Strategic Analysis of Reboot

Introduction

Reboot computers, like many start-up companies, saw an opportunity in the Indian market and grabbed at the earliest opportunity. for business dissertation help. However, the Reboot business success is quite different from the normal business stories we hear every day of starting small and eventually making a breakthrough (Raghavan, 2013). Reboot’s business strategy is interesting and though provoking. This strategy will be the main agenda of this report henceforth. When the company began their journey of bridging the digital divide, their founders were indeed oblivious of the challenges and uncertainties that lay ahead.

This report will first provide a succinct overview of the company by highlighting its vision, mission and objectives. A discussion of the company’s strategic goals will provide insight into its journey from the moment it was a start to the point when it impacted the market. The next section will consist of a detailed evaluation of the environmental market using PESTEL and Porter’s five forces analysis. Essentially the two tools of analysis will aid in bringing out the clear picture of the political, social, economic, social, technological and legal factors affecting the business.

Further, this paper will cover the strategic capabilities and sources of competitive advantage. To achieve this, a value chain analysis will be conducted with the aid of tools like TOWS analysis. A discussion of the issues and challenges will follow having been derived from the analyses conducted before. At this point a SWOT analysis will be applicable to establish a connection between both external and internal analysis and the strength, weaknesses, opportunities and threats faced by the company. At the end of this paper, it should convey in no uncertain terms the factors affecting Reboot strategy to bridge the digital divide and an evaluation of the main issues and challenges affected it.

Overview of Company Strategy

At its inception, Reboot expressed its commitment to bridging the digital divide by providing an affordable and accessible alternative computers to the Indian market. For Reboot, everyone in India deserved a computer and it was their mission to deliver upon that conviction. In particular, its vision is to bridge India’s digital divide in an eco-friendly manner by building a sustainable business enterprise (Raghavan, 2013). To achieve this vision, Reboot set its mission to be India’s first national provider to offer value priced, certified, co-branded, pre-owned computers and hardware, backed by warranty and quality assurance. There are two elements in the vision statement one being bridging the digital divide while the other is achieving that in a sustainable manner.

In their exploration of how e-waste extraction could be a viable source of business opportunity, Reboot founders realised that there was an unorganised secondary market for used computers. Initially targeting customers from the lower economic strata, Reboot founders beat the capital challenge by admitting another business partner, and together they undertook to solve a social need by providing affordable but refurbished computers to those who could not afford new ones. According to Rao (2005), most people in India cannot afford ICT and lack of affordability, education, poor technology has worsened the digital inclusion in the country. Further, India’s e-waste was growing three times the municipal waste and was the second largest in Asia.

Therefore, armed with the above information, Reboot sought to kill two birds with one stone: to deal with e-waste and improve the low digital inclusion. It thus curved out a niche in providing cheap and frugal computers to the lower economic strata at first, then to Multinational Corporations and the government, eventually. Instead of producing new computers, Reboot offered to the lower economic classes in India refurbished computers which were not only environment friendly but relatively cheaper compared to new ones.

Evaluation of Environmental Impacts

PESTEL Analysis

Political factors

Political factors have a significant impact on the profitability and sustainability of the Reboot’s business venture. E-waste management is regulated by the Indian government through licensing requirements and Reboot had to comply with the mandatory full cycle management before they could get the license. Government policies like the Executive order 12999 that implemented tax deductions for organizations donating computers to schools have a positive impact on Reboot’s quest to increase awareness of using refurbished computers (Raghavan, 2013). A politically stable environment is good for business especially for Reboot, which is engaged in cross border sourcing of used computers under its e-waste management license (Yuksel, 2012).

