Macro/ Micro Environment
Porter’s Five Forces Model
The threat of new entrants.
The threat of substitute goods.
The threat of competitive rivalry.
Bargaining power of suppliers.
Bargaining power of buyers.
Company’s Competitive Advantage.
Company’s Generic Strategies.
Atlassian Corporation Plc is a software company based in Australia that comes under the software development of the IT industry. It usually develops products for project management, software development, and content management. It was founded in the year 2002 and headquartered in Sydney, Australia. The mission of the company is to assist release the potential of each team. It has its established business in over 7 countries worldwide serving approximately 150000 customers. It is currently having a team of 4000 workers who all are highly skilled engineers and other members. The values of the company play, as a team; build with heart and balance; open company, no bullshit; be the change you seek. These values are unique to the business and are followed by each of its members so that they can shape the culture of the company (ATLASSIAN 2020). This report discusses the strategic analysis of the Atlassian Corporation using the external and internal environment analyses. Moreover, it entails the competitive advantage of the company, its generic strategies, growth strategies, and recommendations for future growth.
The macro-environment of the business can be analyzed using the PEST framework. This framework is the strategic management tool that is used by marketers to examine the external environment of business by assessing the factors like political, economic, socio-cultural, and technological (Vlados and Chatzinikolaou 2019). These factors are described with respect to Atlassian as follows:
These are factors relating to the guidelines and regulations of the government that have an influence on the business positively or negatively (Ho 2014). The Atlassian Company is influenced by numerous political factors in the native and global markets. The political environment of Australia is stable currently which is creating numerous growth prospects for Atlassian Company. However, there have been frequent changes in the policies of the government in terms of tariffs, taxes, and more that is increasing environmental ambiguity.
These are factors relating to the foreign exchange rates, GDP growth rate, unemployment rates, and more that affect the company’s performance. The Atlassian Corporation has faced various challenges and hindrances in preserving a greater performance level because of the reduced GDP rate of Australia. There has been a high level of unemployment in a nation that is maximizing the costs to the business. Despite these economic factors, the company is earning higher returns by attracting consumers who have higher disposable income (AboElsoud, AlQudah, and Elish 2020).
These factors are relating to the lifestyle of the individuals, their desires, and their cultural aspects. Moreover, these include the cultural and demographic facets of the macro environment. Each business organization indeed has to take care of its customer's needs and desires (Hossain et al 2019). In the Information technology and software development industry, there exists a positive trend in respect of acceptance and inclusion of people. Furthermore, the Atlassian Corporation also has respect for inclusion practices that helps it in attracting a great pool of consumers. Additionally, lifestyle is one factor that defines the buying patterns and behaviors of the clients about a particular product or service.
These factors are relating to prompt progressions in innovations and modern technologies. These progressions in technologies have generated many visions for the business. The modern technologies like artificial intelligence, cloud computing, big data, and others are being utilized by every business for building competitiveness in the industry. The Atlassian Corporation has been affected the most with the X-as-a service and cloud businesses. In order to remain competitive, the company has developed numerous digital products in its product line and increased its probable clients.
To examine the competitive influence of the industry, porter's five forces model is intended that is the greatest mainly reflected strategic tool for determining the attraction of the industry (Moreno-Izquierdo, Ramón-Rodríguez and Perles-Ribes 2016). There are five forces of porter’s model that are described below:
The threat of new entrants: To enter in an IT industry, a business entity requires less investment but need to create a solid product for competitiveness. Therefore, the threat of entry in this industry is moderate. Currently, numerous businesses are planning to enter this industry to bring innovation and novel products. This enables the Atlassian Company to change its strategies in terms of costs, innovation, and more (Saji and Harikumar 2014).
The threat of substitute goods: This force is also medium in the software engineering of the IT industry. This industry is approaching maturity and there are numerous substitute enterprise software solutions offered. This force can be reduced by the company by being service oriented along with product oriented.
The threat of competitive rivalry: There is intense competition available in the IT industry
Bargaining power of suppliers: There is high power of suppliers in the tech industry. The employees of the companies are its suppliers and there is tough competition for highly competent employees in this industry. They can bargain for salary, benefits, and prices.
