sample bap-assignment one

7/26/2019 Sample BAP-Assignment One

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Business Analysis Project


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Table of Contents

1. Introduction of market, selected company and competitors......................4

1.1. CRM Industry and Market...................................................................................4

1.2. Selected Company Salesforce.com.....................................................................5

1.3. Benchmarked Competitors racle and !etSuite................................................."

2. Financial Analysis...................................................................................7

2.1. #nalysin$ fundamental %nancial data of Salesforce...........................................&

2.2. Industry '(Is.....................................................................................................1)

2.3. Comparison of Re*enue +ro,th ,ith Competitors...........................................11

2.4. (ro%ta-ility.......................................................................................................122.4.1. Net Proft Margin...........................................................................................122.4.2. Return on Equity............................................................................................13

2.5. Risk Indicator....................................................................................................142.5.1. Debt to Equity...............................................................................................142.5.2. Current Ratio or Risk Ini!ator o "#ort $er%...............................................15

2.". /ciency ratio..................................................................................................1"2.&.1. 'sset $urno(er...............................................................................................1&

2.&. Identifyin$ 'ey Issues from '(Is 0inancial #nalysis..........................................1&

3. Qualitative Analysis...............................................................................18

3.1. Business n*ironmental #nalysis......................................................................1

(S 0rame,ork......................................................................................................1

3.2. (orters 0i*e 0orces 0rame,ork........................................................................213.3. Select the Strate$y...........................................................................................23

#pply Salesforce to BC+ Matri....................................................................................23

Salesforce (roduct in Market -y #nso6 Matri.............................................................24

3.4. Strate$y Chosen Based on #nalysis and ackle 'ey Issues...............................25

4. odellin! and "cenario #est $y "preads%eet..........................................27

&. Appraisal of 'imitations of Analysis........................................................2(

). *onclusions and +ecommendations........................................................3

".1. Conclusions......................................................................................................3)

".2. Recommendations............................................................................................31

7. +eference-............................................................................................ 32

8. Appendi.............................................................................................. 3&

.1. Calculation ,ork in spread sheet......................................................................35

.2. Modellin$ 7ork.................................................................................................3"

.3. Salesforce #nnual Report 8for 2)) to 2)119....................................................3&).3.1. "a*esor!e 'nnua* Re+ort or 2,1, to 2,11...................................................3-

).3.2. "a*esor!e 'nnua* Re+ort or 2,,) to 2,,...................................................4,.4. !etSuite #nnual Report 8for 2)) to 2)119.......................................................43


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).4.1. Net"uite 'nnua* Re+ort or 2,1, to 2,11......................................................43).4.2. Net"uite 'nnua* Re+ort or 2,,) to 2,,......................................................4&

.5. racle #nnual Report 8for 2)) to 2)119..........................................................4:).5.1. /ra!*e 'nnua* Re+ort or 2,1, to 2,11.........................................................4).5.1. /ra!*e 'nnua* Re+ort or 2,,) to 2,,.........................................................51


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1. Introduction of market, selected company and competitors

1 CRM Industry and Market

CEOs rated CRM as the most important area of investment to improve their business over

the next five years, according to Gartner's !" CEO #urvey$CRM maga%ine !"&

(ccording to the Meulen and Rivera $!")&, CRM industry revenue continued to gro* at "!

to "+ these years as figure belo*, and the gro*th is expected for another + years

2,1, 2,11 2,12

,

5

1,

15

2,

Industry +evenue/0illion "

Inustry Re(enue

0i**ion "D

Figure 1: Global Industry Revenue

Source Data: Meulen and Rivera (2013)

CRM is a business strategy that -no*s no boundaries .hile /orth (merica represents the

largest CRM mar-et, other global regions have the opportunity to learn from the successes

and failures of the 0# mar-et $crmsearch !"&

This paper focused on the selected company $#alesforcecom& in CRM industry


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Selected Company Salesforce.com

#alesforcecom 1nc 2/3#E4 CRM5 is the enterprise cloud computing company, announced it

has been named to 6orbes 7+ 6astest Gro*ing Tech Companies7 8ist for the third

consecutive year $9aul M Murdoc- : ;ohn ; Ray, !!


