Company Overview

The report is prepared to discuss about the ways of managing, developing and implementing effective strategies for ensuring that successful business functioning can be achieved with the consideration of the business organization named NEXTDC in Australia. The business organization falls under the ICT and communications industry and thus the assignment will focus on utilizing various processes and strategic external environment analysis techniques to describe the size of industry along with assessment of various factors impacting business effectively (Nextdc.com 2018).

The business organization named NEXTDC is one of the major data centers providing cloud based services and solutions and act as a link the enterprise based information technology and cloud based services. The company is assumed to be one of the major data centre operators and is currently a major growing technology based company n Australia (Epstein 2018). The organization has been operating in more than 8 data centers all over the world and the major facilities are located in Sydney, Melbourne, Brisbane, Canberra and Perth, all of these operating at different Tier standards including Tier III and Tier IV.

The strategic external environment analysis has been done by assessing the various forces affecting the business and this could be done with the use of Porter’s five forces analysis technique that is considered as a holistic strategy framework to assess the competition. This could benefit the organization by understanding the forces affecting business and develop a sustainable strategy to attain competitive advantage in business within the Software and Services industry (Parmenter 2015).

The threats of new entrants are common, though it creates new scopes for managing innovation through adoption of low pricing strategy, cost reduction or leadership strategies and enabling value proposition techniques to ensure value creation to the customers. The threats of new entrants are low, because NEXTDC has not only innovated its products and services, but also has developed economies of scale along with investments on research and development activities to emerge as a successful player within the industry by safeguarding its competitive edge.

The bargaining power of suppliers is medium, because though they hold a dominant position in providing raw materials and supplies to negotiate power and extract higher prices, still due to immense distribution channels, the company has access to multiple suppliers and often shifts from one to another conveniently (Eden and Ackermann 2013).

The purchasing power of customers is high, because the success of company depends mostly on customer satisfaction. Customers demand best quality services are reasonable prices and thus to form a larger customer base, NEXTDC should provide discounts and offers for keeping customers engaged altogether.

The threat of substitute products is moderate because NEXTDC has met the requirements of clients effectively by remaining service oriented and through increase in switching costs of customers.  

The rivalry among the competitors is quite intense and thus the prices should be lowered to remain competitive within the industry and thus has allowed NEXTDC to build economies of scale along with product differentiation to influence clients purchase those from NEXTDC and not from anywhere else (Galliers and Leidner 2014). This has helped in developing a strategic position with in Software & Services industry and created various profitability opportunities to sustain in the marketplace.

Porter’s Five Forces

The political factors including the political stability and corruption within the country can affect the long term profit of the organization and at the same time, manage diversification of systematic risks associated with the political environment. There are legal frameworks for enforcing contracts while the protection of intellectual property and managing trade regulations and tariffs are essential for setting right prices for the services delivered (Laudon and Laudon 2016).

The economic factors are rate of growth, inflation rate and tax rates are considered along with the Government intervention within the free market to manage successful business functioning. The rates of exchange, financial market effectiveness, costs of labor at NEXTDC are responsible for managing human resources while the rate of unemployment must be overcome by creating good scopes for ensuring consistent business process management.

The social factors include the culture adopted by NEXTDC and assessment of demographic conditions to understand the preferences of clients in different market segments (E. Dobbs 2014). The educational level of people, gender, buying behaviors, income, etc. are other factors contributing to the management of business, which has allowed NEXTDC to design marketing techniques for keeping clients informed about the services delivered, furthermore facilitate leadership strategies to maintain an entrepreneurial spirit and broader nature within the community.

The technological advancements have brought innovation and with technological diffusion, the value chain network is influenced positively and the cost structure has been managed properly too. The automation systems have further created convenience to reduce the costs of manufacturing and production along with connecting physical and virtual world and transform business (Gomes et al. 2013).

Strengths · Dedicated CRM department to meet clients’ expectations and positive brand equity · Strengthening brand portfolio to create diverse range of software solutions and services · The automated services have created supplies efficiently to meet clients’ demands · Great flow of cash · Highly skilled workplace due to proper motivation and engagement through training sessions · Great rate of return on investments

Weaknesses · High rate of attrition within the workplace · The net contribution percentage to economy is comparatively lower than the industry average · The threats of new entrants have caused barriers and due to this, market share has been lost

Opportunities · Implementation of environmental laws and policies has created opportunities to manage sustainable practices along with gaining market share in new product category · Green initiatives are undertaken · The rate of inflation is low, which has brought higher stability in market conditions (Alias et al. 2014) · Cresting employment scopes for enhancing workforce efficiency

Threats · Lack of skilled workforce and constant change in consumers’ needs and buying behaviors · Increased prices of raw materials and resources · Currency fluctuations have affected the company’s functioning and prices set for the products

The rivalries or competitors are the 365 Data centers, QTX, Cologix, ByteGrid, etc. The business organization has experienced good revenue generation and the shareholders are interested in making investments, which ensures a bright future for NEXTDC in Australia.  The market analysts’ consensus looks positive and with the increase in earnings, there should be higher growth and expected to reach AU$25m by the year 2021 (Cserháti and Szabó 2014). The anticipated growth could be achieved by managing the financial statements such as balance sheet, cash flow statement, income statement properly along with management of market conditions to pursue high growth alternatives and gain sustainable competitive edge over its competitors.

