Sample Software Company is an S Corporation founded and entirely owned by Ralph and Mabel Smith. The company was founded in 1993 and has received no outside investments. Sample sells three different software products that command impressive market share. Ralph and Mabel are interested in taking the company to the next level in sales by 2000.
Sample's objectives are ambitious yet achievable. Sales increases in 1999, and doubling again for the next year. They also forecast commensurate gross margin increases and net profit increases. Their goal is to hold personnel to one employee for every $250,000 in revenue. With their flagship product, Product X, they will maintain a 30% market share as measured by PC Data. These goals will be maintained by adhering to three keys to success, market power, customer satisfaction, and the right management team.
The Market
Sample is participating in a $3.8 billion market that will have a 20% growth rate for the next three years. Sample will be targeting four customer segments: home offices, small offices, professionals, and academics. These markets are growing at 2%, 5%, 8%, and 0% respectively. These markets have 22,000, 15,000, 10,000, and 12,000 potential customers respectively. These figures are the USA market. The major trend in the market is toward international sales. The market has seen a significant surge in international PC products primarily fueled by the recent Internet boom. While the US market has seen 22% growth for the last three years, it is estimated that the international market will grow at 40%.
The Products
Sample Software currently has three products. Product X is the second-leading Windows task X software and the quality leader. It combines an easy-to-use, step-by-step interface full of guidance, help, and glossaries, with a powerful business analysis model, complete financial analysis, and very strong cash flow analysis. Product Y is a stand-alone task Y application for Windows. It is the best product available for creating a task Y, and the only product for day-to-day management of the [omitted] function. Their last product is Product Z, a creative business process application.
The Strategy
Sample will follow four concise strategies to achieve the desired growth. They will build customized versions of their standard products, providing more value for specific groups of customers. They will develop a strong marketing infrastructure. This will be key for them to get their products out on the market. Sample will remain focused on small to medium size companies, the segment that has been largely ignored by the competition. Lastly, Sample will focus on follow-up technology which is more appropriate for the masses, instead of leading technology which is best suited for experts.
The Management Team
Ralph and Mabel are seasoned managers who are capable of executing on their ambitious strategies. Ralph has 10 years of sales and marketing experience from Arrog International. In 1993 he founded Sample as a software distribution organization and is primarily responsible for its growth. Mabel will also be needed to grow the company. Her years as a consultant will be drawn upon.
Sample Software is a dynamic company that was built on humble beginnings in 1993 and has grown to a $1 million company now with increased revenue forecasts for 2000. This is all the more impressive when you consider that this was all done with investments from the owners, no outside capital was secured.
1.1 Objectives
- To increase sales in 1999 and double sales again in 2000.
- To increase gross margin and net profit margin correspondingly.
- To hold personnel to 1 full-time person for every $250K in revenues.
- To maintain at least 30% market share of Product X, as measured by PC Data.
1.2 Mission
Sample Software develops, publishes, and markets business tools and business know-how together in a software product including software and documentation. It makes business techniques accessible to millions of business users who would otherwise not have the knowledge to use them. It makes a profit and generates cash. It provides a rewarding work environment and fair compensation to its employees, a fair return to its owners, and a fair royalty to its authors.
1.3 Keys to Success
- Marketing power. We need to have our products on the shelves with attractive packaging and enough marketing power to maintain a 30% or more market share, as measured by PC Data.
- Product quality and customer satisfaction. Everything we sell is guaranteed, so the product has to do what we promise and well.
- Long-term customer satisfaction is critical to our survival.
- The right management team, with strong foundations in marketing, management, finance, and product development. Enough working capital to survive in the working-capital-intensive retail channel.
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