Economic factors

The macro environment factors like savings rate, inflation rate, interest rate, economic cycle and foreign exchange rate affect the demand and investment in an economy. India has one of the highest gross domestic product in the world at 6.9GDP, a factor which should increase the consumption of Reboot products for the next decade. Although the average income of India is low compared to developed nations, it is a favourable to Reboot since it has positioned itself to offer affordable computers to the lower economic strata. Education levels in India will also affect the organization’s business since literacy levels have a bearing on the number of persons

interested in computers. Because Reboot has been sourcing for used computers internationally, any fluctuating in the interest rates will affect its operation. A higher inflation rate will slash consumer’s disposable income and affect Reboot sales including the cost of its raw materials.

Social

Society’s culture and way of doing things affect the marketing and sales of an organization. A study conducted in at least 82 cities and 19,000 households indicate that there is an increase in computer ownership and an increased desirability to own Personal Computers (PCs) (Raghavan, 2013). This change in consumer patterns and behaviour is favourable to Reboot and will likely increase its sales in the second most populous country in the world. Additionally, youths have become a driving force in purchasing of PCs and play a big role in decision making. A culture of entrepreneurship means that more people will set up cybercafés and business requiring refurbished computers to the advantage of Reboot in terms of sales and revenue.

Technological

For Reboot to stay relevant in the computer industry, it must be alive to the new technological advancements in the market. It can thus make use of social media strategies of advertising and sales by using platforms like Alibaba, eBay, Facebook, Twitter, Instagram and YouTube to reach more customers and sell efficiently. Essentially social media can be used for business growth and the internet for online retailing of Reboots products (Bivolaru, Andrei and Purcaroiu, 2009). Reboot can further invest in improved value chain network by incorporating increased levels of business intelligence and improved product quality to remain competitive in the market.

Environmental

Reboot’s niche in selling refurbished computers was the green aspect which involved extension of the usability of its products and reducing the need to produce new computers. Therefore, it should stay in that line and improve on its agenda of supply and purchase of used computers for recycling. As a result of climate change, the government and consumers generally appreciate the essence of environmental conservation and this is the selling point for Reboot whose aim is frugal solution for a digital divide. The Green India Ambassadors is a good initiative that will increase awareness among communities and eventually impact on its sales.

Legal

There are many legal implication in the kind of market Reboot is entrenched in. because it deals with used computers, the organization must follow the legal procedure for the disposal of old computers without flouting environmental laws. The company should also avoid dealing in illegal imports of e-waste for secondary raw materials as this would have implications on their licenses. As an organization with a number of employees, it must abide by the labour laws prevailing in India and also avoid any acts of discrimination that would lead to legal costs or stain its brand.

PESTEL Framework

The five forces which affect Reboot’s business strategy is as follows-

Strategic Capabilities and Sources of Competitive Advantage

Value Chain Analysis

Value chain analysis is a way of business to analyse their production, design and distribution processes to create a product (Grant, 2010). The results of the analysis of the business can be applied to evaluate and implement changes aimed at enhancing the business’s competitive advantage. Michael Porter introduced the value chain analysis in 1985 as a representation of all the internal activities a business like Reboot engages in to produce refurbished computers. After a careful consideration of the case study, the most applicable type of competitive advantage is cost leadership. The goal of this type of competitive advantage is for the business to become the lowest cost provider in the market. Reboot’s strategy is such that it provides affordable refurbished computers that are eco-friendly because they are recycled.

Reboots primary activities entails all actions that go into the refurbished computer. Its inbound logistics involves the sourcing of used computers from different suppliers. Over the years the source of Reboots suppliers has expanded to include domestic agencies, asset management companies, and international suppliers, Reboot online bidding and Reboot Asset Management. Another activity under inbound logistics would be storage of the raw materials being use computers once they have been sourced from suppliers. Operation activities include: cleaning, testing, re-engineering the product, re-certifying the software, branding and packaging.

