Appirio: New Venture on a Cloud Harvard Case Solution & Analysis

Porter’s Five Forces Analysis for Appirio’s

The Porter five forces analysis is very important for analyzing the competition of the company and analyzing the business strategy of the company. It also helps to address the competition of the company and its intensity and also the increasing the awareness of the market.

Threat of New Entrants

            The threat of new entrants is always a major issue for the companies like Appirio. There will be a large number of new companies which are willing to enter the industry related to cloud marketing and consulting. Many companies want to enroll themselves in the business like Appirio and providing services to the companies to help them out in adopting the cloud and solving other technical issues so that the company can focus on their business operations rather than focusing on their Information Technology issues.

            Due to the start of the industry and growth in the industry, there are new entrants being attracted towards this industry, which increases the competition between the companies. The threat of new entrants is different for the different type of companies existing within the cloud. SAS companies require low investment for the start of the business and the low investments increase the threat of new entrants in the industry, and hence, the threat of new entrants is high for Appirio.

Threat of Substitute Products or Services

            The threat of the substitute product or services should be considered by the companies inorder to have an idea about their customer’s choices. The main substitutes for the cloud computing are the traditional information technology companies and it seems that the market seems to be dragging away from the traditional Information Technology companies. But, this could change rapidly if the cloud computing would not be providing the security measures which traditional IT companies does. The availability of the internet services and also the other options can increase the demand of traditional IT companies. Since, the substitutes are low and going away from the market therefore, the threat of substitutes for Appirio is low.

Bargaining Power of Customers

            The companies are increasing with blinding pace, entering the cloud industry and targeting the customers specifically with better services than their competitors. Therefore, the buyers or customers have different choices regarding the companies offering the cloud computing and hence, there is a pressure on the Appirioto decrease the prices as the company compete with its competitors regarding the customers.Though, the bargaining could be lowered down in case of other services or through some monopoly by the company. Therefore, the bargaining power of buyers is high for Appirio.

Bargaining Power of Suppliers

            Cloud service providers are the suppliers for Appirio, regarding the cloud computing market. In the market such as SAS market, the bargaining power of the suppliers is very low. The company is dependent on its suppliers for providing them the services which can be utilized to fulfill the needs of the customers. This is due to the reason that the switching cost of buyers is very low in the market and also due to the presence of many players.Therefore, the suppliers do not have high bargaining power in case of Appirio.

Intensity of Competitive Rivalry

The market of the IT companies provides services to the companies for adopting cloud.. The increase in the number of firms allows less concentration in the cloud market. This low concentration increases the competition for Appirio. So low concentration in the market makes it a high competitive market. The presence of giants like IBM, Google and Accenture makes ithighly competitive rivalry. The competition tends to be high for the companies have less differentiation between the services they have to offer.


Appirio sustainable model?

The competitive rivalry for Appirio is very high. Considering the interest of the new entrants or the companies already working in the industry, causes low concentration in the market. Therefore, Appirio is facing high competition and presence of giants like IBM, Google and Accenture in the market make it tougher. In the market like this the company needs to identify its target market really well and have an effective business model so that it can compete with thegiants in the market.

In the case of Appirio, the growth has been up to the mark and it is a $40 million company and achieved the goal of $10 million after startup. Similarly, the performance of Appirio has been of top class and the functions and strategies proves to be currently working for the company. Glenn and Chris aimed for the next generation IBM, to develop the system solution company which was cost free, no complexity, and also the hurdles like the technology being used before.The company was based on the goal of moving the non-core businesses in the cloud, which was a very different and unique technique...............................

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