Introduction
BlueJeans is a technology company that offers video conferencing as a critical service of cloud computing. The growing trend of globalization led to the establishment of the company in 2009 by Alagu Periyannan and Krish Ramakrishnan in San Jose, California (BlueJeans). Over a decade, the company has made tremendous growth owing to notable milestones in innovations and collaborations. BlueJeans was the first video conferencing service that permitted users to link Skype rooms in 2011 and integrate conferencing rooms in desktops and mobile phones in 2012. Moreover, the company was the first to offer interactive services in large events in 2014, integrate workplace and Facebook Live in 2015, and collaborate with Dolby Spatial Audio in the cloud platform in 2017 (BlueJeans). These milestones have made BlueJeans to be one of the leading providers of video conferencing services in the United States and across the world.
The analysis of BlueJeans shows that it employs different business strategies because it has been leading in creating unique innovations over time in line with it is mission and vision. With the core belief of prioritizing customer needs, the mission of the company is to be a trusted partner by providing superior services and ensuring the attainment of the best online meetings (BlueJeans). Through its vision of being a leader in the video conferencing industry, the company has gained numerous awards, such as G2 Cloud in 2018, World’s Best Cloud Companies 2017, and UK Cloud Awards 2015 (BlueJeans). These awards have enabled BlueJeans to have a sustained competitive advantage, making it a key player in the realm of cloud computing, innovation, and business performance. As an emerging leader in cloud computing, BlueJeans has created strategic alliances with Facebook, Samsung, Dolby, Poly, and Microsoft (BlueJeans). Therefore, the research paper analyzes the business strategy of BlueJeans and provides feasible recommendations for the improvement of performance in the competitive global markets.
Analysis of the Firms Strategy
PESTEL Model
The analysis of the external environment in which BlueJeans operates using the PESTEL model shows that political, economic, socio-cultural, technological, ecological, and legal forces have a marked influence on its profitability. According to Dyer et al., businesses operate in a competitive environment that is subject to diverse external forces, which determine the performance and profitability of companies (p. 38). High rates of taxation, weak foreign currencies, and piracy of software comprise political factors that reduce the profitability of BlueJeans. With a local and global brand image, BlueJeans has to carry out due diligence on taxation policies and payment methods of various jurisdictions where customers reside. Moreover, the company has to cope with the challenge of weak protection of intellectual property rights in some countries with emerging markets. Products of BlueJeans have a high level of price sensitivity because of their presence in diverse markets across the world. Prices of products are sensitive to global economic recessions, which decrease not only prices but also the demand for services. However, the emergence of pandemics, such as coronaviruses, would increase the demand for video conferencing and make BlueJeans earn above-average profits. Fluctuations in inflation and exchange rates in local markets and foreign countries have significant impacts on pricing strategy.
Socio-cultural factors such as demographics, product awareness, and customer preferences influence the use of video conferencing by individuals. Segmentation analysis shows that the target customers of BlueJeans are techno-savvy, understand video conferencing, hold professional meetings, prefer a brand image, and desire versatile services. In this view, product differentiation and mass customization enable BlueJeans to achieve its market mission of making online meetings simple and fast. The analysis of technological factors reveals that BlueJeans is the leading company in the innovation of video conferencing. BlueJeans has integrated cloud-based services with desktops, mobile phones, Dolby spatial audio, social media broadcast, and the capacity to perform large interactive events (BlueJeans). Since BlueJeans and consumers utilize electricity in powering servers and electronic gadgets, it supports collaborators, such as Microsoft, Samsung, and Facebook, in the production of renewable sources of energy. As a technology company, BlueJeans experiences numerous legal challenges relating to acquisitions, collaborations, copyrights, and privacy issues in the provision of video conferencing services.
Strategy Canvas
Since BlueJeans operates in a highly competitive environment, it is adjusting its operations and activities. According to Dyer et al., strategy canvas enables organizations to explore new markets, create new demand, shift market boundaries, and use competitive pricing in the provision of services (p. 219). BlueJeans is exploring new markets of individuals and local companies in various countries since significant proportions of customers come from international organizations, particularly those with bases in the United States. The exploration of new markets creates new demand and increases the market share of BlueJeans globally. The examination of products illuminates that BlueJeans employs a competitive pricing strategy by segmenting customers to standard and pro prices of $10 and $14 per month, respectively, and an additional premium package (BlueJeans). Thus, BlueJeans utilizes the blue ocean strategy in ensuring that it diminishes the impacts of competition and boosts performance.
