Sun Microsystems Case Study Solution
Introduction:
On 17 April 2009, the management team of a large multinational database and software developer Oracle had placed an offer to acquire another industrial giant Sun Microsystem, for a cash consideration of $9.5 per share.Representing 40% premium on the investment of shareholders of Sun Microsystem. At the same time, IBM also bid for the acquisition of Sum Microsystem, at a price of $9.4 per share. The competition in the industry, in which these companies are operating is very high.Almost all the companies are running aggressive strategies, to steal the market share from other companies. The global technology industry has a total value of almost $2.8 trillion, which makes this industry as one of the biggest industry in the entire world.
Oracle:
The potential acquirer of Sun Microsystem, Oracle was established in 1977 by three enthusiastic entrepreneur, the initial days of the Oracle were extremely successful, and the revenues and profits grow at a rapid pace. The major customers of Oracle in the early days were government, military, and intelligence agencies of U.S. In 1986, the shares of Oracle were offered to the general public through an initial public offering. Since, its formation as a public listed company, the Oracle undertake aggressive strategies of Inorganic growth and acquire many companies inside and outside the information technology sector. Due, to the intense hard work and effective strategies of top management, Oracle had become as the biggest player in the commercial software development company.
Sun Microsystems Harvard Case Solution & Analysis
Sun Microsystems:
Sun Microsystem was formed in 1982 by young, energetic and passionate businessperson, with the combined aim to form a company in the information technology sector, which is the fastest growing company. The primary business activity of the Sum Microsystem, is to manufacture computer system and workstations. The operations, revenues, and profits of Sun Microsystems grows at very healthy rates in its early days, which makes the company as the largest growing company in the history of U.S. business. In order to further expand the operations, the company went public in 1986.
Problem Statement:
Oracle is considering to acquire Sum Microsystems at an amount of $7.38 billion, due to the availability of large cash reserves, Oracle is planning to acquire a company within the information technology sector, which have the most positive growth prospects. There can be many benefits for the Oracle and Sun Microsystems of the acquisition, both the companies can obtain substantial economies of scale by the acquisition.Moreover, the bargaining power can also be increased, due to acquisition of both the companies.
SWOT Analysis of Sun Microsystems:
Strength:
There can be much strength of the Sun Microsystem, which mainly includes the expertise of the management, availability of huge cash reserves and high brand recognition. It can be said that, the management of Sun Microsystems is very competent and keen to expand the operations, profits, and revenues of the organization. The management of Sun Microsystems, is capable of turning around the performance of any company in any sector, which can be considered as one of the biggest strength of Sun. On the other hand, Sun hasa large amount of cash reserves available, which can be used to pursue the growth prospects of the company. Apart from the availability of the cash reserves, the Sun Microsystems have also access to the new sources of finance, which allow the company to grow the operations.In addition to this, the quality of the products of Sun Microsystems is one of the best quality in the industry, which can play an important role in growing the revenues of the Sun. Along, with the best quality, the brand recognition is also high, and the loyalty of the customers is also high.Which is also one of the biggest strength of the Sun Microsystem.
Weakness:
It can be argued that, there are many weaknesses of the Sun, which mainly includes the slow pace of growth in the revenues and the profits in the recent years. Due, to the global financial crises and the little innovation in the products of the Sun Microsystem, which led to the reduction in the pace of growth in the recent years. On the other hand, the morale and the confidence of the employees of the Sun Microsystems are shaking, due to many factors such as acquisition by Oracle and depressed economic conditions. It is expected that, many middle and lower management of the Sun will be redundant by the acquisition, which is causing dissatisfaction among the employees.Which is affecting the performance of the employees and the quality of the product of Sun. (Bhasin, 2016)
Opportunities:
There are considerable opportunities for the Sun, which can be much beneficial for the organization. Nowadays many manufacturing companies are considering to relocate their production plants to the poorer or developing countries, because of many factors. Skilled labor is available in the developing countries at considerable lower rates, as compare to the developed countries. Furthermore, the overheads are also lower in the developing countries as well, and the company of those countries is offering substantial tax reliefs to the multinational companies, who wants to set their production plants in those countries. The R&D expenditure is said as the lifeblood of the organizations operating in the technology industry.Sun Microsystems can increase their revenues drastically, by incurring more expenditure on the R&D and by incorporating innovative features in their systems....................
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