StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Strategic Management of Technology and Innovation - RazorFish - Article Example

Cite this document
Summary
The paper "Strategic Management of Technology and Innovation - RazorFish " is a perfect example of a finance and accounting article. This case study is about the company Razorfish which is a web technology and design consultancy firm. This company was founded by two childhood friends Jeff Dachis and Craig Kanarick in 1995…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER93.1% of users find it useful

Extract of sample "Strategic Management of Technology and Innovation - RazorFish"

Student Name> Strategic Management of Technology and Innovation RazorFish This case study is about a company Razorfish which is a web technology and design consultancy firm. This company was founded by two childhood friends Jeff Dachis and Craig Kanarick in 1995. The company started in a small cramped up office in New York but its phenomenal growth in five years due to an aggressive acquisition strategy, strong brand strategy with a unique hip image that attracted the most creative people who loved to think out of the box, led the company to become a multinational in just five years. The company was never known as a roll-up since they never acquired for only financial purposes. The company considered the acquired companies as family. But the company’s downfall began during 2000 when the stock market made a reassessment of the valuations of the internet related stocks. The once best traded stock on the market began to fall when one of their acquisitions turned out to be a failure due to a “mass exodus” of its employees. The company started to dip into huge losses from this point onwards and eventually when they had either highly risky or distasteful options left, the two founders resigned from Razorfish. Answers: a. Problems and Challenges: The major challenge and problem for Razor fish was intense competition from four broad categories of competitors in the market. Secondly, during 2000 they decided to make a secondary stock offering but one of their acquisitions i-Cube started to give them problems. The senior management and CFO from i-Cube who became the CFO of Razorfish resigned stating that they could not adjust with the corporate culture. Thirdly, the external environment had a major role in the fall of the going-to-be giant in the Internet industry. The stock market began to reassess the valuations of internet-related stocks. Thus all employees in this industry and the shareholders became wary of the internet industry. They decided to not to be involved with any such company. Corporate marketing and IT managers decided to pull out their investments and venture capitalist were wary of this industry as well. This was a recession in the new internet technology industry and people started to fall back to traditional IT consultancies. The old and established firms were in action now. Fourthly, the buyers started to demand for lower fees, tighter deadlines, they wanted the consultancy firm to bear all the project-cost overages and they wanted fixed prices. This was a problem for Razorfish since they depended on varying prices and deadlines. Fifthly, the company’s high priced real estate was a problem since it was difficult for them to adjust the cost structure in case of a downfall in the industry. Sixthly, their third-quarter expenses increased and they faced a loss in the fourth quarter. This was the beginning of their ultimate downfall. They had to downsize by cutting down on employees by going against their values. Lastly, they had to start thinking about ways to reduce cost through restructuring. Their revenues continued to decline and they were left with high risk and highly distasteful options. Thus, the two owners resigned. b. SWOT Analysis: The major strengths of the company included cutting-edge technology and since they started small and were new they could easily adapt to the latest requirements of the industry unlike the old established firms, their unique and strong brand identity that distinguished them with customers and workers since it gave them a hip image that attracted the most creative and talented people around who were willing to work for the firm and were also loyal to the firm and lastly, they did have an acquisition strategy but they were never considered to be a roll-up (acquisitions for financial purposes only) since they considered those firms as family. The company’s weaknesses included the industry it was operating within since it faced a downturn mainly because of its intangible properties and its risky acquisition strategy that did create problems when one turned out to be a failure and the company ended up in a lawsuit with its shareholders. The opportunities for the company were acquisitions that turned them into a multinational, since large corporations did not want to be left behind in the race so they invested or acquired interactive start-ups and Communicade invested in Razorfish that helped them raise funds, lastly their strong brand identity and unique style helped them get small projects from time to time that generated continuous profits. The threats faced by the company included a downfall in the industry and recession in the internet-related stocks in the stock exchange, acquisitions are risky since its not necessary those workers can adjust and adopt to the new firm and the company’s high priced real estate that made cost restructuring inflexible in case of a downturn. c. Strategic decisions in creating or acquiring technologies: The company raised funds through the investments made by Communicade in their stocks and Razorfish made its first acquisition of Spray Network which was a Swedish firm and this extended their business to Europe. Razorfish made its IPO in 1999 and raised funds to launch an acquisition strategy. In order to broaden its capabilities, Razorfish acquired Fuel, an L.A based company dealing in broadcast design and television commercial production so now the firm could explore PC’s and the television technologies. Their largest acquisition was i-Cube a Massachusetts-based system developer and integrator that helped the firm to increase its expertise in the ‘back-end’ operations for corporation websites. They also acquired in 1998, Avalanche based in New York that dealt in media, and then they proceeded to Plastic based in San Francisco and Media in L.A. Other acquisitions included Sunbather in London, Lee Hunt in New York, TSDesign in New York, QB International in Stockholm, Limage in Rotterdam and Medialab in Munich. d. Possible Solutions: To cutback costs immensely, do aggressive marketing or maybe do additional funding only if required. The company managed to retain talent, culture and morale until the industry took a downturn. They had a strong balance sheet and they needed additional funding with stock prices declining continuously. But the general managers of the company wanted to deal with the matter in a modest way and that is through an optimistic approach since they did believe that the company might have a rebound of demand and they can make profits. But this was not a good idea since it was impossible. To drastically downsize the company to its most profitable operations. They had two viable options that were to cut back European operations or get rid of 13-15 subsidiaries. But many members were against drastic cut backs since every country has laws against downsizing, lay-offs and close downs. Attempt to be acquired. The company had 1300 talented employees and sophisticated web development processes. They had expertise in the field. The company was still an attractive venture for traditional consultancies but the owner Dachis refused to abide with this option since according to him it was the worst option. Close up and distribute the assets with the shareholders. The firm still had $30million in cash and as receivables plus they had no debts so they could close up. But the employees were against this option since they loved working for the company and it was a religion to them plus in countries like Europe shut downs are not allowed to protect worker rights. e. My Solution: I would recommend the third option that is an attempt to be acquired. This is because the company’s employees do not want a shut down and the owner’s have resigned so the company needs to be rescued from hot waters at the moment. The company has 1300 valuable workers and also expertise in web development processes for corporations so Razorfish is still an attractive and viable option for an acquisition. This is their only way to survive sine all the other options of downsizing and cutting costs have been implemented and now the company is on the verge of a close down. To survive the company must make an attempt to be acquired. Although Dachis believed this option was the worst one because it was a blow to the company’s ego and he could not bear to see his company fail so badly. But this is the only and the most viable option left for the survival of the company. Thus according to me an attempt to be acquired is the best option for the company at this stage. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(Strategic Management of Technology and Innovation - RazorFish Article Example | Topics and Well Written Essays - 1250 words, n.d.)
Strategic Management of Technology and Innovation - RazorFish Article Example | Topics and Well Written Essays - 1250 words. https://studentshare.org/finance-accounting/2031467-razorfish
(Strategic Management of Technology and Innovation - RazorFish Article Example | Topics and Well Written Essays - 1250 Words)
Strategic Management of Technology and Innovation - RazorFish Article Example | Topics and Well Written Essays - 1250 Words. https://studentshare.org/finance-accounting/2031467-razorfish.
“Strategic Management of Technology and Innovation - RazorFish Article Example | Topics and Well Written Essays - 1250 Words”. https://studentshare.org/finance-accounting/2031467-razorfish.
  • Cited: 0 times

