Rosetta Stone's headquarters are in Washington, DC. Here the decisions are made that move the company forward. Their whole focus is put on their one product, which is a computer program that teaches people a language in an innovative way, they have differentiation in their product in the sense that they have different languages and that they specialize their products to their customer. They have a second office in America in Colorado. Furthermore there are offices allocated over the rest of the world; London, Munich, Tokyo, Seoul. The company employs 1738 employees, of which 922 full time. The majority of their employees work as the kiosk sales employees; 894. The rest of the employees work at the core of the company, quite a substantial amount of employees work on the research and development of their product (333) and then there are the marketing and sales department (266) and general administration (190). Since they focus on efficiency they use a third party to handle their packaging and distribution.
In order to analyze Rosetta Stone. we first need to define and review its business model. Who does the company serve, what does it provide, how do they generate revenue, how are they different or what is their value proposition and how do they reach their customers. In order to do this the following model is used the Business Model Canvas by Alexander Osterwalder.
Starting on the right hand side of the canvas, Rosetta is targeting a couple of different markets which can roughly be broken down to four customer segments. They focus on individual consumers with their personal product edition. The government agencies, armed forces (which is part of the government in most cases), and corporations are met in their needs by the enterprise edition. Whereas the Classroom edition focuses on the educational institutions. Additionally the company has a home school addition which is designed to provide parents with the tools and resources necessary to manage student progress without extensive planning or supervision. Their products have value as they claim to be the only solution for language learning that does not use the classic teaching tools, but rather focuses on a method which is also called a method of Dynamic Immersion. The customers are reached through channels which are categorized as institutional and consumer channels. The consumer channel generates 79% of the firm’s total revenue. This distribution channel encompasses websites, call centres, kiosks, and selected retail resellers. Logically 21% of revenue is thus generated by the institutional distribution channel which serves Primary and secondary schools, colleges, and universities; the U.S. armed forces and federal government agencies; corporations; and non-profit organizations. In order to create a better relationship with their customers the company is investing in an online peer-to-peer practice environment where anyone is able to register for free in order to enhance the whole language learning experience. Which brings us to the left side of the canvas, because how and what does the company do in order create its value position and offer it to the customer segments. One of the key activities of the company is the research and development within the company. The Firm developed most of its own technology and protected it as well making the intellectual properties of the company together with its research and development key recourses. Moreover the high sales and marketing budget, 46% of total revenue in 2009, make that sales and marketing is one of the key activities of the company in order to create money. Most of the product and packing components are bought from third party contractors making them a key partner to the company. Additionally they have third party vendors as key partners mostly in order to support the company with its international activities. Those activities account for 8% of the...
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