SWOT Analysis SalesForce
Hartadianata Harianto Aki - Yoshida Sai Revanuru
SWOT Analysis for Oracle
Strengths
Oracle has four key strengths as a business, geographic diversity, Industry leading services and products, high margins, and an ability to generate significant cash flows.
First, Oracle’s revenues do not solely come from the US market. Although 53% of revenues stem from the US, 31% and 16% come from the EMEA and Asia Pacific regions respectively. Second, the company has industry leading end-to-end IT solutions. Oracle has a substantial amount of products and services, including database and middleware software, application software, cloud infrastructure, hardware systems and data analytics. Combined, all of these enable Oracle to provide an ecosystem of IT solutions to its clients. Third, Oracle has good margins due to its prepackaged software products. Margins for Software and Cloud, which is equal to 75% of revenues, have 25% margins in 2014. Finally, the company is a cash generating machine. In 2014, Oracle had an operating cash flow of more than $15 billion. Creating such large cash flows benefits Oracle in several ways. Most importantly, it allows the company to continue to spend large amount of R&D. In 2014, Oracle spent more than 12% of its sales on developing future innovations and products. Furthermore, large cash inflows allow the company to finance its growth-by-acquisition strategy, a key part of delivering returns to shareholders
Weaknesses
Despite being an industry leader in the software space, Oracle has some inherent weaknesses in it’s business model. Most importantly, Oracle faces acquisition integration risk from its growth-by-acquisition strategy. Despite having one of the largest R&D budgets out of all of its competitors, Oracle grows by purchasing smaller companies. While this can be an effective strategy, often times expected synergies do not emerge. Furthermore, investors may not
SWOT Analysis for Oracle
Strengths
Oracle has four key strengths as a business, geographic diversity, Industry leading services and products, high margins, and an ability to generate significant cash flows.
First, Oracle’s revenues do not solely come from the US market. Although 53% of revenues stem from the US, 31% and 16% come from the EMEA and Asia Pacific regions respectively. Second, the company has industry leading end-to-end IT solutions. Oracle has a substantial amount of products and services, including database and middleware software, application software, cloud infrastructure, hardware systems and data analytics. Combined, all of these enable Oracle to provide an ecosystem of IT solutions to its clients. Third, Oracle has good margins due to its prepackaged software products. Margins for Software and Cloud, which is equal to 75% of revenues, have 25% margins in 2014. Finally, the company is a cash generating machine. In 2014, Oracle had an operating cash flow of more than $15 billion. Creating such large cash flows benefits Oracle in several ways. Most importantly, it allows the company to continue to spend large amount of R&D. In 2014, Oracle spent more than 12% of its sales on developing future innovations and products. Furthermore, large cash inflows allow the company to finance its growth-by-acquisition strategy, a key part of delivering returns to shareholders
Weaknesses
Despite being an industry leader in the software space, Oracle has some inherent weaknesses in it’s business model. Most importantly, Oracle faces acquisition integration risk from its growth-by-acquisition strategy. Despite having one of the largest R&D budgets out of all of its competitors, Oracle grows by purchasing smaller companies. While this can be an effective strategy, often times expected synergies do not emerge. Furthermore, investors may not