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3 Bencmarked Competitors !racle and "etSuite

The CRM mar-et is closing in on Oracle as #alesforce gun for the top spot Oracle holds the

CRM lead courtesy of (sia>9acific gro*th, but #alesforce is closing in due to strength in

/orth (merica and ;apan $?ignan !"&

Figure 2: Maret S!are

Source: ID" 2012

Oracle Corporation $/3#E4 ORC8& is mostly -no*n as ER9 and ?atabase soft*are ma-er

*hich leads the computer soft*are industry as *ell as Microsoft Oracle *as ran-ed @

th

place among the soft*are companies by revenue in !", behind 1=M, Microsoft and A9

$#oft*are Maga%ine !"& This giant enterprise also provides CRM system as the figure of

Mar-et #hare above sho*n, therefore, it is most strong competitor for #alesforce

On the other hand, /et#uite is follo*ing #alesforce *ith high pace though it is still under

BOthers in the figure of Mar-et #hare /et#uite $/3#E4 /& founded in "


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#. $inancial Analysis

1ncome measurement and financial position of an economic entity has al*ays been a

challenge for accounting standard setting bodies $?astgir : elashani !!D& 1n this chapter,

the Fuantitative data of important performance indicators based on 91s *ere extracted and

analy%ed from annual report from !!D to !"" of #aleaforce, /et#uite and Oracle

Calculation *or- in spreadsheet and annual report *as attached in (ppendix (s the result

of analysis, -ey issues *ere discussed in end of this chapter

% Analysin& fundamental financial data of Salesforce

#alesforce has continued to gro* and expanded their business scale, from !"" to !",

they obtained )H of revenue gro*th (pparently #alesforce is in good trend, they *ere

a*ard for one of fastest gro*ing company in the *orld by 6ORT0/E maga%ine $C//

Money !""&

,

5,,,,,

1,,,,,,

15,,,,,

2,,,,,,

25,,,,,

1,-&-&13,55)3

1&5-13

22&&53

#otal +evenue

$ota* Re(enue

Fi!ures in #%ousands in "

Figure 3: #otal Revenue o$ Sales$orce


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(lthough the revenue increased, net income has declined since !"! The company

expensed high operation cost and R:? to enhance their service and products

,1,,,,

2,,,,

3,,,,

4,,,,

5,,,,

&,,,,

-,,,,

),,,,

,,,,

4342)

),-1

&44-4

115-2

et Income

Net In!o%e

Fi!ures in #%ousands in "

Figure %: &et Inco'e o$ Sales$orce

The revenue gro*th surge share price and total eFuity, ho*ever, ROE and RO( *as

declining as belo* due to the lo* net profit Therefore, trend *as seen that #alesforce has

expanding business but profit remained lo*

#able 1: ro$itability o$ Sales$orce


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The figure belo* presents the revenue of #alesforce by each region, (merica, Europe and

(sia

Figure : Revenue by Geogra*!y $or Sales$orce

Currently #alesforce heavily relies on 0# mar-et as the figure has sho*n

Ao*ever, most gro*ing area is the (sia 9acific as its revenue achieved doubles from the

year of !!< to !"" Therefore, #alesforce may need to allocate their resource to (#E(/,

*hich is most gro*ing mar-et


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' Industry (PIs

The basic financial analysis of #alesforce figured out that they are increasing the revenue,

but not profit 1n this section further analysis and comparison is carried based on industry

91s and benchmar-ed competitors, Oracle and /et#uite

.hat are the specific 91s of CRM industryI

Mcgladrey $!")& insisted that revenue gro*th and profit are one of most important factors in

#((# $soft*are as a service& industry, because the company *ill -no* the ho* their

business is expanded in diversified soft*are industry ?ebt ratio is also critical factor to

measure their leveraging of asset in healthy range for R:? to provide high Fuality of ne*

product, *hich influences customer satisfaction 8astly, mar-et share in regions should be

considered to enlarge their business si%e

Therefore, financial 91s are belo*,

=usiness si%e expansion$Revenue gro*th rate&

9rofit ratio$ ROE&

8everage of finance $?ebt to EFuity&

Mar-et #hare Rate

6or the reference, non financial 91s are,

9roduct>#ervice Fuality

/e* 9roduct

Customer satisfaction

=ase on those financial 91s, financial analysis *as carried in follo*ing section, and result

*as discussed


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) Comparison of Re*enue +rot it Competitors

(lthough the revenue does not tell the profitability, it at least visuali%es the scale of the

business enterprise is dealing

Revenue is simple indicator to vie* the sales si%e, though it does not indicate the

profitability #eeing the gro*th rate for last three years, #alesforce gained greater gro*th

rate than the figure of /et#uite and Oracle in !!


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- Profitaility

1 "et Profit Mar&in

The net profit margin of #alesforce *as not high although it is the positive figure at least

unli-e /et#uite Ao*ever, it *as pale in comparison to Oracle One of the reasons *as highoperation cost and investment, in the fact #alesforce acFuired around "+ enterprises for last

decade regardless the partner or competitor $.all #t !"&

#able 3: &et ro$it Margin

6ear 2,, 2,1, 2,11

"a*esor!e 5.7 &.1)7 2.&27

Net"uite

8

3.37

814.22

7

813.54

7

/ra!*e24.,5

722.)-

723.

