Weaknesses
Even with Sun being among the leaders of its industry, there are still some weaknesses that they need to work out. First of all they have a strong dependence on their suppliers. This isn t allowing them to be as flexible as they need to be. Another problem is that they need to work on their inventory forecasting. For this, we believe that they need to develop a Just-In Time inventory system. For these problems we have assigned the strongest weights because it can be very dangerous for a company to have too much or too little inventory in such a rapid changing industry. As for some other problems, Sun has had a very long and ongoing vendetta with Microsoft that has probably been more of a distraction of their own progress if anything. Sun problems have also resulted in the slow evolution of their Java systems. This has allowed other companies to produce and market similar products. Although, Sun has one of the largest cash balances, they need to better utilize their debt resources. They need to use leverage because cash sitting in the bank is not making them any money.
INTERNAL FACTORS
Opportunities
With such a fast growing industry, there are tremendous opportunities afoot. Sun has had a strong internet history. They created a vision statement and have continued to follow it through with great success. Sun has also developed a strong global position. They currently provide about half of the servers for the international sector. For these two reasons alone, we have assigned them the highest weights. We feel that it is usually important to have to have a strong background in order to seek other opportunities. As for some other opportunities, Sun has formed an alliance with America On Line. This was a wise decision because AOL is the world s largest internet provider. E-commerce trends have also been skyrocketing and we feel that there is plenty of room for growth. Finally, there has been an ongoing battle between the Government and Microsoft. This has slowed Microsoft down and should allow Sun to gain a better position within its industry.
Threats
While in an overall strong position, Sun still has several threats that could cause serious harm. The strongest threat we have found is the rapid industry change. The main problem is with their heavy supplier dependence. Again, they need to develop a JIT system in order to remain more flexible with the changing times. Another problem is that we feel there is a consumer acceptance issue that may harm them. Simply because Sun is not nearly mainstream as some of the competition. Microsoft still has a monopolistic hold on the industry that may still pose as a threat. Although, we feel that Sun is in a strong enough position to challenge their advances. Finally, there is a fierce price competition that can serve a threat to their business. This competition is usually not good for business, but consumers should benefit from this.
SWOT ANALYSIS
We feel that overall Sun is a great company, but with any company there is still room for improvement. Therefore, we have made several recommendations within the TOWS Matrix that should benefit Sun. For our Strengths Opportunities Strategies, they should use their resources to expand their Internet and global positioning. They should also strengthen and create new alliances to increase market share. Their alliance with AOL was a step in the right direction. For Strengths Threats Strategies, they should utilize their international position to combat competition. They should also use some of that large cash balance to broaden consumer acceptance. For Weaknesses Opportunities Strategies, Sun can use alliances to build a better supplier network. Sun should also put more emphasis on the Internet industry, because this seems to be the fastest and most promising growing area. For their Weakness Threats Strategies, we feel that they need to focus less on their vendetta with Microsoft. This become too much of a distraction for them. Finally, they need to develop a JIT inventory system in order to stay ahead of competition and avoid any related threats.
TOWS Matrix
Internal Factors Strengths Weaknesses
S1 Strong international position W1 Vendetta w/ Microsoft
S2 Sales growth W2 Dependence w/ suppliers
S3 Strong leadership W3 Slow evolution of Java
S4 Large cash revenue W4 Inventory forecasting
External Factors S5 Server networks W5 Utilize debt resources
Opportunities SO Strategies WO Strategies
O1 Strong internet history – Use resources to expand – Use alliances to build
O2 Alliance with AOL Internet & global position supplier network
O3 Strong global position – Strengthen alliances to – Emphasize internet
O4 E-commerce trends increase market share
O5 Government vs. Microsoft
Threats
T1 Microsoft monopoly – Utilize international position – Less focus on Microsoft
T2 Rapid industry change to combat competition
T3 Consumer acceptance – Use cash to broaden – Just in Time
T4 Price competition consumer acceptance
RECOMMENDATIONS
Sun has a great history. They may be young, but Sun is still a force. We as a group feel that it is vital that Sun Microsystems focus on itself. Sun should downplay the Microsoft legal battle. They should reinforce their dominance on the server market and the internet. Expand their networks to a position where everybody else has to catch up to them. They need to ensure that they avoid entropy. Sun does not want to rebuild. They should want to remain a global leader. Last we feel they should focus on their suppliers and use more of their corporate muscle. They need to be more demanding on their suppliers, make suppliers bend to Suns needs. If suppliers don t Sun has the opportunity and money to buy what they want. Sun has the ability to dictate its future.
REFERENCES
E*Trade.com, March 2000 Quotes
Sun Microsystems, Inc. 1999 Annual Report
Sun Microsystems, Inc. s home page: www.sun.com
Sun Microsystems, Inc. 1999 10-K Report
Wheelen, Thomas and Hunger, J. David, Strategic Management and Business Policy, Prentice Hall (2000).
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