Abacus Business Solution - Case Study Example

of the of the Number Abacus Business Solutions Table of Contents Table of Contents 2 Introduction 3 Industry Definition 3 Company Definition 5 Natural Environment 6 Broad Environment 6 Competitor Identification 6 8 Task Environment (Supplier Power) 8 Task Environment (Threat of New Entrants) 9 Key Success Factors 9 Opportunities and Threats 10 Conclusion 10 Recommendations 11 Works Cited 12 Introduction Companies around the world are trying to speed up their system of operation in order serve maximum number of customers (“Speed up your operations”). In order to speed up the operation process, companies are implementing several tools and techniques; Point of Sale (POS) system is one of them. POS terminals are the places where the transaction between the buyers and sellers are completed. The POS terminals are however mostly found in retail shops and restaurants. This report will provide a brief introduction to the POS industry and will also analyze the affect of external forces in this industry. The report will also analyze the external business environment of Abacus Business Solutions, which is one of the renowned marketers of POS systems. In addition, the study will also uncover the direct competitors of the firm and will shed light on its opportunities and threats. Finally, on the basis of the findings a conclusion will be drawn. Industry Definition Point of Sale is the checkout place where a transaction is completed. In other words, it is the point where customers make payments for the goods or services they have purchased. POS systems are usually used by retail industry and restaurant industry. However, in this context, the study will focus only on the restaurant industry. According to David Gilbert, COO of the National Restaurant Association, POS systems are one of the most essential tools for a restaurant as it helps to make their business operation secure, fast and reliable. POS systems are simply the synthesis of hardware and software and business model of the companies belonging to POS industry is also simple. In general, the supply chain model of the POS industry includes POS manufacturers and developers, POS distributors, POS VARs and business owners. Figure 1 –POS Supply Chain Model (Source: “How the Point of Sale (POS) Industry Works”) Some of the major players of POS industry are Micros Systems, Inc., Restaurant Data Concepts and NCR among others. The industry is characterised by variety in product features, services and prices. According to the reports published by IBIS World, the industry reached a value of $1.2 billion in the year 2012. The industry growth rate is 1.8 % annually, but it is expected that, the growth rate will be 2% for the next five years. The major customers of this industry include hospitality sector, retail sectors, and foodservices sector. The share of revenues of POS industry is presented below. Figure 2 – Share of Revenue in POS Industry (Source: “Point of Sale Software Developers in the US: Market Research Report”) The implementation of POS terminals has highly benefitted the restaurant industry. According to reports, one of the top restaurants witnessed 5 % increase in the revenue, within 4 months of POS installation. Now, to get better understanding of the importance of restaurant industry for POS industry, Abacus Business Solutions, the US based POS marketing company will be thoroughly analyzed. Company Definition Abacus Business Solutions is an US based technology solution provider. The company was founded by Rich Peterson in the year 1974. It is a sole proprietorship business and is currently headquartered in Clearwater, Florida. Since the time of its incorporation, the company has been growing at a rapid pace and is now a $12 million company. The company mainly caters to the hospitality industry and its major products are touch-screen POS systems and back office applications. Abacus Business Solutions has also been the biggest reseller of Aloha POS systems for the restaurant industry. The basic intentions of the company were to provide best software, hardware and other technical services to the restaurants. The company is also concerned about providing superior after sales services to the customers (“About Abacus”). Natural Environment The present business environment is turbulent and thus it is difficult for the organizations to sustain for a longer period of time. Moreover, with increasing competition, it is necessary for the firms to develop a competitive advantage for themselves. In the context of Abacus Business Solutions, the company targets the restaurants that are upgrading their operation systems and not the start up businesses. They also targeted the restaurants that operate in a multiple location. In addition, to gain an upper hand over the competitors, the company remains highly concerned towards providing superior after sales services and training to the customers regarding the usage of the POS application. Broad Environment The broad environment in this context is the impact of political environment on Abacus Business Solutions. The political environment of USA is highly stable and the government is also enthusiastic about innovative and modern products. The US government has always tried to encourage the use of technology in order to increase efficiency and speed up the operation. Therefore the political factor will have a positive impact on the company for a long term, until the government makes striking changes in the policy. Competitor Identification POS industry is characterised by high differentiation in prices among the competitors. Moreover, the players also differentiate themselves with their product features and after sales services. The major competitors of Abacus Business Solutions are Micros Systems, Inc., Restaurant Data Concepts, Squirrel Systems, Menusoft Systems Corp, Action Systems, Inc., and several other small players. The competitor analysis is shown below in a tabular form. Name of the company Products & Features POS – product Market Share Micros Systems, Inc It offers restaurant information system package which consists of POS hardware and software, back office suite and operational applications Some of the well known POS packages of the company include MICROS 3700 and MICROS 9700 HMS (“Our Products”). 