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Management Consulting Case Study: Software Growth Strategy for Global Software Group (GSG)
Case Problem 1
Background Information:
Global Software Group (GSG), a publicly traded software services company, is experiencing slowing growth and lagging stock performance. While its international business is thriving, the U.S. operations, constituting over a third of sales, are underperforming. GSG aims to restore top-line growth in the U.S. and has enlisted A.T. Kearney to develop a strategy.
Exhibit:
|
Product Group |
U.S. Revenue ($M) |
Customer Base |
Growth |
|
Universal Desktop Software |
$477 |
Individuals and Businesses |
Low Potential |
|
Productivity Pack |
$1,566 |
||
|
Business Infrastructure Suite |
$145 |
Businesses Only |
High Potential |
|
Business Solutions Suite |
$1,378 |
||
|
Total |
$3,566 |
Analysis:
- Recognize opportunity in the "business" product groups, with a focus on BIS and BSS for growth.
- Identify specific opportunities within the "business" products to drive strategy.
Case Problem 2: Market Segmentation for GSG
Background Information:
GSG historically segmented the market by product. However, there is a hypothesis that alternative, more meaningful segmentation methods exist.
Exhibit:
|
Market Segment |
2005 GSG Revenue ($B) |
2005 Software Spend ($B) |
2005 IT Services Spend ($B) |
Total IT Spend ($B) |
|
Small- & Medium-Sized Businesses |
$0.7 |
$9.3 |
$53.5 |
$62.8 |
|
Large Corporations |
$1.2 |
$20.3 |
$60.2 |
$80.5 |
Analysis:
- Explore logical segmentation structures, considering variables like vertical markets, business vs. consumer, geographies, and buying behaviors.
- Request data on revenue growth projections for each business segment.
- Small businesses appear as a better target for GSG, with substantial growth projections.
Case Problem 3: Prioritizing Small Business Targets
Data :
|
Industry |
# of Businesses |
IT Spend ($B) |
|
Agriculture |
967 |
$1.1 |
|
Manufacturing |
483 |
$7.3 |
|
Telecom and Utilities |
69 |
$3.3 |
|
Business Services |
1,538 |
$7.6 |
Analysis:
- Concentrate efforts on industries with the highest spend per business, prioritizing sectors like Telecom over others.
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Conclusion and Recommendation:
GSG should shift from a product-based to a customer-segment-based view, focusing on the small-business segment for growth. The recommendation includes:
- Emphasizing the small-business segment due to its high growth rates, less competitive nature, and historical neglect.
- Prioritizing strategy within the small business segment, with a focus on industry verticals like telecom for targeted efforts.
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Frequently asked questions
Why is GSG struggling in the U.S. market?
GSG’s U.S. business shows slowing growth due to underperformance in certain product groups and outdated product-based market segmentation. A customer-focused strategy is needed for revival.
What product groups offer the highest growth potential for GSG?
The Business Infrastructure Suite (BIS) and Business Solutions Suite (BSS) offer the highest growth potential, especially within business-focused customers rather than individual consumers.
Why should GSG target small businesses?
Small businesses have shown substantial IT spend growth, are historically underserved, and offer a less saturated market for GSG to capture, especially in high-value sectors like telecom and business services.
What market segmentation approach is recommended for GSG?
A shift from product-based to customer-segment-based segmentation is recommended, focusing on verticals, business sizes, and industry-specific needs for better alignment and targeted strategy.
Which small business industries should GSG prioritize?
GSG should prioritize telecom and business services industries due to their higher IT spend per business and promising return on investment in targeted marketing and product development.
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