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Salesforce.com, Inc. seeks to expand its customer relationship management (CRM) services globally. It is already a leading CRM company within the industry. Salesforce.com will encounter local and global competitors in the Philippines. Team Four Consulting Group (T4CG) recommends the differentiation strategy after completing a competitive risk assessment of the top 10 competitors operating in the Philippines. The team analyzed the competitors’ strengths and weaknesses then compared them to Salesforce.com’s. Based on the results and Salesforce.com’s, market position and product quality, will help separate itself from its competitors. Identifying the target market and assessing the market size will aid in Salesforce.com’s success.
Salesforce.com, Inc. is an American CRM cloud-based software company located in San Francisco, California. Established in 1999, the company has 29,000 employees (Forbes, 2018) and 150,000 customers worldwide (D&B Hoovers, 2018). Its products and services provide CRM technology to assist businesses in improving their customer relationships and daily productivity.
Forty percent of its customers reported productivity increases using the mobile application. Its ability to forecast and anticipate customers’ needs through productivity helps companies foster better customer relationships. Tailored products also allow companies to improve internal productivity.
The next target country of entry for Salesforce.com is the Philippines. An economically growing country, the Philippines presents ample opportunities for Salesforce.com with minimal risks. The country is advanced, its gross domestic product (GDP) is $825 million United States dollars (USD), and its inflation rate is only 3.2 %. Its economic growth is 6% and the Philippines is greatly investing in the technology industry (Central Intelligence Agency, 2017). The country has the required resources for Salesforce.com to operate efficiently. Most importantly, the Philippines has a market size of 400,000 companies with 56,000 renewing their licenses (Philippines Business Registry, 2018). Export.gov (2017) identified renewable energy and information and communication technology (ICT) among the best prospects for U.S. companies in the Philippines. The renewable energy aligns with, and reinforces, Salesforce.com’s vision of improving the environment.
Entering a foreign market must be a strategic decision. There are many reasons for expanding operations beyond a country or region such as increasing revenue, brand recognition, customer demand, and global competitors’ expansion plans. Salesforce.com is in the process of expanding its operations in the Philippines. There are four market entry modes exporting, licensing, joint venture, and direct investment (“Foreign market entry”, n.d.).
Salesforce.com provides cloud based CRM software to its customers that can be delivered using the internet. Considering the strategic objectives of Salesforce.com in the Philippines, a licensing or joint venture or direct investment entry strategy would work. Exporting has its own limitation especially where your target is a large customer base. On the hand direct investment requires a large initial investment and return on investment (ROI) takes longer.
Salesforce.com could choose between licensing and joint venture market entry methods ensuring the most important strategic objectives are met in the Philippines. Licensing may provide a faster way to enter the Philippines and is a low risk option for Salesforce.com. Licensing also has a high ROI. Considering the market size and the growth rate in the Philippines licensing limits the overall revenue generation potential of Salesforce.com.
Salesforce.com can maximize the revenue generated in the Philippines and reduce the competition from new entrants and other vendors that offer on-premises solution by utilizing the strategic alliance with a local vendor. Joint venture opens Salesforce.com to the local customer base in the Philippines and utilizes the different channels to develop a direct sales and marketing campaign.
In the Philippines, Salesforce.com has some political threats that can impact the company’s ability to be successful in its expansion hence, T4CG recommends Salesforce.com to be highly strategic in creating a rapport with the government by advocating the importance of certain legislation that impact the Philippines and Salesforce.com’s corporate social responsibility (CSR). The company must also begin lobbying to the Philippines government about the importance of reinforcing piracy and IP laws to protect both piracy and intellectual property.
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