Dear Paul Sagan, Akamai is already established as a leader in the CDN industry, largely due to the high quality of service offered and a thorough understanding of the Internet. Akamai’s decentralized structure has been a fundamental difference from you and your competition since the firms’ beginning, and has allowed you to not only survive but also steadily grow in a fiercely competitive industry. Akamai currently commands 60% of the market share in revenue, making it the largest CDN in industry.
Despite your successful financial position, over the last two years the number of competitors n the industry has grown more than fivefold, and demand has been slow to recover since the 2008 financial crisis. These developments raise the question, should Akamai should maintain its decentralized structure, or move towards your competitor’s cheaper, more centralized structure. In light of this, our consulting firm conducted both an internal and external analysis to provide a context for our strategy development.
We took into account the main strengths and defining features of your organization in order to create a strategy that aligns with your vision and goals. The xpected growth in the HD video market coupled with the growth of centralized CDN’s has led us to recommend that Akamai focus on its strengths that have gotten you to your current position. Although the centralized structure has lower costs, your decentralized structure and “edge” has been key in earning you your reputation as an industry leader in service quality.
Through eliminating your complimentary services and focusing on geographical growth and capacity expansion we believe that you will be able to grow your market share. This will lead to long-term sustainable rowth in revenues and maintain your status as a leader in this increasingly competitive industry. Sincerely, STRATEGIC ANAYLSIS We started our analysis by examining the external environment in which Akamai operates. Our first step was to explore the competition in your industry through creating a strategic group map, using price and level of centralization as our two variables.
We concluded that the majority of your competition clustered around a low to middle priced, centralized strategy. Conversely, Akamai was on the other end of the spectrum with your high priced, decentralized structure. It should be noted that our group map also took into account market share, with Akamai having the largest by a comfortable margin. Upon completing a five forces analysis we noted that the threat of new entrants as well as degree of rivalry in the market were both high.
This means that it is essential for Akamai to have a strong strategic plan that will allow you to distinguish yourselves from the current and future competition in the market. Following our external analysis we went on to examine the internal environment of your organization. We began with a value chain analysis and noted that the defining eature was your firm infrastructure was your decentralized CDN structure, or your “edge”. This edge is what has allowed you to provide your premium quality product, and through extension charge a premium price.
However, it should be noted that it comes at a much higher operating cost than that of a centralized structure which is used by the majority of your competition. This low-cost centralized structure is the main contributing factor to the high threat of new entrants and high degree of market rivalry in the external environment. Upon review of the past four years’ inancial statements we have noted that Akamai is currently a strong financial position, with a sustained increase in revenue.
While revenue is increasing, it is also worth noting that our vertical analysis shows a steady increase in cost of sales, surpassing relative growth in revenue in recent years. Our horizontal analysis of your balance sheets showed constant growth in assets that funded largely through equity, particularly through paid in capital. After completing the internal and external analysis, three strategic alternatives were derived that match Akamai’s various strengths to the opportunities and threats in the market.
The first alternative would be to aggressively cut prices to match those of your competition in order to increase your market share and revenues even further. If Akamai were to implement this create pressure in the industry that would potentially force competition out of the market. The second strategic alternative would be for Akamai to cut down complementary offerings and to focus on your core operations, in particular your distributed content delivery. Experts forecast that the HD video and mobile market will grow from $400 million to $1. billion over the next 5 years, and if Akamai were to nvest in servers and expand your edge into growing markets you would be poised to capitalize on this explosion in demand. As well, cutting your complementary offerings would lower expenses and create a sustainable increase in revenue. For our third alternative, Akamai would drop prices and develop your complementary services further brand yourself as a “one stop shop” CDN service provider. This alternative would allow Akamai to increase market share by lowering prices and would also capitalize on your reputation as a seasoned leader in the market that you have worked so hard to achieve.
The three alternatives are discussed in further detail in appendix 4. Each of these alternatives was evaluated by using a decision matrix of seven criteria. These criteria were weighed according to their importance in making a strategic decision. Using this decision matrix the second strategic alternative was determined to be the best-suited strategy for Akamai to adopt, scoring highest in the sustainability and increased market share criterion. We recommend that Akamai pursue this strategy to ensure long term sustainable product and to continue to reap the benefits of the superior product that their decentralized structure offers.
We have developed a 5 year implementation plan that will allow Akamai to realize our recommended strategy. It outlines the key activities as well as the key responsibilities necessary to executing our plan. The focus is largely on strategic investments that will expand your edge into developing markets in order to capitalize on the exploding demand for mobile and HD services. These strategic investments will aid Akamai in analyzing market trends as it will provide you with firsthand information about server usage and market demand, while also leaving you poised to react to early trends.
This growth in infrastructure will require a significant investment, however your financial statements show strong a strong current ratio and based on your current financial structure we believe that acquiring smart short-term debt will allow you to leverage your strengths. As well, the reduction of your complimentary services will help free up cash flows as well. Throughout this capacity expansion and geographical growth, maintaining Akamai’s superior service quality will be paramount.
about the transformational leader, should be 4 to 5 pages with 7ed APA style and all other requirement in the attached work please check it before.
Transformational leaders encourage their employees to share ideas. This type of leader motivates employees and seeks collaboration to achieve goals. They take the time to listen to employees and evaluate ideas. Open communication, cooperation, and risk-taking are characteristics that often describe transformational leaders. When COVID-19 began, Salam, the general manager of XYZ’s chain restaurant, conducted a meeting with all employees. During the meeting, Salam shared COVID-19 related information and expressed the critical importance of customer safety. As a transformational leader, Salam wanted to involve all employees in the decision-making process to determine if masks and gloves should be used by employees, the number of customers to be served inside the restaurant at one period of time, how sanitation efforts could be encouraged, and more. Since the transformational leadership approach was used, the process of determining what was best for the organization took countless meetings and over one month to agree upon. While waiting to make a final decision, employees became ill with COVID-19 and the restaurant needed to close for longer than anticipated. Thinking about the case presented above: 1. Determine if the transformational leadership style was the best approach to use. 2. Explain what leadership approach you would have used if you were in Salam’s position (i.e., transactional leadership, charismatic leadership, or transformational leadership). 3. Explain the advantages and disadvantages with using the transactional leadership approach as compared to the transformational leadership approach. 4. If you were Salam, what would you have done differently and why.
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