CHECK THESE SAMPLES OF Strategic Management of Technology and Innovation - RazorFish

Management Accounting Innovation

… The paper "Management Accounting innovation" is a wonderful example of a report on management.... The paper "Management Accounting innovation" is a wonderful example of a report on management.... This essay will analyse management accounting innovation as one of the core themes that are driving modern organisations.... The analysis will comprise of the current innovations in management accounting, role contribution and appropriateness of innovations and the responsibility that is played by management accountants in accelerating and promoting innovation (Askarany & Smith, 2000)....
7 Pages (1750 words)

Innovation in Management Accounting

7) defines management accounting innovation as “strategic management accounting to connect the strategies to value chain and link activities across the organization that relates to cost objects”.... This statement is reinforced by Chenhall (2008) who argues that management accounting innovations help organizations to engage in strategic management by connecting cost objects to the value chain and relating the two to organizational strategies.... … The paper 'innovation in Management Accounting' is a great example of a management term paper....
6 Pages (1500 words) Term Paper

Management Accounting Innovation

Others include strategic cost management, competitor accounting, life cycle costing, customer profitability analysis, economic value-added measurement, Japanese target costing, and strategic management accounting.... … The paper "Management Accounting innovation" is a perfect example of a report on finance and accounting.... The paper "Management Accounting innovation" is a perfect example of a report on finance and accounting.... This essay will analyze the statement that “management accounting innovation has been one of the core themes driving modern organizations”, and will specifically seek to highlight the contribution made by such innovations to organizations....
7 Pages (1750 words)

Strategy and Operations Management of a Company

… The paper "Strategy and Operations management of a Company" is a wonderful example of an assignment on management.... The paper "Strategy and Operations management of a Company" is a wonderful example of an assignment on management.... The organization's success and ability to survive external change and internal challenges resulted from careful strategy formulation and implementation, strategic leadership, and competitive advantage....
8 Pages (2000 words) Assignment

Strategic Management: Competitiveness and Globalization

… The paper "strategic management: Competitiveness and Globalization" is a perfect example of an assignment on management.... The paper "strategic management: Competitiveness and Globalization" is a perfect example of an assignment on management.... technology is core in many firms.... Due to daily dynamism in technology, many firms are taking the tread of changing technology to enhance efficiency.... Most of the firms are adopting new technology to enhance and increase their output....
8 Pages (2000 words) Assignment

Strategic Reputation Management

ocial factors are also another external factor that is attributable to its rise as with the frequent use of internet and appreciation of technology, there was much use of services from Razorfish.... There were several factors both internal and external that affected razorfish's rise in the market and a sudden decline.... razorfish as a company had to consider the environment in which they were holding their business.... There were several factors both internal and external that affected razorfish's rise in the market and a sudden decline....
9 Pages (2250 words) Assignment

Innovation - Vending Machine and Shoes

… The paper "innovation - Vending Machine & Shoes" is a perfect example of a business case study.... The paper "innovation - Vending Machine & Shoes" is a perfect example of a business case study.... Even though not all firms endorse growth as their foremost goal owing to the responsibilities and challenges that accompany growth, a lot of firms aspire to grow through innovation of new technology.... As information technology grows fast, different products must be availed to the customers in different ways to ensure that the company survives current market turbulence....
9 Pages (2250 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us