Case Scenario 2: ERP Inc

question 89

Essay

Case Scenario 2: ERP Inc.
ERPI is a leading provider of enterprise integration software (EIS). EIS allows a firm to connect and integrate processes across all aspects of its business, regardless of where they are located around the world. ERPI is a product-focused company, whereas most competitors in its market space, like Oracle, operate as "solutions companies." Oracle and Microsoft have begun to devote considerable resources to the development of and acquisition of products to compete in the EIS space. Despite these recent threats, one benefit of its product-focused strategy is that ERPI's proprietary product is generally recognized as being 200% to 300% better than competitors' software. ERPI estimates it will take 2 to 3 years for competitors to develop the capabilities needed to bring a competing product to market. ERPI invests a considerable percentage of its profits in basic R&D to support its core products. As evidence of this, among its competitors the firm maintains the largest in-house programming staff dedicated solely to the development of advanced enterprise integration software. Installation and related consulting for EIS typically cost between $100 and $200 million, with the ERPI software component accounting for about 20% of the installed cost (the remaining 80% is spent on the actual installation, not counting the value of the customer's time). ERPI's target market consists of the world's largest manufacturing and industrial firms and it currently enjoys a 60 percent market share.
-(Refer to Case Scenario 2) Imagine that ERPI's historic growth strategy has focused on making one sale and then moving on to the next target company. After several years of building market share using this approach, what new resources has ERPI developed?

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Definitions:

Mental Capacity

The ability of an individual to make decisions or perform tasks that require cognitive functions such as understanding, reasoning, and remembering.

Technical Means

Tools, equipment, and procedures used in the production of goods and services.

Commercial Aircraft

Airplanes specifically designed and utilized for the transportation of passengers and cargo as part of the aviation industry.

Age Cohort

A group of people broadly in the same age range, sharing similar experiences, attitudes, and historical contexts.