7

/et 9rofit Margin4 /et 1ncome > Total Revenue

Calculation *or-ing is sho*n in (ppendix D" calculation *or- in spread sheet


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# Return on /0uity

The figure belo* sho*s the return of eFuity for each company

Figure -: Return on ./uity

#alesforce has -ept ROE Kust above ! to "! only although it *as much higher figures

than /et#uite Moreover, #alesforce *as declining *ith value, and there *ere only fe*

percentages of ROE in !"" Aence, it may needs turning point to up*ard trend again by

proper plan and strategy On the contrary, Oracle resulted in excellent figures *ith more than

! of values

Return on EFuity4 /et 1ncome > Total EFuity



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Risk Indicator

1 2et to /0uity

?ebt to EFuity Ratio is meant to the company strategy ho* far they go for the investment

using the debt to generate the revenue

2,, 2,1, 2,11

,

,.2

,.4

,.&

,.)

1

1.2

1.4

1.&

e$t to 56uity

"a*esor!e

Net"uite

/ra!*e+atio alue

Figure : Debt to ./uity

The tendency of firms to ma-e financial choices that move them to*ard a target debt ratio

appears to be more important $Aova-imian et al !!"&

#alesforce presented highest ratio values among them On the contrary, Oracle -ept the

values belo* "! *ith safe driving in terms of managing the company financially

?ebt to EFuity4 Total 8iability > Total EFuity



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# Current Ratio for Risk Indicator of Sort erm

( current ratio of around "L! is pretty encouraging for a business 1t suggests that the

business has enough cash to be able to pay its debts, but not too much finance tied up in

current assets *hich could be reinvested or distributed to shareholders ( lo* current ratio

$say less than "!"+& might suggest that the business is not *ell placed to pay its debts 1t

might be reFuired to raise extra finance or extend the time it ta-es to pay creditors $Riley

!"&

The figure belo* describes the ratio value for last ) years by the line chart

2,, 2,1, 2,11,

,.5

1

1.5

2

2.5

3

*urrent +atio

"a*esor!e

Net"uite

/ra!*e+atio alue

Figure : "urrent Ratio

Crucially, current ratio implies the capability of the company to pay their short term debt

using the current asset The best figure among ) companies *as one of Oracle as its ratio

value has been around ! or more, and /et#uite *as also great because their ratio has

been very stable at around "+ To the contrary, the ratio value of #alesforce *as fluctuate,

and mar-ed belo* " in the year of !"" 1t meant the company *as not able to pay off their

liability by the current asset

Current Ratio4 Current (sset > Current 8iabilities

Calculation *or- is sho*n in (ppendix D" calculation *or- in spread sheet


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4 /fficiency ratio

1 Asset urno*er

1f there is a problem *ith inventory, receivables, *or-ing capital, or fixed assets, it *ill sho*

up in the total asset turnover ratio $9eavler !"&

(sset Turnover is to measure the efficiency of utili%ing the company asset to convert it into

the revenue Aigher number indicates high efficiency

2,, 2,1, 2,11

,

,.1

,.2

,.3

,.4

,.5

,.&

,.-

,.)

,.

1

Asset #urnover

"a*esor!e

Net"uite

/ra!*e+atio alue

Figure : ,sset #urnover

/et#uite has mar-ed highest ratio value among ) companies, and the ratio of #alesforce

*as moving bet*een !L plus to !+ Thus /et#uite has utili%ed their asset and capacity

more than #alesforce has done Oracle has hold their asset and not fully made use of it to

generate the sales

(sset Turnover4 Total Revenue > Total (sset

Calculation *or- is sho*n in (ppendix D" calculation *or- in spread sheet


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15 Identifyin& (ey Issues from (PIs $inancial Analysis

ey 1ssues identified from 91s analy%ed

The table belo* *as *or- to summari%e the -ey financial ratios analy%ed in this chapter

earlier for industry average, #alesforce, Oracle and /et#uite The average index of sector

*as extracted from Reuters $!")& from /e* 3or- #toc- Exchange

Figure 10: Financial Inde

#alesforce had -ept high revenue gro*th as *ell as industry average nearly !, ho*ever,

profit *as lo*er, and financial ris- *as high compared to other competitors

Therefore, financial -ey issues for #alesforce are,

8o* profit4 1t is because of high operation expense, M:(, and R:? *ith necessity

but it is recommended to reserve the profit as "! of net profit margin at least

Aigh liability4 essential to reduce current liability to maintain current ratio above "! at

least

0# Mar-et Reliance4 necessary to develop the other gro*ing mar-et such as (sia

9acific $refer to " Revenue by geography&

Modelling and #(6 $suitability, acceptability and feasibility& test *as carried out in

Chapter @ after financial analysis, Fualitative analysis and strategy chosen


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3. 6ualitati*e Analysis

The financial analysis in previous chapter revealed out that #alesforce relies on 0# mar-et,

but gro*ing mar-et is (sia, (#E(/, especially, -ey mar-et is #ingapore, *hich is hub of

