An Analysis of Oracle Corporation’s Business Strategy
Business is generally competitive. With this in mind, businesses come up with strategies that they use in order to survive this competitive landscape. Business strategy is defined as an intentional choice of activities that are combined to come up with a unique value proposition for the market (How to Define Strategy Using Porter’s Five Forces, 2019). Michael Porter (1980) stands out for coming up with a generic classification of business strategy. He lists four strategies, namely: Cost leadership, Differentiation, Focus, and Integration (Nexford, 2023). We will examine Oracle and try understand which business strategy they employ, by examining the company’s performance in the last two years.
Company Analysis
Oracle Corp (Oracle), is a company with a founding in the United States, that focuses on providing enterprise software solutions (Oracle Corp Company Profile — Oracle Corp Overview, n.d.). The company has a global presence and since its founding back in 1977, has gone on to become one of the largest software companies and is listed as a Fortune 500 company (Fortune 500 Full List (2023), n.d.). According to Pereira (2023), Oracle uses the focus strategy, by targeting a specific customer segmentation. The company targets enterprises by providing a wide range of software products that meet their unique needs (Pereira, 2023). Although it may appear as though they target a wide range of businesses, their focus is on the businesses that require cloud-based services and customized solutions that meet their business needs. Oracle achieves this by collaborating with their customers, building custom software solutions, and offering a wide range of products to their customers (Pereira, 2023).
According to Mba Skool Team (2023), Oracle has the following strengths: Large pool of talent (130,000 employees), large suite of products, good research and development team, involvement in sponsorship of many global events, and its presence in more than 100 countries worldwide. Oracle’s weaknesses include low expenditure on marketing and high number of labor force (Momin, 2022). Despite its significant presence in the market, oracle still has opportunities in the market, including a hardware market for its products, more visibility of the brand through marketing, and partnerships with governments (Mba Skool Team, 2023). Oracle faces the threats of recessions due to its global nature of business, and increase in competition (Mba Skool Team, 2023).
Competitive Advantage
Competitive advantage is defined as the position of favor a company seeks among its target market, allowing it to realize more profits than its competitors, through the business strategy it employs (Laskowski & Lebeaux, 2023). Oracle has achieved this competitive advantage over its competitors by having a specific target customer and providing value with a focus on highly customized software that meets all the needs of the customer. The company invests heavily on understanding their customers’ needs hence they have positioned themselves in a place of offering custom solutions on the cloud. Oracle’s customer segmentation consists of enterprise businesses, small and medium sized businesses, industry specific businesses, and developers. For each of these customers, Oracle’s value proposition consists of enterprise-grade technology, software-as-a-service, tailored solutions for specific niches, and a range of software development tools (Pereira, 2023).
Oracle exploits its position in the market by having well defined objectives, which involves solving each customer’s needs uniquely, which in turn leads to customer satisfaction. With the use of technology, the company has a huge advantage over its competitors, with their ecosystem being able to service a wide range of customer needs. The use of technology also allows them to serve their global market with ease, especially with the focus on cloud-based solutions. It is important to note that although Oracle is a globally known company, much improvement can be made by aggressive marketing to strengthen its position and brand identity in comparison to their competitor Microsoft (Momin, 2022).
Business Strategy
Taking a deeper look into Oracle’s strategy, we can make a few observations and correlate Porter’s (1980) focus strategy insights and the way Oracle conducts its business. Oracle has a clearly defined target market, which includes large enterprises, Small and Medium Enterprises, industry specific providers and developers (Pereira, 2023). Observing that a company using the focus strategy must have a deep understanding of its customer segmentation, and provide a unique value proposition (Nexford, 2023), Oracle has successfully employed this strategy by building customized solutions and providing them as cloud-based solutions for their target market. The company has also invested in marketing and distribution, which is a practice used in focus strategy (Nexford, 2023). With the introduction of new offerings in their cloud infrastructure, Oracle clearly monitors and evaluates feedback from its customer base (Oracle Announces New Application Development Capabilities for Oracle Cloud Infrastructure, 2023).
Strategy Evaluation
Oracle announced their fiscal full year results in June 2022. There was a 5% growth in revenue (ORACLE — Oracle Announces Fiscal 2022 Fourth Quarter and Fiscal Full Year Financial Results, 2022). This is a clear indication of growth which can only go to show that their focus strategy worked. Realizing such growth despite the impact of Covid-19 is testament to the fact that Oracle used their competitive advantage of being able to provide their solutions through the cloud, which minimized their exposure to the pandemic. Oracle was also named a “2021 Gartner Peer Insights Customer’s Choice for Sales Performance Management” (Calfo, n.d.). Such an award goes to show that their focus strategy gave them an edge over their competition, especially in sales performance management.
To sum up, Oracle’s use of focus strategy stands out in the way they conduct their business. With the use of various channels of distribution such as website, social media, and community forums, they have been able to stay in touch with the needs of their customers (Pereira, 2023). The company frequently organizes many events and provides online customer support to further maintain a constant monitoring of their customer feedback. Through the use of their vast resources, human capital, and partnerships with key stakeholders in the industry, Oracle will remain to be one of the global leaders in the enterprise software market.
References
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