Outbound logistics of Reboot entails the distribution of finished products to various infinity store in India. Under marketing and sales, Reboot has been able to build a strong and visible brand by developing a logo and branding its products. The business planned to open a series of Reboot branded infinity stores. Additionally, they planned to conduct direct sales to institutional buyers like small and medium enterprises, educational institutions and government agencies. These are largescale purchasers and would greatly impact their sales volume. Another marketing and sales element is the expansion of their online supply reach through the e-store and other platforms. The business also provides services like a one year warranty on their refurbished computers. The Green India Ambassadors programme is an example of a service that Reboot offers to individuals and organizations that wish to donate or return used computers. It also provides consumers with services of calculating e-waste benefits of reusing computers.

Each activity has a cost assigned to it which aggregate to the total cost of the product. The next step is to identify the cost drivers for each of the activities under primary support. Finally, the links between activities should be identified and the opportunity for reducing costs taken into account. To create a competitive advantage over other competitors, Reboot has supporting activities which strengthens the primary activities above. Firm infrastructure consists of the business’s management, legal and financial systems in place to aid in decision making and effective management of resources. As a labour intensive business involving employees working in production and customer service, human resource management should aim at inspiring and motivation employees for quality products and excellent services. Additionally, Reboot is engaged in technology industry hence it must continuously innovate and make use of new technology to stay relevant. Lastly, the element of procurement should be streamlined to acquire quality supplies befitting of organization’s budget

VRIO Analysis

VRIO is an acronym for value, rarity, imitability, and organization. It is a strategic analysis tool that is designed to assist organizations like Reboot to discover and protect the resources and capabilities that elevate them over the other competitors for a long term (Cardeal and Antonio, 2012). What is so special about Reboot? This is the question that this tool of analysis asks any given company subjected to its four pillars. The first question is whether the business offers a resource that adds value to customers. Under the same umbrella its questions whether Reboot, for example, is cable of utilising an opportunity or defuse competition with its internal capability. Reboot offers value to its customers by providing a frugal solution to a digital divide through refurbished computers. It has been able to exploit its internal capability to use e-waste as raw materials for affordable and quality products. Because value has been established for Reboot, the next question is on rarity.

About rarity, Reboot does not control resources that are hard to find or scarce. Their main raw material is used computers which are in fact being illegally dumped in developing economies including India (Needhidasan, Samuel and Chidambaram, 2014). Refurbished and affordable computers are in demand but they are not hard to find because other competitors can make similar ones. Therefore, Reboot has value but not rarity which is a position of competitive parity (Barney and Hesterly, 2010). This means that other competitors with capital can invest in the same venture and instigate stiff competition with Reboot.

On imitability, any company with capital can refurbish used computers once they obtain e-waste licenses and soon they will have similar products which are affordable, environment friendly and solves the digital divide. It follows that Reboot will at this point only have a temporary competitive advantage until another company come into the picture with similar offerings (Coates, 2009). Suppose Reboot had passed the three questions, it would now be a company that can offer a product that is valuable, rare and hard to imitate. However, it has failed the last two elements of VRIO analysis.

The last question enquires into the organized management systems, culture, processes and structures to profit from its resources and capabilities. Internal organization and support is key in realizing the full potential of its resources. A company that has all the four elements of a VRIO framework is said to have achieved the ultimate goal of becoming sustainably competitive (Lin et al, 2012).

VRIO Framework

External

Reboot being predominantly based in India faces the challenge of political and economic factors. Political instability in India would massively impact on the operation of the business including its sales and revenue. It is advisable that the company considers investing across borders so that it can have international presence to reduce the risk of political disruption (Gereffi and Fernandes-Stark, 2011). Similarly, Reboot would be greatly impacted by any financial crises or other changes like increase in inflation, increase in interest rate or even high unemployment rates. The business remains vulnerable to these factors which it ought to be insulated against.

At the time of venturing into the industry, there were never really any serious competition. It is inevitable that as Reboot grows there are organizations watching and ready to jump in the market and take advantage of being a second mover into the market. These kind of businesses can create stiff competition with Reboot by reducing its prices thus forcing it out of the market or reducing its profitability (Donaldson, Ishii and Sheppard, 2006). As seen above, Reboot provides low cost products but they are not rare neither are they imitable. It means that any new entrant with

substantial capital can move into the market and make similar products thus causing competition rivalry. The business might consider diversification by investing into other technology related areas apart from refurbished computers.