(sia and (#E(/ Aence, analysis continues to focus on the #ingapore Mar-et *ith the

competitors 1n order to analy%e the situation of #alesforce, 9E#TE8 discover the mar-et

situation in #ingapore *hereas 9orter 6ive 6orce reveals the competitors impact to

#alesforce, and then, (nsoff Matrix and =CG figures out the strategy to be ta-en for

#alesforce product, the strategy is chosen based on financial analysis carried out in previous

chapter

11 Business /n*ironmental Analysis

P/S/7 $rameork

9olitical4

#ingapore government encourages foreign company to expand business there 1n fact,

corporate tax rate is one of lo*est among advanced country Ao*ever, as the population

issue *as raised, lately they started controlling the number of foreign employees $M91 !"&,

thus it may affect the resource plan #alesforce

Economic4#ingapore has been continuously gro*ing, and they -eep ) to + of G?9 gro*th rate last

fe* years $Trading Economics !")& although that heavily relies on foreign capital and

trade (s the result of that, most of leading companies are *illing to invest and enforce their

1T eFuipment to enhance their business operation (nd #ingapore is trading by #G?, and

#G? has appreciated against 0#? for last decade $refer to figure of Exchange Rate belo*&

This trend is profitable for #alesforce and ma-es their product competitive in terms of the

price as they sell the product by 0#? although it is unpredictable *hen this trend turns bac-


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Figure 11: .c!ange Rate 4SD5SGD

Source: 6. "urrency 2013

#ocial4

#ingapore is international country *ith mix culture as )! to )+ of population is contributed

by the foreigner, and the Fuality of life and education are high Moreover the first language

spo-en is English Therefore, the impact by the social feature to the #alesforce business *ill

be minimi%ed #alesforce enforced corporate social responsibility by establishment offoundation in #ingapore to contribute the society from base $#alesforcecom #ingapore

6oundation !")&

Technological4

The latest 1T technology is eFuipped in any office and peoples 1T s-ill is also high There are

numbers of soft*are engineers *ho can provide 1T solution, especially ER9 system

Environmental4

The internet broadband has been disseminated in the over the country /ot only the internet

line in the office, most of people have )G or @G mobile broad band by hand phone, hence

internet is accessible from any*here This enables #alesforce to deliver the cloud computing

business except that client needs offline $no internet& system due to the security concern

8egal4

The every industry is ruled by each ministry of #ingapore Government $#ingapore

Government !")& #ince #alesforce does 1T business, they need to follo* the rule from


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ministry of communications and information, *hich established 9ersonal ?ata 9rotection (ct

in !" $9?( !"& Thus, vendor must fully comply *ith the *ay to collect and maintain the

personal data 1n addition, *hen #alesforce deals *ith the client in other industry such as a

ban- in the finance sector, #alesforce must follo* the regulation from ministry of finance as

*ell #ingapore ministry of finance issued the policy of data residency, *hich *ill be critically

constrain for cloud computing model and influences the #alesforce business

The follo*ing table presents the advantage or disadvantage for each company in the point of

9E#TE8

#able %: "o'*etitor "o'*arison by .S#.7

"a*esor!e Net"uite /ra!*e

Po*iti!a*

9o(ern%ent %ay!o**aborate :it#:or* *eaing!o%+any

E!ono%i!

se**ing ser(i!e by "Don*y0+ri!e is f;e by"D

se**ing ser(i!eby "9D

se**ing ser(i!e by"9D

"o!ia*

"a*esor!e enor!esCor+orate "o!ia*Res+onsibi*ity0"a*esor!e.!o%"inga+ore ega*i%+a!t to !*ou!o%+uting %oe*

+ro(ie on8+re%ise %oe*in !ase !*ou!o%+uting is nota**o:e

+ro(ie on8+re%ise%oe* in !ase !*ou!o%+uting is nota**o:e

$indin&, Conte8t and Back&round /stalised9

Overall by 9E#TE8 analysis above, basically it is time to expand the business for #alesforce

in #ingapore as the economy is steadily gro*ing and basic 1T infrastructure and peoples

certain s-ill is there and ready for the cloud computing use The concern #alesforce may

ta-e is the compliance of legal regulation from ministry and ho* to align *ith that *ithout

negative impact Oracle brand has certain lead for the mar-et as they have served thecustomer *ith their variety of service and products not only for CRM #alesforce is ma-ing


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effort to catch up, and one of their attempts is to insist volunteer foundation for C#R besides

ordinary mar-eting

1# Porter:s $i*e $orces $rameork

9orters 6ive 6orce could reveal the vie* from #alesforce in the mar-et and *ithcompetitors

Figure 12: orter8s Five Forces $or Sales$orce

Rivalry4

The rivals of #alesforce are *ell-no*n companies such as Oracle, #(9, Microsoft and

