The Business, Its Mission and Its Strategy - Term Paper Example

?The Business, Its Mission and Its Strategy Samasource is a social business that was founded in 2008 by Leila Chirayath Janah with a mission to reduce poverty by providing women and youth in the developing world with the skills and jobs so that they can earn a living wage. This living wage is with respect to where they operate. Samasource is registered in the United States as a 501(c) (3) nonprofit organization. The organization aims to impact at least 120,000 women, youth and their dependents throughout East Africa and South Asia by 2016. The organization has continued to experience an explosive growth, which is demonstrated by its annual revenues moving from $250,000 in 2009 to over $2 million in 2010 (Samasource, 2011). Samasource’s core business is outsourcing of digital work from large or small organizations. The organization offers outsourcing services under five broad categories: data services, research and archival services, machine learning, customer support services, and online content services (Samasource, 2012). This is mainly done on the Internet. The organization operates as follows. First it sources for work from other organizations. It then uses a proprietary technology platform to divide the digital work it has received into smaller tasks which are then distributed through the Internet to its various processing centers or partner sites. At these processing centers Samasource specifically recruits and trains women and youth from poverty-stricken areas who then perform the small tasks. Upon completion, each of these small tasks is taken through a rigorous quality-assurance process on the proprietary platform before they are aggregated back into complete projects and delivered to the clients. The proprietary technology platform is known as SamaHub and the small tasks are referred to as microwork – a term first coined by the Samasource founder. Samasource’s business model is heavily reliant on the robustness and capabilities of its SamaHub platform for breaking down, distributing, quality testing and aggregating the work. SamaHub gives the organization a competitive advantage. The Competitive Environment To understand Samasource’s competitive environment, we use Porter’s Five Forces. The Five Forces model helps us better understand industry structure and profitability. This industry has numerous buyers and suppliers, which makes the bargaining power of both parties relatively weak. The three forces that Samasource would need to be wary of are competitive rivalry, threat of entry and threat of substitutes. The intensity of rivalry here is currently moderate because of the contrasting characteristics. On the one hand, there are numerous competitors, which should warrant a fight for market share. On the other hand, industry growth is high, and this somewhat negates the need for fighting over market share. Also, exit barriers in this industry are low, which means that companies that are earning low or negative returns can easily opt to leave the market rather than struggle. This eliminates excess capacity from the market (Porter, 2008). Nevertheless, we single out competitive rivalry because of the potential for rivals to converge and compete on the same dimensions. The nearly identical services of rivals coupled with low buyer switching costs could lead to price competition and, consequently, destructive rivalry. Barriers to entry for this industry are low for the following reasons. Firstly, the primary infrastructure for this industry is the Internet, which weakens the incumbents’ ability to harness supply-side economies of scale. Secondly, buyers face low switching costs in changing suppliers. Thirdly, capital requirements are modest. Fourth, the Internet gives new entrants equal access to the distribution channel. These low entry barriers make the threat of entry industry force to be very high. Substitutes to Samasource’s offerings are Odesk, Elance, Freelancer and other online outsourcing sites as well as the traditional BPOs found in the developing countries. We have highlighted the BPOs in developing countries because they can match the low wages and, consequently, price competitiveness offered by Samasource. BPOs in the developed world are also substitutes, especially with the increasing sense of nationalism and job retention policies in the developed world as their economies emerge from recession. Buyer switching costs are relatively low, especially when moving from one online outsourcing provider to another. The Marketing Mix This section begins with the traditional 4Ps (Product, Price, Place and Promotion) of the marketing mix and then three extra Ps (People, Physical evidence and Processes) for service marketing. Samasource’s core product is the provision of quality digital services under five broad categories: Data Services, Research & Archival Services, Machine Learning, Customer Support Services and Online Content Services. With regard to price, Samasource has a flexible pricing model. This means that the organization factors in segmentation and adaptability in its pricing model. Segmentation is manifested when it sets different prices for different groups of customers. On the other hand, adaptability is manifested when Samasource dynamically alters its price in line with demand (Chaffey, 2009). On the surface, place appears to be a fairly straightforward part of the marketing mix for Samasource, because the Internet has global reach. However, Samasource does not primarily use the Internet as its place of purchase. The organization uses a wide range of “places” to distribute its activities: from cold calling and referrals to fundraising dinners to face to face. The company has to do this because it is mostly targets large companies. As a 501(c) (3) nonprofit organization, Samasource’s promotion strategy focuses on cost-effective approaches such as word of mouth and public relations (PR) activities. Much of the PR activities for the company are conducted by the founder, Ms. Leila Janah, who has continued to receive good coverage as a female visionary in social change. Ms. Leila has appeared on TED talk and magazines such as Fast Company. People denote the skills, values and knowledge of the persons delivering the service. This is a strong element of the marketing mix for Samasource, especially with regard to its effect on customers. Samasource trains and employs women and youth in the developing world. Its goal is to reduce global poverty. By making its customers aware of this fact, the organization is able to appeal to its clients as being more than a digital outsourcing provider. Physical evidence is difficult to demonstrate in the service industry. However, the organization trains its staff to better their customer interaction as a potential opportunity for demonstrating physical evidence. Lastly, we have process. This refers to what the customer must go through in order to obtain the service. For Samasource, this is implemented at SamaHub over the Internet from product uploading to the time the clients receive their completed work. SWOT Analysis Major strengths: The proprietary technology SamaHub’s capability to break down work received into smaller tasks, distributing them on the Internet, as well as rigorous quality-assurance checking, and aggregation back into complete projects for delivery to clients. Demand-side benefits of scale. This refers to a situation when a buyer’s willingness to pay for a product increases with the number of other buyers who patronize that company. Samasource has built its brand as a social enterprise at the heart of the Silicon Valley. The company also sourced most of its initial clientele from the Silicon Valley. This way the big corporations view Samasource’s offer to be more compelling than that of its rivals. Also, these clients would feel good being associated with an organization working to eliminate global poverty. Major weakness The company has concentrated its marketing efforts in the US market. This prevents the company from fully utilizing its Internet-based infrastructure. Opportunities As seen from the weakness, Samasource could leverage its Internet-based infrastructure to meet the needs of clients in other developed parts of the world, such as Western Europe and Australia. Threats There is always the possibility of any of the big Internet companies – Google, Amazon, Facebook and so on – leveraging their resources, technology and know-how to enter into this market. The rising software development skills in the developed world and increasing Internet penetration could lead to a rise in copy-cat ventures in any of these economies. For example, Kenya, where Samasource has one of its main outsourcing physical sites, is currently being referred to as the Savannah Silicon Valley. Recommendations On the basis of our analysis, we make the following recommendation. Samasource should make it possible for clients to track their work in SamaHub and also have the option to select which regions to outsource the work to. This way the client could build a more intimate relationship with a given developing region of the world. This will increase the extended marketing mix’s physical evidence element. The better the physical evidence is, the more likely the customers will feel they are getting a quality service, which will increase their use of the service and also will give them confidence to send referrals. References Chaffey, D. (2009). The e-marketing mix part 1. Retrieved from http://www.marketing-insights.co.uk/wnim0602.htm Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business Review Online, R0801E, 1-18. Samasource (2011). 2010 highlights (annual report). San Francisco CA: Samasource. Samasource (2012, September 15). Services. Retrieved from http://samasource.org/business/the-services/#data-services  Read More