4. Executive Summary:
Adobe Inc. is an American multinational computer software company. Incorporated in Delaware and
headquartered in San Jose, California, it has historically focused upon the creation of multimedia and
creativity software products, with a more recent foray into digital marketing software. Adobe is best known
for its Adobe Flash web software ecosystem, Photoshop image editing software, Adobe Illustrator vector
graphics editor, Acrobat Reader, the Portable Document Format (PDF), and Adobe Creative Suite, as well
as its successor Adobe Creative Cloud.
Adobe was founded in December 1982 by John Warnock and Charles Geschke, who established the
company after leaving Xerox PARC to develop and sell the PostScript page description language.
As of 2019, Adobe has more than 21,000 employees worldwide, about 40% of whom work in San Jose. It
also has major development operations in Noida and Bangalore in India.
5. Strategy Formulation:
Identify and Analyze Current:
1.Mission Statement:
“to move the Web forward while also giving Web designers and developers the best tools
and services in the world.”
2.Objectives:
Outstanding
Involved
Genuine
6. Strategy Formulation:
3.Key Strategies:
There are various key strategies that would be pursued by Adobe Systems Incorporated.
These are:
Increase the rate of launching new products on the market through enhancing the
research and development team.
Increase collaboration with successful technological companies and organizations in
the market.
Seek to increase patented products on the market.
Diversify our market segment as well as seek new markets that are yet to be
explored.
7. Analysis internal and external Environment:
Organizational Resources and Capabilities:
Strengths of Adobe:
Successful track record of integrating complimentary firms through mergers & acquisition. It
has successfully integrated number of technology companies in the past few years to
streamline its operations and to build a reliable supply chain.
Highly successful at Go to Market strategies for its products.
Strong Free Cash Flow – Adobe has strong free cash flows that provide resources in the hand
of the company to expand into new projects.
Strong distribution network – Over the years Adobe has built a reliable distribution network
that can reach majority of its potential market.
Successful track record of developing new products – product innovation.
8. Weakness of Adobe:
Limited success outside core business – Even though Adobe is one of the leading
organizations in its industry it has faced challenges in moving to other product segments with
its present culture.
Not highly successful at integrating firms with different work culture. As mentioned earlier
even though Adobe is successful at integrating small companies it has its share of failure to
merge firms that have different work culture.
Need more investment in new technologies. Given the scale of expansion and different
geographies the company is planning to expand into, Adobe needs to put more money in
technology to integrate the processes across the board. Right now, the investment in
technologies is not at par with the vision of the company.
Organization structure is only compatible with present business model thus limiting
expansion in adjacent product segments.
9. Industry and External Environment:
Opportunities for Adobe:
Opening up of new markets because of government agreement – the adoption of new
technology standard and government free trade agreement has provided Adobe an
opportunity to enter a new emerging market.
Organization’s core competencies can be a success in similar another products field. A
comparative example could be - GE healthcare research helped it in developing better Oil
drilling machines.
The new taxation policy can significantly impact the way of doing business and can open new
opportunity for established players such as Adobe to increase its profitability.
New trends in the consumer behaviour can open up new market for the Adobe. It provides a
great opportunity for the organization to build new revenue streams and diversify into new
product categories too.
10. Threats Adobe Facing:
As the company is operating in numerous countries it is exposed to currency
fluctuations especially given the volatile political climate in number of markets
across the world.
Intense competition – Stable profitability has increased the number of players in the
industry over last two years which has put downward pressure on not only
profitability but also on overall sales.
Rising raw material can pose a threat to the Adobe profitability.
Increasing trend toward isolationism in the American economy can lead to similar
reaction from other government thus negatively impacting the international sales.
12. Marketing Strategy:
Leader in commercial bitmap & image manipulation
High Price for Best Value
Adobe relies on a “Push” Strategy
Adobe Photoshop is marketed through sales channels
13. Adobe Growth Strategy:
At the company's investor
meeting, Adobe CEO Shantanu Narayen said
the growth strategy is "to unleash creativity,
accelerate document productivity and power
digital businesses." Digital business and the
customer experience market is expected to drive
the bulk of Adobe's growth.
15. What is Porter Five (5) Forces:
In his revolutionary article - "Five Forces that Shape Strategy", Michael Porter observed five
forces that have significant impact on a firm's profitability in its industry. These five forces
analysis today in business world is also known as -Porter Five Forces Analysis. The Porter
Five (5) Forces are -
• Threat of New Entrants
• Bargaining Power of Suppliers
• Bargaining Power of Buyers
• Threat from Substitute Products
• Rivalry among the existing players.
16. Adobe Systems IncorporatedPorterFive (5)ForcesAnalysis forTechnologyIndustry
Threats of New Entrants:
New entrants in Application Software brings innovation, new ways of doing things and put
pressure on Adobe Systems Incorporated through lower pricing strategy, reducing costs,
and providing new value propositions to the customers. Adobe Systems Incorporated has
to manage all these challenges and build effective barriers to safeguard its competitive
edge.
