Strategic Analysis for a Software Company in the Customer Relationship Management Market

This strategic analysis considers the current state of Maximizer Software Inc., its internal resources and the external forces acting on it. In doing so, it identifies the barriers to the company’s success and analyses its current state against three new strategies capable of sustaining revenue growth and profitability over the next five years.The firm’s market continues to grow at a healthy 12% per year and the firm’s target customer base exceeds 3 million businesses that have yet to adopt the market solution. Yet the firm has been unable to sustain revenue growth or profitability over the three years ending November 2012. The firm’s revenue from new customers is declining faster than its total revenue, suggesting that it is no longer attractive to new customers.This analysis finds that the firm lacks an appropriate strategic position from which it can execute a defensible strategy. It lacks significant differentiation for its products in a crowded competitive market segment. It has not been able to effectively leverage the resources and advantages it does enjoy.This strategic analysis recommends that the company take advantage of capabilities inherent in the product to develop industry-specific solutions for a number of industry vertical markets. In this manner, the firm will move a significant portion of its business from an undifferentiated and highly competitive horizontal market space to a series of less competitive vertical market spaces with differentiated solutions. The firm’s products have a capability that enables it to inexpensively develop industry-specific variants. In this manner, the firm can enter smaller and more defensible markets with differentiated solutions that raise the customers’ willingness to pay.There are two recommended strategies, both of which predict significant revenue gains and consistent profitability.The first recommendation is based on an internally funded strategy that begins with a lowering of operational expenses, internal efficiencies, and an expansion into industry-specific vertical markets. This strategy predicts a revenue growth from $7.5M inFY2012 to id="mce_marker"5M in FY2017. Discounted cash flow analysis suggests a net present value of between $3.5M and $4.6M over a five-year span.The second recommendation a variation of the first, adding new investment from the firm’s shareholder of between $2M - $2.7M. This investment will be used to accelerate development and marketing activities to enter the vertical markets set out in the first. This strategy predicts revenue growth from $7.5M in FY2012 to id="mce_marker"7M inFY2017. Discounted cash flow analysis suggests a net present value of between $0 -$647k over five years after paying off the original investment after which time the firm will realize both higher revenue and net income.