Servervault Analysis Case Study

1496 WordsOct 14, 20126 Pages
RSM322 Assignment C - ServerVault Instructor: D.L.Losell Name: Ching Leong Kwok Student#: 998199088 LEC: 0201 Date: 28th June 1999 To: Board of Directors of SeverVault From: Ching Leong Kwok Subject: Alternatives evaluation and recommendation of ServerVault After reviewing all the potential problems that ServerVault is facing, the most crucial problem is the shortage of cash. It is because ServerVault wants to maintain its competitiveness in hosting industry. Therefore, it needs adequate cash to build more new facilities in order to expand its business in a larger scale. There are several approaches which are worth for SeverVault to consider. The first alternative is Status Quo (SQ), it means do nothing and let the business keeps…show more content…
Therefore, if merging can reduce the operating cost such as set up, hosting, and services cost will be definitely decrease in a significant portion. Another advantage is that merging can increase the competitiveness of its company. As the market share will be increased by merging two companies, it will has a lower production cost (operating cost). As a result, ServerVault can provide the same hosting service with a lower market price because of the lower production cost. Thus, since ServerVault has been doing the product differentiator because of its unique security technology, it can shift its cost driver from product differentiator to cost leader gradually. So it can widen its customer base not only for those who are looking for fast and secure internet service, but also for customers who cannot afford for the original price. With reference to the example of "facebook's Instagram acquisition", since Instagram "has become a popular application used on facebook, a site that has built an audience of some 950 million users,"and its nature is similar with facebook about sharing photos on the internet, the acquisition can help facebook to eliminate a large competitor in photo sharing market. This movement helps facebook to maintain its competitiveness in the market. If ServerVault merges with the other hosting company, it will bring a similar effect as facebook and Instagram. Last but not

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