Centra Software Case

Topics: Revenue, Income statement, Net income Pages: 7 (1603 words) Published: April 13, 2015
Case: _Centra Software
Name(s):Alyssa

Altman & Ashley Hayes

Section: ______

Be sure to hand in the complete template, including grading
sheets.

Fiel
d Sa

les

2. Les
ser ’s S
trateg
y

1. Ree
d

’s Strat
egy

5 & 6. Alternatives and analysis (typically 3-5 alternatives)

3. E
limi
nate

1.
Strengths
-Leon Navickas who is the founder of Centra had worked as general manager of Advanced Research and Development on the Lotus Notes groupware, which shows he has knowledge of the industry. (pg 4)
-Revenues have increased from $8.6 million in 1999 to $23 million in 2000. -The three different products that are offered appeal to many if not all of the needs of the stated target market.
-Able to reduce the installation process from 5 days to 2 days. (pg.5) Weaknesses
-The net income before taxes and interest has been constantly negative since 1996. The net income went from $-2.7 million to $-17.6 million by 2000. (pg. 14) -Centras expenses significantly increase from year to year and in 2000 SG&A made up about 67.7% of the total expenses. (pg.14)

-The difference of beliefs between the VP of Corporate Strategy, Chris Reed and Chris Lesser cause tension within the company.
-Centra only has about 10%of the corporations in the delivery platform of the market. [440/(330+440+150+20)]=10%
Opportunities
-eLearning accounted for $1.1 billion of the $17 billion spent in 1999, and projected that it would grow to $11 billion in 5 years. (pg2) -In 2001 many of the Fortune 500 companies were evaluating the need for LMS. -The eLearning and the eMeeting industries were in the beginning stage of their product lifecycle.

-The Web promised to cute the cost of synchronous learning. (pg. 2) Threats
-There is a large amount of competition already existing in the industry. These competitors range from small companies to huge corporations.

2. Problem recognition (symptoms)
-Steve Lesser received a phone call from the field sales
representative who ran the Ford Motor Company had a client
taken from her by a telemarketer selling a stripped-down
version of the software.
-The net income is is becoming even more negative as the
years pass
3. Problem statement (question)
-What is the best way to organize Centra’s Sales force?
4. Evaluative criteria
-For 2001,decrease the SG&A expenses that were $27.5 million in 2000. - Focus on growing their penetration of the "Global 2000" market significantly (i.e. doubling penetration in the next year).

2

1. The telesales would be used to make the initial sale to a Global 2000 and then have the field sales sell to other departments of the firm +The costs per deal would decrease form 666.67 to 166.67 annually which will allow Centra to spend less money on the SG&A expenses.

+Increase the deals for the Global 2000 from 200 to 576.
-There is a large possibility that many of the employees will become upset with the changes and new assignments.
-May cause tension between Lesser and Reed
2.Keep the original strategy of having a telesales team to sell eMeeting product to potential customers under $200 million and uses the field sales to sell eLearning product to Global 2000 firms.
+Field sales would make revenue of 126,511.63 per deal and annual revenue of $21,760,000
+The sales force would have specific customer they will have to focus on instead of having many different customers in different markets. -The cost per deal per rep will be a high expense for $1,075.58 -There would not be any penetration of the Global 2000 market because the deals would remain at 172.

-May cause tension between Lesser and Reed.
3. Eliminate Filed Sales
+Eliminate the tension and difference of the the field sale and the telesales. + Significantly cut the SG&A costs
-With the loss of the 25 employees that would be fired, Centa would have to come up with a huge strategy to make-up for the $21,760,000 in sales revenue that would be lost.
-172 deal would be lost from the...
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