Porter’s Five Forces
In further analysis of the external environment of BlueJeans, the model of Porter’s five forces (PFF) was employed. This model evaluates the attractiveness of the industry of a company by examining th rivalry of competitors, bargaining power of customethe rs, bargaining power of supplies, threats of new substitutes, and threats of new entrants (Dyer et al, p. 26). In the cloud computing industry, BlueJeans experiences a strong level of competition from highly aggressive companies, such as Zoom, Google, Skype, TeamViewer, Cisco, and GoToMeeting. Low switching costs because consumers do not need to purchase hardware and software components, which are necessary to access video conferencing services. Given that BlueJeans runs in a technology industry, an increasing number of innovations make competitive rivalry strong. The bargaining power of customers is also strong because there many substitutes and low switching costs. Hence, the ability of BlueJeans to satisfy diverse consumer tastes and preferences determines its competitiveness in the markets.
The analysis of the bargaining power of suppliers shows that they have a moderate force on BlueJeans. The company has signed contracts with its collaborators and provider of servers and software, thus ensuring guaranteed delivery of services to consumers. Moreover, BlueJeans has hired competent staff who are not only reliablebutd also competitive in the provision of quality services to the company. Overall, the company has an assurance that its suppliers of goods and services would not change prices or withdraw from their duties. The threat of substitute products is high since BlueJeans operates in a competitive industry where numerous technology companies operate, switching costs are low, and competitive performance is high. For instance, BlueJeans has to overcome threats of substitute products, such as Zoom, Google Hangouts, TeamViewer, and Skype. The threat of new entrants is moderate because of the high cost of marketing and developing brands and the low costs of running the business. To gain a brand image globally requires a great deal of marketing and promotion of a new entrant. However, the costs of providing services to customers diminish following the establishment of a brand image in target markets (Table 1).
The VRIO Model
In the analysis of the sustainable competitive advantage of BlueJeans, the VRIO model applied. This model employs a resource-based approach because it examines the value, rareness, imitability, and organization of a company in providing goods and services to consumers (Dyer et al. 53). Video conferencing services that BlueJeans offers to customers are valuable because they comprise additional features that make them stand out in the competitive global markets. Moreover, BlueJeans provides rare services to consumers due to the additional features of video conferencing. In addition to standard features, BlueJeans supports up to 100 participants, allows unlimited recordings, command center live, onboard manager, in-depth analytics, and add-ons of Committed Audio, Direct Connect, Meeting Assistant, Premium Access China (BlueJeans). The analysis of these rare features indicates that they are imitable since competitors can easily adopt and duplic in their products. A combination of valuable and rare features that are easy to imitate shows that BlueJeans enjoys a temporary competitive advantage. However, BlueJeans lacks organizational structure and systems to enable it to tap international markets and optimize its assets and operating capabilities. Therefore, BlueJeans has an unused competitive advantage of valuables and rare features in its products (Table 2).
Strengths/Weaknesses
One major strength of BlueJeans is that it is a leading company that provides quality video conferencing to consumers across the world. Another strength is that BlueJeans has established a brand image that has enabled it to create beneficial collaborations with Facebook, Microsoft, Samsung, Ploy, and Dolby. Valuable and rare innovations comprise a strength that has boosted the competitive ability of BlueJeans. However, the company has minimal weaknesses, such as reliance on their party products to provide services, small market share, low-profit margins, lack of diversification, and imitability of its products.
Recommendations
Diversification
Given that BlueJeans operates in a competitive global environment, diversification offers an effective strategy for growth and expansion. Additionally, BlueJeans needs to diversify because it deals with a single product of video conferencing. Lynch asserts that diversification reduces risks of complete losses, proprotectsvings, andgeneratese high revenues (p. 62). BlueJeans has options of diversifying into closely or distantly related products, depending on target markets. BlueJeans should undertake a concentric form of diversification to allow it to leverage its expertise in cloud computing. By providing cloud computing services, BlueJeans would diversify its sources of revenues with a cost advantage. Furthermore, BlueJeans needs to undertake horizontal diversification into realms of software design, Internet, Networking, cybersecurity, and mobile applications for it to explore and curve new markets.