Bargaining power of buyers: In earlier times, buyers have low power because of the higher switching costs occurring due to software integration, costs. However, this power has been increased with the lowering of switching costs due to the introduction of cloud-deployed software (Akhter, Rahman and Rahman 2014).
The Atlassian Corporation is operating in an extremely competitive environment in which its key competitors are Google, Salesforce, zendesk, Microsoft, and more. The company has created a one-time platform for the support and development departments to which it is offering a user-friendly atmosphere (Dempsey and Kelliher.2018). The exclusive set of services and support from the Atlassian Corporation entail excellent support, user-friendly design, a variety of plug-ins, agile development, seamless integration, customization and automation, free online support, and more. All these services and support help it in building a robust competitive advantage in the IT industry. The potential of the company is extensively viewed as one of the best in the industry with continually refining software improvements that further enlarge the plug-in potential. It is the most resourceful company in terms of the integration of its products with a variety of plug-ins. Moreover, it has a different strategy than others like Atlassian Company has no salespeople in its organization. It lists prices visibly on the website and users can buy easily using credit card payment. Furthermore, it provides a market of supplements for its products that characterized by integration with bigger businesses’ services like Upwork and sovereign developers. This further lets them make value for others like customers and developers. Moreover, it permits the company to capture value through better products and augmented lock-in (Hajduk 2016).
According to porter, there are generally four business generic strategies that are to be adopted by businesses in order to gain a competitive advantage in the industry. These strategies are named as cost leadership, cost focus, differentiation leadership, and differentiation focus (Mutunga and Minja 2014). The generic strategy followed by Atlassian in order to remain competitive is the differentiation strategy. The company is doing its constant efforts in achieving is a strategy through its product strategy, distribution model, and the culture of the company. The culture of the company further adheres to certain aspects like innovation, openness, long-term orientation, the team determined, and dedication towards fulfilling the requirements of customers. Moreover, it also focuses on offering its products to clients at reasonable prices.
Therefore, its generic strategy is stuck somewhere between the differentiation and the lower cost advantage. These strategies have been aiding the Atlassian Corporation in creating higher value for the customers and also help in generating higher profit margins for the company (Mualla and Leicester 2018). The culture of the company is unique as compared with its competitors as they place a high priority on its clients and workers. Moreover, its culture is hard to be copied by others and thus their distribution model of self-service, subscription-based cloud organized products is rapidly becoming the standard for software service suppliers. Since the differentiation strategy of a company is reliant on the product strategy of the company, the distribution strategy of the company, and its culture. Its product strategy is the availability of its products for teams either startups or enterprises. Furthermore, its distribution strategy is based on low friction virtual channel that further depends on word-of-mouth demand production for the expansion of its products.
The growth strategies of the company are in the form of pricing approaches, licensing, and mechanization of its products. The pricing approach of the business is regarding the creation of products that can be valued at lower charges and retailed in huge amounts for making higher revenue and amplifying the profit margins for its business. Furthermore, it has considered the strategy for expansion of its business operations by entering into the global markets with attractive cities in various parts of the world. However, various factors were challenging for the Atlassian business namely taxes, investments, costs of wages for workers, and others. Moreover, numerous aspects are significant factors for its growth strategy. These are lower prices of the company, distribution framework of forming great products, transparent pricing, seeking volume sales via virtual platforms, and informal trials. Further, the growth strategy is the mechanization of product deals using the marketing medium and selling its products to a demographic that is not pleasant to sales individuals that are designers in numerous companies. Furthermore, it has been following the diversification strategy of the Ansoff matrix through its widespread researches and development (Kim, Lee, and Cho 2016). Despite a tough strategy, the company has been doing its constant efforts in bringing diversification through novel products.
As far as recommendations and suggestions are concerned for the Atlassian Corporation, it must constantly sell more of its software product at reasonable prices. Additionally, the company needs to start marketing its software products in varied languages like Spanish, Germany, and more. It enables them to influence the market for those by these languages. Moreover, in order to keep the growth of the company, it must include the endless refit of the pricing approach that helps in connecting inclusive variations in the method its business model functions. It is also recommended to the company that it must realign its business model taking into consideration the environmental variations. Additionally, expansion of the revenue of business via advanced novel products by aiming the evolving markets like china.
