Case Study 2: SUN Microsystems
You are going to write up a case study for a company that uses technology in the workforce. An
internet/library search will give you a good idea about companies that have case studies on
technology. In terms of the selection of the company, you could use one that is listed throughout the
textbook or one from any of the articles you have read. No one is to do Apple, Iphone, Dell, Nike as
everyone likes to do them, you will all be competeing with each other. Try to choose a company that
no one else will think to do.
When writing a case study analysis, you must first have a good understanding of the case study.
Before you begin the steps below, read the case carefully, taking notes all the while. It may be
necessary to read the case several times to fully grasp the issues facing the company or industry.
Once you are comfortable with the information, begin the step-by-step instructions offered below to
write a case study analysis.
CASE STUDY 2: SUN MICROSYSTEMS 2
Case Study 2: SUN Microsystems
Background
The company was founded following the conception of a workstation based on UNIX
by Andy Batchtolsheim, a Palo Alto graduate student, which he dubbed “68000 Unix
System” in a project of networking named Stanford University Network. In the month of
February, 1982, his colleagues, Vinod, Bill and Scott inaugurated the SUN Microsystems
company from the initials of Stanford University network. In 1992, SUN introduced the
world’s leading multiprocessing desktop computer, the SPARC station 10 system, which was
the first in the competition of desktop performance. That very year saw them ship the most
multiprocessing UNIX any other vendor ever did in history.
The other key products of the company include Sparc microprocessors, Solaris
operating system, the famous java technology as well as the Jini technology that enabled any
kind of device to connect to the network in the form of plug and play. The company also
enjoyed revenues going up to 1.3 billion dollars from server sales in 1996, and topped in the
1998 quarterly sales by 16 billion in the technology frenzied internet boom (Afua & Tucci,
2013).
CASE STUDY 2: SUN MICROSYSTEMS 3
Competitive and Industrial Analysis
In the analysis of the company, Porter’s Five Forces and SWOT analyses will be very
effective to help bring out the various factors that the company is currently facing. By design,
Porter’s Five Forces Analysis helps in carrying out the assessment of the external
environmental effects that an industry will have on any firm towards serving of customers
and profit making. On the other hand, SWOT analysis is a tool that has the potential of
analysing both the internal and external forces that may affect the company, in this case, the
SUN Microsystems and the computer industry. Both may be used in a combination to analyse
the current state of the company as well as come up with the most appropriate move for it to
achieve the competitive advantage over its respective rivals (Burrows, 2010).
SWOT Analysis of the Firm
This analysis will help in establishing the current position of the firm in the computer
industry as well as the internal as well as the external forces that hits it (Sun Microsystems
2009 Annual Report, 2009).
Strengths
i. The firm has the most stable server platform even than that of Microsoft.
ii. The company has been able to establish a research and development division,
which helps it keep up with the constantly changing and advancing technology.
iii. It has forged several corporate alliances with other companies such as
Advanced Microsystem Devices Inc. (AMD).
iv. Its service revenues are constantly increasing, thus, increasing its bargaining
power and the ability to expand and capture new markets.
Weaknesses
CASE STUDY 2: SUN MICROSYSTEMS 4
i. The end products and services of the company tend to be comparatively
expensive, hence, locking out some of the potential customers.
ii. The company has a major weakness on their product marketing platforms as
they mainly use the internet (their web site), which is quite selective as only the users of
the internet may be able to access their new product adverts.
iii. It had a period of negative revenue from the period between 2001 and 2005.
Opportunities
i. The company has the potential of furthering the Java open source.
ii. It has the advantage of the new CEO, with the new management and
marketing strategies.
iii. It has the ability to outsource internationally, hence, widening its market
scope.
Threats
i. It faces competition from Linux, which is more open.
ii. Microsoft Windows poses a major threat to the company as it offers much
more capabilities than the firm’s OS products.
iii. The UNIX server can be made by the company’s competitors
iv. The PC Research and Development currently being carried out by IBM poses
a very great challenge to the company.
Porter’s Five Forces
This tool takes into account five different forces in the determination of the strengths
and weaknesses of a firm: substitutes, rivalry, threat of new entrants, suppliers and customers.
Porter shows that through the analysis of the attractiveness of the company with respect to the
forces, it is possible to come up with strategies that give it competitive advantage over its
CASE STUDY 2: SUN MICROSYSTEMS 5
rivals. For Sun Microsystems, the following analysis may be established (Afua & Tucci,
2013).
Substitutes
There is a very strong threat posed by substitutes based on the grounds that there is
constant evolution in the computer industry. To help counter this challenge, the company has
greatly invested in the Research and Development, which ensures constant innovation. In the
year 2006, the company invested as much as $2 billion.
Rivalry
The industry in which the company is has gained very tremendous competition over the
recent past with the technological advancement and the numerous firms that have risen and
produce the sane products. The company is facing competition from the top companies
manufacturing servers such as, IBM with about 31% of the market share, Dell with 10.5%
share and HP with 29.6% share (IDC, 2009).
Threat of new entrants
The industry has a relatively good barrier advantage to the new entrants based on the
grounds of the obstacles involved: the costs involved in starting a business and brand loyalty.
Most clients tend to stick to particular brand names and convincing them to try out new
products tend to be very futile. As such, the chances of facing threats from new emergencies
are very minimal in the industry (IDC, 2009).
Suppliers
The company’s supplier base is very unbalances since the company is trying to
diversify on its suppliers and the needed supplies. For instance, there is high supplier power
in the computer chip market since there only two dominant manufacturers of CPU. In 2003,
CASE STUDY 2: SUN MICROSYSTEMS 6
for instance, AMD got into an alliance with Sun Microsystems whereby it was to use Opteron
of AMD in its servers (King, 2008).
Customers
The customer power of the firm is currently very weak as a result of constant cost
fluctuation, complications in the switching of software and hardware platforms, software and
hardware needs as well as the proliferation of networking. A real scenario case is the pressure
that Microsoft has put on its clients to upgrade their software or go elsewhere, for instance,
the deadline that was given to the US Army by Microsoft to upgrade their OS to Windows
XP latest by 1 st October, 2005. This leaves a customer at the dilemma of deciding on whether
to move to a new company or stay (King, 2008).
Recommendations
The principle market objective of the company is the small business owners and large
corporations. The company should take advantage of its workstation product in order to
increase its profit. The company has currently started teaming up with Wal-Mart in an effort
to reach out to the small businesses, however, the workstations are not being sold in the
stores, but over the internet. To increase its sales of the workstations, the company should
start offering them in the stores rather than purely online (Burrows, 2010).
The second move for the company is to take advantage of the open-source software
sale. So far, the company has made Solaris OS available for download as well as free
download of Java (King, 2008). Lastly, the company’s website is currently concentrated
mainly in its performance rather than advertising of its products, making it difficult to surf the
website to get to the item desired for purchase. It is, therefore, recommended that the
company balances between its performance and advertising.
CASE STUDY 2: SUN MICROSYSTEMS 7
References
Affua A. and Tucci T. (2013). Internet business models and strategies (2 nd ed.). New York:
Mc Graw-Hill.
Burrows P. (2010). McNeally: Why Sun is Black.