As it grows and expands, BlueJeans should perform lateral diversification to allow it to explore other niches. The increasing competition in the global markets hinders organizations from growing and expanding in the areas of their specialization (Lynch, p. 35). To overcome the challenge of stagnant growth and decreased market share, BueJeans ought to venture into the computing and smartphone industries. This form of diversification would empower BlueJeans to stop relying on Microsoft, Samsung, Apple, and Android technologies in the provision of video conferencing services.
Integration
Business integration is an effective strategy that promotes growth in businesses by allowing optimization of employees, technology, processes, and information. BlueJeans should implement both vertical and horizontal integration strategies for it to leverage its resources and achieve optimal performance in diverse markets. Dyer et al. hold that companies adopt vertical integration to boost their capabilities, improve coordination, and gain control of the supply chain (p. 133). In backward integration, BlueJeans should create its servers for cloud computing instead of outsourcing fthird partiesties. In forward integration, the company needs to manufacture computers, smartphones, and their operating systems to avoid depending on Microsoft, Samsung, Android, and Apple. As social platforms, the company ought to create mobile applications that allow users to access their services in remote areas.
The company also needs to implement horizontal integration to boost its growth and development in competitive markets. Horizontal integration enables companies to grow and expand their operations through merging and acquisition. By merging with other companies in the same market niche, such as Zoom, Google, Facebook, and Skype, BlueJeans would gain economies of scale, expand market share, and boost performance. Additionally, BlueJeans should acquire upcoming telecommunication companies to enable it to gain the capacity to produce smartphones. Overall, horizontal integration would make the company gain market power, access capital, and gain innovations.
Price Model
As BlueJeans experiences a high level of competition in both global and local markets, it should adopt a competitive pricing model. According to Lynch, this strategy of pricing is powerful in regulating competition because it supports companies to retain and attract new customers (p. 23). A low-pricing strategy is appropriate when it had attained a significant market share to gain from economies of scale. During challenging economic times or in low-end markets, customers prefer affordable services. Since the low-pricing strategy is attractive to consumers, BlueJeans would be able to boost its market share and register increased revenue in competitive markets.
BlueJeans should also employ a skimming pricing strategy because it offers quality video conferencing services. This pricing strategy allows the company to enjoy high prices based on new innovations before competition increases and lowers prices significantly. The standard and pro packages are priced using ca competitive strategy, while the advanced packaged require skimming to establistheirts premium prices in high-end markets. As competitors of BlueJeans increase with time, the prices of video conferencing would decrease, resulting in poor returns. Hence, the use of a skimming pricing strategy would give BlueJeans an upper hand in shaping prices and maintaining market share.
Differentiation
BlueJeans needs to differentiate its product of video conferencing to meet the diverse needs of customers. Product differentiation is beneficial because it reduces price competition, promotes competition, facilitates innovations, boosts profits, and sales brand image. Although BlueJeans has differentiated its products into three packages of standard, pro, and advanced, it does not accommodate all types of customers. BlueJeans should create additional packages for an hour, a day, and a week for individuals and businesses to subscribe on a need basis. Some consumers do not require video conferencing for long durations; hence their preference for short usage requires consideration in product differentiation.
Conclusion
The analysis of BlueJeans revealed important information regarding business strategies employed in its operations and activities. PESTEL analysis indicated that BlueJeans is sensitive to the influence of political, economic, socio-cultural, technological, ecological, and legal factors in local and global markets. Canvas depicted that the blue ocean strategy enables BlueJeans to expand its markets and gain a competitive advantage. In contrast, PFF established that competition, substitutes, and bargaining power of customers are strong, while the bargaining power of suppliers and threats of new entrants are moderate. VRIO showed that BlueJeans enjoys a temporary competitive advantage. Therefore, the analysis recommends BlueJeans to diversify its services, adopt integration, apple competitive and skimming strategies, and differentiate its products in the market.
Charts
Table 1: Porter’s Five Forces
Table 2: The VRIO Model of BlueJeans
References
- BlueJeans: About Our Company. BlueJeans, 2020.
- Dyer, Godfrey, et al. Strategic Management: Concepts and Tools for Creating Real World Strategy. 2nd ed., John Wiley & Sons, 2016.
- Lynch, Richard. Strategic Management. Pearson, 2018.