India and others might be helpful for the company to remain competitive. The company should enlarge its business through market development by entering intonations that are foreseen to have developing markets having skilled workers and information technology startups, this recommendation supports the objective of the company as stated in its annual report. Further, it is recommended to the company that it must amplify its alliances with numerous other businesses in order to refine the optimistic externalities. In order to boost sales and maintain its growth, it must start to focus more on its diversification strategies through a more extensive approach for market research. A step ahead, it must adopt the approach of mergers and acquisitions to improve its diversification approach.
From the above strategic analysis of the Atlassian Corporation of Australia, it can be concluded that the company is putting its continuous efforts in delivering innovative software to its clients. Furthermore, it has an abundance of capabilities that are responsible for its status in the market. The political environment of Australia is stable currently which is creating numerous growth prospects for Atlassian Company. The Atlassian Corporation has been affected the most with the X-as-a service and cloud businesses. Moreover, it can be inferred that the Atlassian Corporation is operating in a tremendously competitive environment in which its key competitors are Google, Salesforce, zendesk, Microsoft, and more. The company has shaped a one-time platform for the provision and development sections to which it is offering a user-friendly atmosphere. The growth strategies of the company are in the form of pricing approaches, licensing, and mechanization of its products. Further, the generic strategy of the company is stuck somewhere between the differentiation and the lower cost advantage. The company is doing its constant efforts in achieving is a strategy through its product strategy, distribution model, and the culture of the company.
AboElsoud, M.E., AlQudah, A., and Elish, E. 2020. Does a change in immigration affect the unemployment rate in host countries? Evidence from Australia. Journal of Applied Economics, 23(1), pp.21-43.
Akhter, S., Rahman, N. and Rahman, M.N.2014. Competitive strategies in the computer industry. International Journal of Technology Diffusion (IJTD), 5(1), pp.73-88.
ATLASSIAN 2020. About the company. [Online]. Available at https://www.atlassian.com/company Accessed on 2 June 2020.
Dempsey, D., and Kelliher, F.2018. Industry Trends in Cloud Computing. Pallgrave McMillian, New York.
Hajduk, G.2016. Challenges for marketing communications in the digital age. The impact of the digital world on management and marketing, pp.183-195.
Ho, J.K.K. 2014. Formulation of Systemic PEST analysis for strategic analysis. European Academic Research, 2(5), pp.6478-6492.
Hossain, S., Anjum, A., Uddin, M.E., Rahman, M.A., and Hossain, M.F.2019. Impacts of socio-cultural environment and lifestyle factors on the psychological health of university students in Bangladesh: A longitudinal study. Journal of Affective Disorders, 256, pp.393-403.
Kim, J., Lee, C.Y. and Cho, Y. 2016. Technological diversification, core-technology competence, and firm growth. Research Policy, 45(1), pp.113-124.
Moreno-Izquierdo, L., Ramón-Rodríguez, A.B. and Perles-Ribes, J.F. 2016. Pricing strategies of the European low-cost carriers explained using Porter's Five Forces Model. Tourism Economics, 22(2), pp.293-310.
Mualla, K., and Leicester, U.2018. The Growing Effect of Cloud Computing on Technological Innovation: A Decision-Making Framework for Hybrid Managers. International Journal of Digital Information and Wireless Communications, 8(4), pp.265-280.
Mutunga, S.L., and Minja, D. 2014. Generic strategies employed by food and beverage firms in Kenya and their effects on sustainable competitive advantage. International Journal of Business and Management Review, 2(6), pp.1-15.
Saji, T.G., and Harikumar, S. 2014. Assessing Profit Potential of Indian Information Technology Industry: An Application of Michael Porter model. Productivity, 54(4).
Vlados, C., and Chatzinikolaou, D. 2019. Methodological redirections for an evolutionary approach of the external business environment. Journal of Management and Sustainability, 9(2), pp.25-46.
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