Razorfish Case

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Melody He

1. Describe the overarching strategy and the environmental conditions that made Razorfish grow so rapidly. How do you know the strategy you describe is the one Razorfish is pursuing (site evidence from the case AND describe the core competencies that Razorfish employs to support the overall strategy)? (400 word limit)

The overarching strategy that Razorfish used is acquisitions. Based on the book “In 1996, Omnicom invested in Razorfish with $3.5 million in cash” (P556). This acquisition helped for Razorfish’s working capital and enable to acquire new media companies. Razorfish's began the rapid series of acquisitions thereafter. “The initial acquisitions were primarily to expand the firm’s geographic scope” (P557). The range for Razorfish’s clients were over United States and Europe. From 1998 to 2000 only two years, non-US locations were over London, Stockholm, Oslo, Helsinki, Hamburg, Amsterdam, Munich, Frankfurt, Tokyo and Milan. “Although Razorfish’s core business stayed consistent, the acquisitions profoundly changed the size of the company” (P557). In this emerging industry environment, Razorfish has the special cutting-edge technological and earned significant revenue from blue chip clients. It was specialized by offering website design and business consulting. Razorfish focused their target markets on these two areas so they are enabled to compete against the largest consulting firms for high-level projects. Based on the example “Netflix” we talked about during class, a firm going international was quite important and it is a big step forward. In this case, there was no more capacity for Razorfish to grow in the United States. They wanted to distribute the resources, the knowledge which the information technology firms in Europe did not have. Therefore, Razorfish invested oversea at Europe. This movement also expand the Razorfish brand awareness. However, the broad acquisitions growth strategy brought Razorfish problems with the integration. Cultural barriers between America and Europe, communication barriers while applying the strategic and the power distance while managing the oversea branches. The dilemma between global demands and localized demand was different which we learned during the class is another downside of Razorfish’s acquisitions. Also, Razorfish has been overpaying for some of the acquisitions.

2. Describe what factors (internal firm factors and external business conditions) changed to make Razorfish’s strategic position weaken so rapidly. (100 word limit – Bullet points OK here) * Internal factors

1. CEO Jeff Dachis was overconfidence about the company.
2. Razorfish has no new development or technology that can hold against other new information technology firms. 3. The clash of corporate cultures caused a lot of employees left the company. * External factors

1. Four major categories of competitors: traditional strategy consulting firms, recently formed internet services forms, old-line technology consulting firms and integrators. 2. Clients refused to extend additional engagements and some were unable to pay for past services. 3. Economic recession

3. Razorfish entered at the early stages of its industry’s formation. Given what you know about first mover strategy, how appropriate was the Razorfish entry and growth strategy? Was this outcome predictable? What might the company have done differently? (300 word limit)

As I discussed earlier on question one, Razorfish’s growth strategy was trying to get the geographic expands by acquisitions. Another growth strategy of Razorfish was their project engagements only last for several weeks or months. It is a lot faster than the traditional consulting firms. This will be easy to attract small scale project and get the additional projects from new or existing customers. Razorfish also used strong branding effort as their strategy. As a first mover,...
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