How Adobe Systems Incorporated can tackle the Threats of New Entrants
By innovating new products and services. New products not only bring new customers
to the fold but also give old customer a reason to buy Adobe Systems Incorporated ‘s
products.
By building economies of scale so that it can lower the fixed cost per unit.
17. Bargaining Power of Suppliers
All most all the companies in the Application Software industry buy their raw material from
numerous suppliers. Suppliers in dominant position can decrease the margins Adobe
Systems Incorporated can earn in the market. Powerful suppliers in Technology sector
use their negotiating power to extract higher prices from the firms in Application Software
field. The overall impact of higher supplier bargaining power is that it lowers the overall
profitability of Application Software.
How Adobe Systems Incorporated can tackle Bargaining Power of the Suppliers
By building efficient supply chain with multiple suppliers.
By experimenting with product designs using different materials so that if the prices go
up of one raw material then company can shift to another.
Developing dedicated suppliers whose business depends upon the firm. One of the
lessons Adobe Systems Incorporated can learn from Wal-Mart and Nike is how these
companies developed third party manufacturers whose business solely depends on
them thus creating a scenario where these third-party manufacturers have
significantly less bargaining power compare to Wal-Mart and Nike.
18. Bargaining Power of Buyers
Buyers are often a demanding lot. They want to buy the best offerings available
by paying the minimum price as possible. This put pressure on Adobe Systems
Incorporated profitability in the long run. The smaller and more powerful the
customer base is of Adobe Systems Incorporated the higher the bargaining
power of the customers and higher their ability to seek increasing discounts and
offers.
How Adobe Systems Incorporated can tackle the Bargaining Power of Buyers
By building a large base of customers. This will be helpful in two ways. It will
reduce the bargaining power of the buyers plus it will provide an opportunity
to the firm to streamline its sales and production process.
19. Threats of Substitute Products or Services
When a new product or service meets a similar customer needs in different ways,
industry profitability suffers. For example, services like Dropbox and Google Drive are
substitute to storage hardware drives. The threat of a substitute product or service is high
if it offers a value proposition that is uniquely different from present offerings of the
industry.
How Adobe Systems Incorporated can tackle the Treat of Substitute Products / Services
By being service oriented rather than just product oriented.
By understanding the core need of the customer rather than what the customer is
buying.
By increasing the switching cost for the customers.
20. Rivalry among the Existing Competitors
If the rivalry among the existing players in an industry is intense then it will drive down prices
and decrease the overall profitability of the industry. Adobe Systems Incorporated operates in
a very competitive Application Software industry. This competition does take toll on the overall
long-term profitability of the organization.
How Adobe Systems Incorporated can tackle Intense Rivalry among the Existing Competitors
in Application Software industry
By building a sustainable differentiation
By building scale so that it can compete better
Collaborating with competitors to increase the market size rather than just competing for small
market.
23. TOWS Matrix:
S-O Strategy:
SO1: Successful track record of integrating complimentary firms through mergers & acquisition,
the adoption of new technology standard and government free trade agreement has provided
Adobe an opportunity to enter a new emerging market.
SO2: Highly successful at Go to Market strategies for its products and Organization’s core
competencies can be a success in similar another products field.
SO3: Adobe has strong free cash flows that provide resources in the hand of the company to
expand into new projects and the new taxation policy can significantly impact the way of doing
business.
24. S-T Strategy:
ST1: Successful track record of integrating complimentary firms through mergers & acquisition,
the adoption of new technology standard and as the company is operating in numerous
countries it is exposed to currency fluctuations.
ST2: Highly successful at Go to Market strategies for its products and Stable profitability has
increased the number of players in the industry over last two years which has put downward
pressure on not only profitability but also on overall sales.
ST3: Adobe has strong free cash flows that provide resources in the hand of the company to
expand into new projects and rising raw material can pose a threat to the Adobe profitability.
25. W-O Strategy:
WO1: Even though Adobe is one of the leading organizations in its industry it has faced
challenges in moving to other product segments with its present culture and government free
trade agreement has provided Adobe an opportunity to enter a new emerging market.
WO2: Organization’s core competencies can be a success in similar another products field and
Organization’s core competencies can be a success in similar another products field.
WO3: Need more investment in new technologies and the new taxation policy can significantly
impact the way of doing business.
26. W-T Strategy:
WT1: Even though Adobe is one of the leading organizations in its industry it has faced challenges
in moving to other product segments with its present culture and as the company is operating in
numerous countries it is exposed to currency fluctuations.
WT2: Organization’s core competencies can be a success in similar another products field and
Stable profitability has increased the number of players in the industry over last two years which
has put downward pressure on not only profitability but also on overall sales.
WT3: Need more investment in new technologies and Increasing trend toward isolationism in the
American economy can lead to similar reaction from other government thus negatively impacting
the international sales.