                                 

                                                       Figure: Profitability margin (Cserháti and Szabó 2014)

                             

                                                        Figure: Strong growth in customers (Cserháti and Szabó 2014)

The major success factors are based on the cloud based solutions used focusing on the data center by leveraging partners of choice and ensure proper IT communications and cloud based learning. This has not only facilitated management of a healthy ICT ecosystem, but has even collocated the private data and information to streamline costs and simplify the business operations and processes perfectly (Tarhini, Ammar and Tarhini 2015). The success factors are also dependent upon the services provided by the company such as cable patching network connectivity, management of increase in bandwidth requirements and multi-socket services too. The data cabling plan includes linking the various standards and maintaining the positions of racks properly to make sure that the servers are maintained properly and bandwidths are raised as well. The management of project is done by NEXTDC with the use of proper planning and implementation and with the presence of highly skilled workforce; the gaps between success factors and drivers of success are minimized too (Sigalas, Pekka Economou and B. Georgopoulos 2013). Gaining positive outcomes during the stages of design, procurement, development, testing and commissioning has helped in managing the projects delivered within the allocated time and this has also resolved the risks associated with the mitigation strategies and facilitated the packaging and distribution of equipments and machineries too.

From the report, it has been found that the NEXTDC has delivered the best quality products and services and thus the SWOT analysis, PESTEL analysis and Porter’s five forces analysis have been done to assess the external environment and to check whether the business functions properly or not. This has helped in managing flexible solutions along with operations within the multi cloud environment to deliver fast and secure cloud based services along with allowing the clients and partners to gain access to the cloud based providers to facilitate communication and connectivity networks with ease and effectiveness (Nextdc.com 2018).

Conclusion: 

From the topic, it was understood that NEXTDC had managed to implement the most effective strategies with the management of SWOT analysis, PESTEL analysis and Porter’s five forces analysis to ensure that the forces affecting business were understood along with management of data security and distribution of IT system and networks to digitally align the networks and ensure specialization of partnership working for ensuring smooth business functioning and gaining competitive advantage in business as well.

References:

Alias, Z., Zawawi, E.M.A., Yusof, K. and Aris, N.M., 2014. Determining critical success factors of project management practice: A conceptual framework. Procedia-Social and Behavioral Sciences, 153, pp.61-69.

Cserháti, G. and Szabó, L., 2014. The relationship between success criteria and success factors in organisational event projects. International Journal of Project Management, 32(4), pp.613-624.

1. Dobbs, M., 2014. Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.

Eden, C. and Ackermann, F., 2013. Making strategy: The journey of strategic management. Sage.

Epstein, M.J., 2018. Making sustainability work: Best practices in managing and measuring corporate social, environmental and economic impacts. Routledge.

Galliers, R.D. and Leidner, D.E., 2014. Strategic information management: challenges and strategies in managing information systems. Routledge.

Gomes, E., Angwin, D.N., Weber, Y. and Yedidia Tarba, S., 2013. Critical success factors through the mergers and acquisitions process: revealing pre?and post?M&A connections for improved performance. Thunderbird international business review, 55(1), pp.13-35.

Laudon, K.C. and Laudon, J.P., 2016. Management information system. Pearson Education India.

Nextdc.com. (2018). Data centres, colocation, hybrid cloud solutions. NEXTDC offers secure, flexible, neutral solutions for ICT needs | NEXTDC. [online] Available at: https://www.nextdc.com/ [Accessed 28 Oct. 2018].

Parmenter, D., 2015. Key performance indicators: developing, implementing, and using winning KPIs. John Wiley & Sons.

Sigalas, C., Pekka Economou, V. and B. Georgopoulos, N., 2013. Developing a measure of competitive advantage. Journal of Strategy and Management, 6(4), pp.320-342.

Tarhini, A., Ammar, H. and Tarhini, T., 2015. Analysis of the critical success factors for enterprise resource planning implementation from stakeholders’ perspective: A systematic review. International Business Research, 8(4), p.25.