Case 1: Datavast Inc.

 
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Situation Analysis

Datavast Inc. comes across as having several areas that could be used for success at present and in the future. The company’s point of strength is its flexible approach to the aspect of cloud storage. While such companies as IBM and Cisco are well established, they offer only fixed products that customers can make few modifications to for satisfying their needs. The most notable weakness of Datavast is its lack of confidence from customers owing to its small footprint in the market and the fact that it is privately owned with only a few years in operation. Thus, the customers think twice about giving their sensitive data to such a company (Schulz 34). Its competitor IBM, for example, has been in operation for more than fifty years and, thus, gained customer recognition.

The opportunity Datavast gives is that it can provide customized services to clients at cheaper prices than the competitors offer. Enticing prices would most likely draw customers besides edging out of the competition. The threats to Datavast’s operations include the fact that its competitors have established brands with a long history of providing data solutions to customers. This aspect stands in the way of Datavast since customers may never learn how to use its products just because they were using IBM and Cisco cloud storage services for a long time. This case presents several aspects regarding Datavast that mean a lot to its success as a data storage company. These aspects, once put into perspective, would reveal the chances that Datavast has in the market.

Assumptions and Missing Information

In the case concerning Datavast, it is assumed that very few changes would occur in the pricing of the cloud storage facilities. This happens because the case is presented without any adjustments to cater for future price changes. Another assumption made is that there will be no new technologies emerging in cloud storage for elicit a shift in the customer preferences. If such shift occurred, the Datavast’s conditions might become better or worse leading to changes in its plans. If the new changes favor Datavast, it will divert its strategy to make the most of it. If they do not favor it, a new strategy will be required to survive. In any case, however, some care should be taken to beat the competition at the price and quality fronts.

The information missing from Datavast case includes any other reasons why customers snub Datavast and its products besides confidence issues. One would ask if the customers are aware of other pieces of information, which do not work well in the favor of Datavast. Another area being not well explained is why Hao does not want to invest more in the company when it could be what the company needs to move ahead. In most cases, the company may do more with more capital. Even if Hao’s plan to retire early makes him pessimistic, he should consider the chances that his company has against bigger competitors unless he has another reason for not doing so.

Problem Definition

The main problem that Datavast faces is whether it should target small and medium-sized enterprises (SMEs) or large companies. The SMEs, on one hand, are very sensitive to price changes. Datavast, if it decides to focus on this market segment, will most likely have to carry out a lot of research on the most appropriate prices to establish. However, the SMEs’ segment is deemed to provide the fastest growth for Datavast. On the other hand, large companies have higher returns given that each Datavast product unit will be made at a higher contribution margin compared to those offered to SMEs. However, dealing with large companies, Datavast will most likely face the problem of long buying cycles. Convincing big firms may also take a painfully long time since they deal mostly with large data sizes and contain very sensitive information. Datavast has to make a choice between these two market segments. Another problem is the competition. Highly established brands such as IBM and Cisco can only be outpaced if the offer given to customers by Datavast is irresistible in terms of the relationship between the services offered and their pricing. However, the attention should be paid to the company for not making it too attractive given that business people often avoid such deals for prudence purposes. Datavast should make use of its position in the market as a new entrant. Given its size, it can easily make changes to its production line to make the most of the market opportunities. Its small size eliminates the cases of bureaucracy that is present in its large competitors.

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Development of Alternatives

The first alternative for Datavast’s disposal is to offer the integrated backup systems akin to the ones offered by IBM. These kinds of systems are reputable for their reliability in data storage and quickness of recovering lost data. However, Datavast is a small company compared to IBM and Cisco, and it would run into financial problems if bent on providing the same option (Coyne, Gopalakrishnan, and Sing 81). The second alternative, which is the most feasible, is data security box designed by Hao. First of all, it is an easily customizable option that could be tailored to the needs of any company being whether it in the SMEs or large companies segment. In this way, Datavast can straddle across the whole data storage market by playing alongside bigger players without directly facing them since it would most likely lose a head-on fight. It would also be a channel for entering the market with a unique product that competitors do not have. According to the design of data security box, it can fit many purposes including using it for the whole companies or certain data-responsible departments. It is also possible for a firm to have several data security boxes suited to various purposes.

Evaluation of Alternatives and Recommendations

Two alternatives stated above can be operated at different levels within the firm. At its current level, Datavast should focus on the data security box as its main product. Companies using products from other data storage providers will still use security boxes for special purposes. Slowly but surely, Datavast can go into the mainstream. However, it should focus on providing highly flexible and customizable solutions to data storage. Only when the company has created a niche for itself, it can go into the provision of services for very big firms that require a lot of reliability. Datavast should also consider the data security box segment seriously given that it offers quicker returns in capital investments compared to other services. This aspect stems from the fact that even for large firms, its purchase cycle is faster than other data security services. Datavast should not, however, focus all its efforts on data security box only. It may offer other services considering that more experienced competitors in the market (such as Cisco or IBM) could launch a competing product (Yang and Xiaohua 27). Datavast should thus remain inventive to gain a niche in the market and maintain it. It should also offer other products and services as a prudent measure against the possible failure of data security box since its success is yet to be proven.

  SMEs Large Firms
Pricing before mark-up RMB7,000 RMB400,000
SIs margin 50% 30%
Sale cycle 2-3 weeks 2-3 months