/et#uite Oracle has strong base product database and ER9 system CRM is also their part

of business, ho*ever they have not fully focused on that yet Aence, it is extreme threat if

they focus on CRM again /et#uite provides solution combined *ith ecommerce, ER9, and

CRM They are severely competing *ith #alesforce

Threat of /e* Entrant4

There is high competition in the CRM mar-et no*adays, thus, it is not easy for ne* entrant

to challenge this mar-et 1n the fact, most of leading 1T product ma-ers have dealt the

business there already Ao*ever, for the case of /et#uite, threat of ne* entrant is high in

terms of ecommerce area


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9o*er of Customer4

The customer bargaining po*er used to be lo* =ecause once the ma-er implemented

enterprise system li-e CRM, it is not easy to s*itch the product due to heavy customi%ation

particularly for the client Ao*ever, no*adays, it is not very difficult for client to shift the

system and bring their functionality to ne* system as vendors offer *ith the choice of

products unless it *as fully customi%ed for client particular purpose Aence, po*er of

customer is medium Ao*ever, for some cases of Oracle, they deployed system deeply

customi%ed for client *ith their inimitable technology, so customer may not be able to s*itch

the product

9o*er of #upplier4

The -ey supplier for #alesforce is the consultant and #alesforce engineer regardless of

internal or external staff in order to deliver the solution to the client (s most of case, client

needs customi%ation of system, *hich only engineer speciali%ed in #alesforce is capable of,

and the #alesforce engineer is slightly lac- in the mar-et Thus, po*er of supplier is middle

to high On the other hand, Oracle *ill not get in trouble to find Oracle engineer

Threat of #ubstitute4

#ince 1T system and technology diversify and evolve s*iftly, ne* type of product or solution

may ta-e over the existing product in the mar-et area Thereafter, threat of substitute is high

#able : "o'*arison by orter8s Five Forces

"alesforce

et"uite racle

*ompetitive+ivalry

?ig# ?ig# Meiu%

#%reat of e95ntrant

>o: ?ig# >o:

:o9er of*ustomer

Meiu% Meiu% >o:

:o9er of"upplier

Meiu% Meiu% Meiu%

#%reat of"u$stitute

?ig# ?ig# ?ig#

$indin&9

Overall, the competition in CRM mar-et is high for #alesforce as some of prominent 1T

soft*are ma-ers are providing this service, especially Oracle holds strong brand here #ince

high completion lies in the mar-et, it is not easy for ne* entrant to Koin and compete in the

mar-et unless they have uniFue idea and solution (lthough the competition is high, po*er of

customer *ill be do*n once 1T vendor, #alesforce implements their system to clients


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because it *ill be costly to change the supplier due to the nature of service $system

customi%ation& Therefore, -ey concern for #alesforce is ho* they obtain ne* customer


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13 Select te Strate&y

Apply Salesforce to BC+ Matri8

Figure 13: 9"G Matri $or Sales$orce

Currently CRM mar-et has been gro*ing for last decade, ho*ever the gro*th pace is getting

slo*, hence the position is middle high in mar-et gro*th #alesforce is one of mar-et

leaders, so share is also high *ith "! globally $refer to figure4 mar-et share& #o right no*

the #alesforce is bet*een cash co* and rising star ;udging from financial analysis "

BRevenue by Geography sho*ed emerging country in (sia is gro*ing, thus, the strategy of

#alseforce recommended is to be rising star in that region of mar-et


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Salesforce Product in Market y Ansoff Matri8

Figure 1%: ,nso$$ Matri $or Salse$orce

(t this moment, the product of #alesforce has been positioned in existing mar-et and

existing products (lthough #alesforce al*ays upgrades and enhances their service as ne*

products, it is still one product, thus variety is limited The 9E#TE8 analysis also revealed

the *ea-ness of #alesforce providing only " product (nd it may cause the loss of

competition compared to Oracle, #(9, and /et#uite, *hich *as proved in 9orter 6ive

6rame*or- analysis Therefore, as the choices of gro*th strategy, they may ta-e a direction

to ne* products


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1% Strate&y Cosen Based on Analysis and ackle (ey Issues

1n this section the strategy is confirmed based from the financial and Fualitative analysis

done in previous and this chapter

(lthough #alesforce achieved great success of gro*ing their revenue, operation expense*as also very high, *hich suppresses the net profit #o #alesforce may reassess their

operation to cut the cost #upposedly the opportunity lies in #ingapore as this regions

economy and demand of CRM system is gro*ing rightly Ao*ever, there some potential

issues #alesforce needs to overcome to expand the business The -ey issues are

competition *ith large company such as Oracle and #(9 as their brand name is still strong

though #alesforce is also bringing up their brand #alesforce provide sole platform, *hich

means only " product This is because the strategy of #alesforce is to enhance their product

in deep rather than diversify their product to multiples Ao*ever, this may be also

disadvantage to obtain the opportunity from multiple demand and reFuirement (nd it is also

ris- to focus on only " product>service in the case of losing popularity of that product On the

other hand, Oracle provides variety of service to different customer, and /et#uite also has

more than fe* products The another strategic issue is form of service, the logo of

