Atlassian, an Australian software company that was launched in 2002 specialises in productivity and collaboration application tools meant to easy collaboration among project teams (Gothard, 2013). The clientele portfolio has been growing in leaps and bounds and already includes eBay, Visa, Citigroup, BMW, Procter & Gamble, Netflix, NASA, Nokia, CiTRỊX, BBC, Samsung, PayPal, Adobe, Volvo, SIEMENS, BOSCH, CISCO, Land Rover, Standard Bank, Tesla, Morning Star among a chain of many other companies around the globe numbering over 51,000 are relying on Atlassian in improving collaboration, project management, software development and overall productivity quality. Atlassian’s products include JIRA Software, BitBucket, Confluence, HipChat, JIRA Service Desk, Sourcetree, Trello, Statuspage, Bamboo, Stride and other applications, which are the hallmarks that drive its business revenues and enabled the company into successfully growing into an international software service provider over the years (Player, 2017).
There are, however, certain issues that threaten to impede Atlassian’s growth strategy. Among these issues is the lack of growth strategies to take Atlassian the next level of growth and help it to pursue and maintain its growth trajectory into the competitive international market and maintain its lead as a software service provider. Another issue that threaten Atlassian growth is how to use its inherent capabilities and converting them into core competencies to enable it maintain its growth trajectory going into the future. As a last issue, which is tied to the above two issues, is the company’s corporate culture and leadership opportunities that the company can exploit to pursue and maintain growth as an international software service provider of choice. The three identified issues pose three respective questions that require to be responded to: What growth strategies should Atlassian pursue to maintain growth? What capabilities that Atlassian should turn into core competencies in order to maintain growth? What corporate culture and leadership opportunities that Atlassian should pursue to maintain growth?
A response to the three issues will provide the executive team at Atlassian an opportunity to midwife a growth strategy in pursuance and maintenance of growth targets. The executive will also use the report to identify possible capabilities the company possesses and which can easily be turned into core competencies in order to maintain growth and lastly, the report will enable the company executive team to identify corporate culture and leadership opportunities that will help the company pursue growth opportunities.
Atlassian’s core values which include open company policy with no bullying, building every product with heart and balance, respect for customers, playing as a team and being the change sought after has enabled it to edge out competitors.
A number of growth strategies proposed include pricing strategies, licensing, and automation of its products (Eisenmann, 2006). The pricing strategy is about building products that can be priced at low price and sold in huge volumes to net more revenue and drive up profits for the company. To grow its business, Atlassian can also consider possible locations for entry into the international markets, with first-tier cities and second-tier cities in different parts of the world being possible candidates as well as existing markets in special economic and technology zones like Silicon Valley and in countries like Russia, China, and many others where tech firms are becoming a force (Eisenmann, 2006). This strategy will be guided by a number of factors such as tax and costs of wages for its employees, tax rates, profit repatriation costs and investment incentives. Resource factors will be mainly manpower because tech firms derive on knowledge assets.
To charge licence fee with the on-going maintenance, which fits Atlassian customers’ patterns will require further concerted efforts in employing more people. In this model, Atlassian can continuously maintain the applications’ value and charge its customers accordingly to net in more revenue and therefore enable it to drive its growth targets.
Though, Atlassian distribution model of building great products, keeping prices low, pursuing volume sales through online, transparent pricing and easy trials have been a significant factor in its growth strategy, it is important to have other strategies that can support its No Sales Force model (Eisenmann, 2006). Other factors are demand side factors such as market growth and size and customer base. Atlassian will have to consider also factors such as multi-market competition. Consumers in technology firms have impressive brand awareness and therefore, Atlassian adoption of intensive advertising in international markets with a foothold in technology will project the firm with a quality image and attract more customers for its software applications.
To avoid possible head-on competition with local brands, when venturing into foreign markets, Atlassian will have to position itself as a software service provider of good reputation and values customers as well as selling its services at a lower price, which have good features. The pricing strategy pursued by Atlassian is affordable to even small firms that have fairly small development teams that spend a lot of time in JIRA, Confluence and many other developer platforms. Atlassian’s pricing strategy is significant and could include continuous lowering of prices and making more of its products easily available and can be easily acquired from online. To sale itself, as one of the core values of Atlassian, the product must be low-priced, sell globally and induce customers to buy through free trials.
For Atlassian to be successful in implementing its growth strategy, the timing should be right. As an early mover into the market, Atlassian will gain pioneer advantages that include market power, strategic advantages over later movers and obtain more pre-emptive opportunities. However, as an early mover, Atlassian will have to contend with operational risk from host governments due to these governments’ lack of experience in handling foreign firms, protectionism in countries like Russia, underdeveloped investment laws in underdeveloped countries, shortage of IT skilled workers, uncertain foreign exchange, underdeveloped support services, unstable market structures and generally poor infrastructure systems. Early entry for Atlassian will make sense since it is a company that is operating in a high-growth sector and can easily make joint ventures with local firms in host countries.
Another significant growth strategy is automation of product sales through successful marketing and sells to a demographic that is not friendly to salespeople, who are mainly developers in various companies. This automation strategy will enable the teams to access services offered by Atlassian, which are not found in other tool vendors.
There are a number of changes in technology segment that could affect Atlassian such as everything as a service (X-as-a-Service) and cloud computing as business models, however, in consideration of these emerging trends, means that more companies will be developing digital products that add value to their portfolio. Therefore, Atlassian’s capabilities as a software tool vendor are to target the needs of these software development teams and in the process increase its potential customer base and achieve growth targets (Chen et al., 2009). The company’s technology development is one of the core competencies. In addition, the Research and Development is another core competency and the distribution model (Huang, 2011).