Be that as it may, one advantage that Reboot still holds is its brand image which has grown over time so much that there is an established customer base that are loyal to the brand. This element of customer loyalty flowing from years of investment in e-waste management awareness,

branding and advertising of its products could be its way out in case a strong competitors comes into the picture. Consequently, it is vital that Reboot reviews its business to deal with the areas that do not support sustainable competitive advantage. It is this that insulates a business from strong competitors that may want to disrupt the market or dislodge the business with the largest industry and market share as Reboot does in India. Additionally, the business should invest in technological advancement to stay relevant because organizations are innovating every single day and it’s possible that tomorrow another company can come up with cheaper computers that would totally drive Reboot out of the market.

Internal

As stated before, Reboot has invested in branded infinity stores that sells its products to consumers. They also have plans to further open more stores as a strategy to reach multiple segments. In pursuit of this quest, the company opened several stores in different states including South India and North-west. Further, Reboot has the first mover advantage into the market and has been the first to come up with the frugal solution to digital divide. To strengthen its brand, it has undertaken an encompassing campaign to create awareness among individuals, organization and government agencies about responsible e-waste management. This, coupled with the various partnerships with policy makers positions Reboot to enjoy many advantages and dominance in the market.

Although Reboot is fast expanding, it still needs more branches to be rolled out in India. In second most populous country in the world, Reboot is not doing well in terms of reach. The company needs to invest more funds into its digital inclusion programme to reach more people without access to computers. Studies indicate that Personal Computer penetration in the Indian market is dismally between 4-7 percent. This shows that Reboot has a long way to go in satisfying the market that is increasingly in need of computers. Additionally, studies show that the perception of complexity in using PCs still exist among the Indian population. Clearly, Reboot has not exploited the full potential of the market this leaves it free for any new entrant who may not face competition at all when entering that segment

Conclusion

Reboot is a company that is at its peak in the Indian market. It is surrounded by loads of opportunities to exploit. As it stands, it has minimal competition in the market segment where it has curved out a niche. Apparently, there are few companies that have ventured in into refurbishing and selling used computers in the manner in which Reboot does. Just any other national business, Reboot is affected by political, economic social, technological, environmental and legal factors. These factors are beyond the control of the business and the best Reboot can do is to adapt accordingly to mitigate the impact. However, it is not all the times that environmental factors will affect business negatively, the effect can be equally upwards to the advantage of the company.

As discussed under five forces analysis, Reboot could be affected by the possibility of other companies venturing into similar business as competitors. Although its supplies sources are diverse the buyer still has a high bargaining power that constantly requires monitoring of product and service quality. The value chain analysis has showed that the primary activities are interlined with the cost of products and one may have direct effect on the other. Interestingly, the VRIO analysis revealed that Reboot is not an all-round company and there are some competencies that precludes it from being sustainably competitive like Google or McDonalds.

Expansions into new markets

By venturing into other regions in India and across the national borders, Reboot will have the advantage of exploring new consumer groups with different tastes and preferences. New markets means new challenges and possibly additional revenue for the company. Further, a company that has international presence gains the title a Multinational Corporation and with it comes certain advantages like being able to withstand political instability in one country. With new markets comes product diversification because what is enjoyed in one market may be shunned in another so it presents Reboot with an opportunity to manufacture new products and test them.

Improving distribution network

Strengthening existing distribution networks will give the company more control over its products in different markets. The essence of control is that the company will be able to ensure that they have required products at the right place, the right time and required quantity. Stronger distribution networks also allows the company to interact more closely with the customers thus enabling real time feedback.

Improving Value network

Reboot can further enhance the activities that are carried out in their value chain. They can invest in technology to either make certain processes faster at different stages or improve product quality with the aim of maintaining sustainable competitiveness

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