunity to increase its revenue, diversify its product portfolio and ultimately expand. One important thing however to consider is while its initial plan did not require a sales team, the latter might require one since as evident, its competition is stiff. In addition, most organizations need to be told on the benefits of data centers as opposed to the conventional method and therefore, the present work recommends that the organization designs a sales team for the plan.

 

 

 

 

 

 

 

 

 

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