#alesforce describes B/o #oft*are, *hich insists cloud computing model and insists cloud

computing *ith latest technology is efficient and superior to tradition server model Ao*ever,

there is certain demand for traditional server model depending on the client case, thus,

#alesforce may lose the opportunity for that case The shortage of #alesforce engineer and

resource also prevents the expansion of business

Thus, the strategies chosen *ere belo*,

1 6inancial #trategy4

1t is advised that the #alesforce aims the net profit margin at around "! at least as it is

currently lo* They may assess the operation expense to achieve it 8arge eFuity fund

generally have lo*er operating expense ratios than small eFuity funds $Rea et al "


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#alesforce has not penetrated #ingapore mar-et yet, but some rivals had done already 1n

order to ma-e more opportunities, it is advisable for #alesforce to enforce the partner

alliance and encourage and train them to implement #alesforce product for partners

customer as *ell as direct customer so that #alesforce can increase their share in the

mar-et 1t is also expected to solve the shortage of #alesforce engineer resource

1 1nnovation of 9roduct4

1t is regrettable that #alesforce provides one product and cloud computing model only Thus,

#alesforce is encouraged to *iden the product range to cover the onpremise model not only

cloud computing to meet customers demand This product flexibility also enables them to

comply *ith the 1T business regulation from the government

These strategies *ill be modelled and tested in next chapter, Modelling


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%. Modellin& and Scenario est y Spreadseet

.ith the strategy and recommendation made from previous chapter based on financial and

strategic analysis, modelling and scenario test *as executed for @ stages $financial, foreign

mar-et, open, innovation strategy& as belo*, $Calculation *or- in spread sheet is sho*n in

(ppendix D Modelling .or-&

#able -: Financial Modelling and Scenario #est by S*reads!eet

I%+*e%entation

0$#ousan in"D

Initia*02,11


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around )! a year figured by financial analysis in chapter Therefore, the plan of

additional "+ of cost and + of return by revenue is suitable

11 (cceptability

1n order to achieve D of cost cut, the company needs to reassess the operation process

and structure to ma-e it efficient and eliminate redundancy

The management may find the redundant department or human capital as *ell, and if they

are not able to allocate those resources to any suitable positions, the layoff could be the

option =ut this acceptability must be examined prudentially before the execution

111 6easibility

The great improvement in model *as net profit, from to )!, this feasibility is depending

on their revenue and the cost as it is calculated ;udging from past financial analysis

revenue *ill be secured *ith gro*th, and challenge is to reduce the cost Ao*ever, it is

highly possible to achieve by refraining from unnecessary M:(

The outcome of entering foreign mar-et is not fully predictable, and only actual experience

tells the result On the other hand, open strategy has visible feasibility as it is corporation

*ith partner as #alesforce has already experienced the alliances *ith certain partners 1t is

more predictable rather than dealing *ith direct customer


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'. Appraisal of 7imitations of Analysis

There are some limitations for the research done,

1n order to use 9E#T8E the area must be narro*ed do*n to country level at least

because factors, political, economic, and others are different in each country 1n other*ords, fran-ly spea-ing, international company *ho is dealing the business *ith !

countries, they need to do 9E#TE8 analysis for ! countries each 1n the case of this

paper to analy%e the #alesforce, #ingapore *as chosen as best case Ao*ever, it

*ould be great if more countries *ere analy%ed as same The limitation is due to the

learners time and cost too

(nalytical frame*or-, 9E#TE8, 9orters 6ive 6orces, =CG Matrix are analysis tool

for establishing the high level research methodology Ao*ever, to apply thoseadeFuately reFuires detailed research *ith various elements =CG for #alesforce

case, the current position in =CG matrix *as decided by financial data and some

secondary data Ao*ever, it may not be sufficient enough 6or instance, it may be

great if every year of accurate mar-et, product share data, and customer satisfaction

*as collected There is limitation due to information of availability

6inancial data, article, Kournal, and public data *ere used to analy%e case of

#alesforce, it greatly assisted to analy%e company financial status, and gave some

general idea Ao*ever, this may not be able to tell the actual product Fuality, feature

and popularity 1n order to obtain those data accurately, the further survey to

#alesforce customers and clients may be reFuired

6inancial data from annual reports can tell ho* far the company business is gro*ing