In analysing the company’s core competency using core competency tree with four levels provides an important insight into the core competencies of Atlassians. The outermost level consists of the company’s end products, followed by business units, followed by core products (Wang, et al., 2004). The company’s end products include JIRA software, JIRA Core, JIRA Service Desk, StatusPage, the recently acquired Trello, Confluence, HipChat, SourceTree, BitBucket and Bamboo (Atlassian, 2016).
The climate change debate in which companies are now being required to espouse corporate social responsibility (CSR) in an effort to reduce impact on environment informs the need for organisations to change their strategies. Atlassian as a software company is a “green company” with two main inputs being human beings and electricity. Therefore, Atlassian can exploit this capability unhindered by legal constraints that constrain traditional manufacturing firms (Chen & Wu, 2007).
To better understand Atlassian’s capabilities and core competencies, it is important to examine Porter’s Five Forces in the context of Atlassian as a tool vendor. Software development teams have low buying power because of costs related switching from one set of tools to another, which could affect scope, costs and schedule of ongoing implementations. However, Atlassian’s subscription cloud-deployed tools have the capability of lowering costs related to switching and in the process raise buyers’ power. However, power of suppliers, which in this case is employees is high and competition for highly skilled IT workers remains to be extremely competitive and therefore, the employees still wield great power during negotiation for their salary and benefits (‘price’).
Therefore, the key success for Atlassian as a business-to-business (B2B) workplace software vendor is their capabilities in producing tools for developers, flexibility, ease of access, performance, customer satisfaction, scalability integration and global reach (Atlassian, 2016). Atlassian capabilities enables it compete with its competitors such as Microsoft, Hewlett Packard Enterprise, IBM, Google, Zendesk, ServiceNow, salesforce and many other vendors like GitHub (Atlassian, 2016). Other capabilities inherent in Atlassian are ability to deploy in the cloud, on premise and creating data centre solutions. Atlassian capability to deploy in the cloud has enabled it gain traction in cloud space and edge out competitors. Atlassian’s data centre solutions enables it to provide customers with different services for all sizes of customers ranging from individuals to established big enterprises. The company is capable of providing services for business, technical and software teams, and IT service teams (Mohamud & Sarpong, 2016). The acquisition of Trello recently has positioned Atlassian as a competitive company that offers solutions to business teams. According to S&P published article on “Software Industry Survey”, it has been predicted that firms operating in software industry will more likely going to increase their revenue streams in the next few years, however, their gross margins will most likely decline due to heavy investment in cloud computing and mergers and acquisitions as noted by Kessler (2016). The trend in acquisition is a result of companies moving towards creating ‘one-stop shop’ solutions for their clients and in the process resulting into low-cost competition.
A number of leadership opportunities exist in Atlassian. This is because of the age of co-founder members, Scott Farquhar and Mike Cannon-Brookes (Forbes, 2017) and there appears an opportunity for leadership in the company. Though the two have proven their success in managing the company for the last 12 years, they lack experience in business management prior to finding Atlassian (Tay, 2014), this is interpreted as a weaknesses when it comes to planning for strategic management (Koruna, 2004; Gonnering, 2010). Other leadership opportunities in the company are related to the growing of the company’s workforce that will require managers to manager managers that will in turn manage people. Strategic management is about managing people, who are the intellectual capital and therefore source of competitive advantage. There is also noted concern regarding the company’s strategy in as far as vision statement is absent on the company’s websites. This should be prove another weakness if it the vision statement is not there.
Atlassian corporate culture is based on its core values in which the company is espoused as an open company, without bullying, building great collaborative tools with heart and balance and respect for its customers. It is a company in which employees play as a dedicated team and seeking to be the desired change sought after. Atlassian’s corporate culture is driven by the need to have greater value for customers and in turn lead to higher profits for the company. The company uses inbound logistics in recruiting its employees and investing in knowledge management. The operations of the company are focused on improving products through Research and Development (R&D). Among the outbound logistics used by the company include distribution model which is part of the company philosophy. The marketing of the company’s products is through word of mouth and online which have become part of the company’s corporate culture. Another corporate strategy that drives the company culture is the services offered by the company, which highly focus on the customer satisfaction and retention by offering incredible online support. There is also firm infrastructure which is part of the corporate culture that informs the company’s continuous development and improvement. The company continuous to develop its human resource management team as a means of enabling it to respond to issues and support employees and grow the business (Wilderom et al., 2012).
In view of the foregoing analysis, this report recommends to the executive team at Atlassian to examine justification for growth strategies such as pricing, licensing, continuous automation of product sales, entry into emerging markets like Russia, China, India and others that are having leading tech start-ups. The capabilities and core competencies identified are prerequisite in maintaining Atlassian growth projection and corporate culture and leadership opportunities that will drive and maintain its growth strategy.
As part of the recommendation, the company should continue to sell more of their software at affordable prices. There is also need for Atlassian to begin marketing their software in other languages like Chinese, Germany, Spanish and so forth to leverage the market for those using these languages. The recommendations necessary in keeping the company’s growth may include continuous overhaul of the pricing strategy that will involve making comprehensive changes in the way Atlassian business model operates. Other recommendations will include realigning the company’s business model in view of environmental changes. In addition, expanding Atlassian’s revenue through innovative new products targeting emerging markets such as Russia, India, and China could help the company remain competitive.
Atlassian (2016). 2015 Annual-transition report.
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