35 % Squirrel System Squirrel System offers hospitality management POS systems. Moreover, it is the first company to offer touch-screen technology Squirrel Professional is the most important product of the company 15% Abacus Business Solutions (Reseller of NCR products) The company mainly caters to the hospitality industry and its major products are touch-screen POS systems and back office applications Aloha is the major POS product of the company. 25 % Menusoft Systems Corp It provides DOS and windows based POS solution to the hospitality sector. The package includes features such as attendance, frequency, time, accounts receivable and labour scheduling management services. Digital Dining is the major POS product of the company. 5 % The following is the market share graph of the companies. Figure 3 – Market Share Graph Task Environment (Supplier Power) The suppliers are also other organisations that provide the company with raw materials. The suppliers of a POS terminal package include the hardware vendors, software providers. The provider of such services in USA is large in numbers and hence the bargaining power of the suppliers of the POS industry is low (“point-of-sale systems”). However, with further technological developments, and increasing demand of the consumers, some suppliers may fail to meet the expectations of the companies. In this context, the number of suppliers may reduce and consequently the bargaining power of suppliers may increase. There, in the long term i.e. after more than 7 years there is a possibility that the supplier power may negative impact the company as well as the industry. Task Environment (Threat of New Entrants) The threat of new entrants is characterized by the possibility of a new player entering the industry and increase the intensity of competition. In the context of POS industry, the initial investments required to set up business is high. Moreover, the existing players have also created certain barriers of entry for the new players. In addition, the present growth rate of the POS industry is only 1.8 %, which is not attractive enough. Therefore, the threat of new entrant is low. However, the reports suggest that the industry is expected to grow at 5 % annually and the numbers of players are also less. Hence in the near future i.e. between 1-7 years, the threat of new entrant may increase and can increase the intensity of competition. Key Success Factors The key success factors for a company generally depends upon the brand value, wide range of products and services, high market share, multiple revenue generation platforms, geographical presence, promotional activities, product quality, price affordability, financial stability and less impact from the external environment. Now, in the context of Abacus Business Solutions, all these factors are important. Now to rank them, in terms of their importance a matrix will be created which will reveal the weighted scores of each. Factors Weight Rating Weighted Score Rank Brand Value 10% 6 0.60 5 Wide range of products and services 10% 2 0.20 9 High market share 10% 4 0.40 7 Geographical presence 10% 3 0.30 8 Multiple revenue generation platforms 10% 1 0.10 10 promotional activities 10%  5  0.50 6 product quality 10% 7 0.70 4 price affordability 10% 9 0.90 2 financial stability 10% 8 0.80 3 Less impact from the external environment 10% 10 1.0 1 Opportunities and Threats The study of the external environment of Abacus Business Solutions revealed that the company has several opportunities to grow in the market. However, the market also poses several threats to the company. The principal factor towards the identification of the opportunities was related to the growth of the firm. The company only caters to existing businesses; hence it has the opportunity to tap new start up business. In addition to that, the company can also come up with innovative POS systems. On the other hand the threat of the company is the intense competition within the industry. Conclusion The study was about analysing the external business environment of Abacus Business Solutions. In doing so, the study has considered some of the important external environmental factors such as the threat of new entrants, supplier power and also the political/legal environment of the country. The study revealed that the UK government is enthusiastic about this industry, and hence the company or the industry not gets affected by the political factor. In addition, the threat of a new entrant and supplier power are also low. Nevertheless, according to the trends, both these factors may negatively impact the company in the long term. Hence, to reduce the possibility of getting affected in the future, the following are the recommendations to the company. Recommendations The company should further develop the product and should ensure price competency. As, penetration pricing may allow the firm to tap new customers. It is highly recommended to the company that they should focus more on the promotional activities. Works Cited “About Abacus.” Abacuspos. Abacus Business Solutions, n.d. Web. 21 Feb. 2013. “How the Point of Sale (POS) Industry Works.” Pointofsale. Barcode Media Group, Inc., 2013. Web. 21 Feb. 2013. “Our Products.” Hmskc. Hospitality Management Systems, n.d. Web. 21 Feb. 2013. “Point of Sale Software Developers in the US: Market Research Report.” IBISWorld. IBISWorld, 2012. Web. 21 Feb. 2013. “Point-of-sale Systems.” Hellotrade. HelloTrade.com, n.d. Web. 21 Feb. 2013 “Speed up your Operations.” USbankconnect. U.S. Bancorp Member FDIC, 2012. Web. 21 Feb. 2013. Read More