$or shrin-ing&, by result of total revenue, expense, profit and efficiency 1t does not

sho* the brea-do*n of #alesforce product, so it is not possible to -no* *hich part of

service *as resulted great, or *hat R:? made the profit efficiently 1f those data are

available in #alesforce annual report, further analysis and advice could be made

#ince 1T solution is diversified and each 1T solution provider has different focused

business area, comparing #alesforce *ith /et#uite and Oracle may have also some

misalignment, unli-e comparing t*o car manufacturers or t*o aviation companies

*ho are managing Fuite similar business in the industry The further detail research

must be done to absorb that slippage


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). Conclusions and Recommendations

1' Conclusions

#alesforce has been successfully achieved their target and increased their business and

capability (ccording to the Fuantitative analysis in chapter ), revenue scale *as si%ed up

*ith approximate )! of gro*th, ho*ever, Kudging from some of 91s, the net net profit of

#alesforce *as lo* as around + only 1n addition to lo* profit, their amount of liability is

large portion compared to the eFuity and total asset 1t *as also indicated by the current ratio

in !"", *hich mar-ed belo* "! Therefore, #alesforce is ma-ing revenue *ith the gro*th,

but in order to achieve it, the company also invested and allocated the large amount of fund

for aggressive M:(, R:? even though it also ma-es large debt till the return received Thus,

#alesforce is *illing to ta-e some ris-s, and that is the direction of company strategy from

finance perspective

(s to the mar-et geographically, currently, #alesforce heavily relies on 0# mar-et for

approximate L! of their revenue, ho*ever, the gro*ing mar-et is (sia 9acific as its si%e

increased more than "!! for last fe* years Thus, their mar-et strategy should be to

expand business in (#E(/ 9E#TE8 figured out #ingapore is good mar-et for #alesforce to

do further business as the economy there is steadily gro*ing and many private and public

sectors are *illing to deploy and invest for 1T system although there are some concerns

#alesforce needs to ma-e allo*ance for The one is the policy regulated by the government

such as data residency>protection scheme, *hich may not give permission to #alesforce to

implement their cloud computing service There are also strong competitors to be

considered, in 9orters 6ive 6orce, competitive rival are Oracle and /et#uite Especially

Oracle has advantage *ith their various service and experience in #ingapore, *hereas

#alesforce has not penetrated the mar-et yet and may have shortage of #alesforce engineer

and partners

(s for the product, #alesforce provides only " product, so this may not be able to cover the

various reFuirements from customers, and lose the opportunity On the other hand, Oracle

and /et#uite has multiple products and services

=ased on those analyses, the strategy *as made for @ steps, *hich are financial, foreign

mar-et, open, and innovation strategy (nd those strategies *ere modelled and tested *ith

financial figure, and #(6 $suitability, acceptability and feasibility& *as discussed


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1) Recommendations

The @ steps of strategy *as propose in earlier chapter, and that strategy recommended *as

modelled and tested by spread sheet, as to that result, revenue *ill increased by H" and

net profit *ill do so by nearly )! That is large improvement financially, and its suitability,acceptability, and feasibility *ere discussed and found out that all steps of strategy *ere in

line and *orth to execute Thus, that strategy is significant recommendation to address the

-ey issues and maKor findings stated in conclusion in order to enhance business of

#alesforce (gain, there *ill be @ stages, financial strategy suggest the target figure of -ey

finance value *here company should improve (nd foreign mar-et strategy advises *here

#alesforce focuses and see-s their opportunity expand area outside 0# 1n third stage,

open strategy is advised as mar-et entry strategy to compete *ith rival and increase

#alesforce engineer resource 8astly, innovation of product is proposed for *hat direction the

product should be enhanced in

6or each stage, the expected cost, benefit, timescale and resource involved is estimated in

table belo* This recommendation *ith actual number *as tested in chapter of Modelling

and #cenario Test by #preadsheet

#able : Reco''endations

$inancial Strate&y $orei&n Market !pen Strate&y Inno*ation

Cost target D of

cost$operation

expense>investment&

cut

increase L of

operation cost to

focus on

mar-et$#ingapore&

increase + of

cost for the

partner training

and alliance

management

increase "+

of cost for

product

innovation

Benefit increase "! of net

profit margin

increase "+ of

revenue

increase " of

revenue

increase +

of revenue

imescale in half a year in a year in a year in a year

Resource

in*ol*ed

(ccounting,

Management

ne* local hiring partner, partner

alliance manager

R:?

engineer,

service

delivery

manager

-. Reference9


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=orgia, ? ;, #*aleheen, M, ;ones, T 8 : .ee-s, A #, !"! (ccounts Receivable6actoring (s ( Response To .ea- Governance4 panel ?ata Evidence InternationalBusiness & Economics Research Journal, >***%dnetcom>blog>btl>crmmar-etshareracetightenssalesforceclosesin>L>e%inearticlescom>I(naly%ingthe(ccounts9ayableTurnoverRatioAelps1nvestingin#toc-s6oraAighReturn:idN"D"!@H2accessed ) March !")5
http://money.cnn.com/magazines/fortune/fortunefastestgrowing/2011/snapshots/35.htmlhttp://www.destinationcrm.com/Articles/ReadArticle.aspx?ArticleID=83897&PageNum=1http://www.crmsearch.com/global-crm.phphttp://www.zdnet.com/blog/btl/crm-market-share-race-tightens-salesforce-closes-in/79949http://www.zdnet.com/blog/btl/crm-market-share-race-tightens-salesforce-closes-in/79949http://www.zdnet.com/blog/btl/crm-market-share-race-tightens-salesforce-closes-in/79949http://www.idc.com/getdoc.jsp?containerId=prUS23539412http://mcgladrey.com/Technology/Software-Revenue-Recognition-Resource-Centerhttp://www.migrationinformation.org/feature/display.cfm?ID=887http://www.gartner.com/newsroom/id/2459015http://www.gartner.com/newsroom/id/2459015http://www.netsuite.com.sg/portal/aboutus.shtmlhttp://www.netsuite.com.sg/portal/aboutus.shtmlhttp://ezinearticles.com/?Analyzing-the-Accounts-Payable-Turnover-Ratio-Helps-Investing-in-Stocks-For-a-High-Return&id=1810462http://ezinearticles.com/?Analyzing-the-Accounts-Payable-Turnover-Ratio-Helps-Investing-in-Stocks-For-a-High-Return&id=1810462http://ezinearticles.com/?Analyzing-the-Accounts-Payable-Turnover-Ratio-Helps-Investing-in-Stocks-For-a-High-Return&id=1810462http://money.cnn.com/magazines/fortune/fortunefastestgrowing/2011/snapshots/35.htmlhttp://www.destinationcrm.com/Articles/ReadArticle.aspx?ArticleID=83897&PageNum=1http://www.crmsearch.com/global-crm.phphttp://www.zdnet.com/blog/btl/crm-market-share-race-tightens-salesforce-closes-in/79949http://www.zdnet.com/blog/btl/crm-market-share-race-tightens-salesforce-closes-in/79949http://www.idc.com/getdoc.jsp?containerId=prUS23539412http://mcgladrey.com/Technology/Software-Revenue-Recognition-Resource-Centerhttp://www.migrationinformation.org/feature/display.cfm?ID=887http://www.gartner.com/newsroom/id/2459015http://www.netsuite.com.sg/portal/aboutus.shtmlhttp://ezinearticles.com/?Analyzing-the-Accounts-Payable-Turnover-Ratio-Helps-Investing-in-Stocks-For-a-High-Return&id=1810462http://ezinearticles.com/?Analyzing-the-Accounts-Payable-Turnover-Ratio-Helps-Investing-in-Stocks-For-a-High-Return&id=1810462


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Oracle Corporation, !!>***oraclecom>us>corporate>press>!"D)H)2accessed + March !")5

Oracle Corporation, !!***forbescom>forbes>!!!"H>!@Dbhtml2accessed ! 6ebruary !")5

9?(, !" ersonal )ata rotection ,ct, 2Online5 (vailable at4

http://www.pdpc.go&.sg/personal%data%protection%act!accessed 1) -uly 2013#

9eavler, R, !" se ,sset anagement Ratios in Financial Ratio ,nal-sis3 Turno'er

Ratios ,nal-e the Firms Efficienc- in $enerating /ales, 2Online5 (vailable at4http4>>bi%financeaboutcom>od>financialratios>a>useassetmanagementratiosinfinancialratioanalysishtm2accessed + March !")5

Rea, ; ?, Reid, = : Millar, ., "


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all St 2012. Salesforce.com 'ontinues "ggressi&e +" Strategy !4nline#

"&aila,le at: http://wallstcheatsheet.com/stoc5s/salesforce%com%continues%aggressi&e%ma%strategy.html/!accessed 2 "ugust 2013#
http://wallstcheatsheet.com/stocks/salesforce-com-continues-aggressive-ma-strategy.html/http://wallstcheatsheet.com/stocks/salesforce-com-continues-aggressive-ma-strategy.html/http://wallstcheatsheet.com/stocks/salesforce-com-continues-aggressive-ma-strategy.html/http://wallstcheatsheet.com/stocks/salesforce-com-continues-aggressive-ma-strategy.html/


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. Appendi8

1- Calculation ork in spread seet


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1 Modellin& ;ork


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14 Salesforce Annual Report


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# Salesforce Annual Report for #55 to #554


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#5 "etSuite Annual Report


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# "etSuite Annual Report for #55 to #554


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#1 !racle Annual Report


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1 !racle Annual Report for #55 to #554


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sample bap-assignment one

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