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    Sas Institute Term Paper Essay (4340 words)

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    Executive Summary: SAS is a recognized company that creates business analyst software for all types of businesses. The acronym SAS stands for “statistical analysis system. ” It was created at North Carolina State University as a project to analyze agricultural research. SAS’s founder decided to transform this research project into a viable company of its own, where he could provide business consulting services to large and small businesses alike. Shortly after becoming a company they were able to run software applications across all platforms of the business by using multivendor architecture for which it is known today for.

    SAS’s internal culture has remained the same since it first started, which has made them successful enough to spread their products and services across the globe in just a few years. SAS’s mission and vision statement run parallel to each other. Their mission is to deliver proven solutions that drive innovation and improve performance. The company’s vision is to transform the way the world works, by giving people THE POWER TO KNOW. Like any other company created, they have values that are incorporated in all company relationships, from long-standing engagements to the strong and focused employee community.

    Those values include being approachable, customer-driven, swift and agile, innovative, and trustworthy. The values, mission, and vision statement, create a positive internal corporate culture across the firm. SAS believes in a healthy workplace environment along with a healthy work-life balance. By providing such a workplace, focusing on people and relationships has led SAS to be more productive, have highly satisfied customers, and more dedicated employees. Also along with SAS’s corporate culture, they are committed to Corporate Social Responsibility which is embedded into their environment.

    SAS is successful because they provide their employees with great benefits which keep them motivated to provide great work for their customers. Reasons for this are: one, they are an innovative company, and two, they care about their employees. By keeping your employees motivated and happy, they stay innovative and they work harder to achieve what their customers are looking for in business analyst software. However, though SAS’s employees play a large part in its prosperity, their success is not due to only their employees.

    We propose that SAS is successful because of a perfect balance between employees, economic value added applications available to their customers, and a strong sense of corporate culture among stakeholders. These combined are the reason they are as successful as they are. SAS has a strong competitive advantage over its rivals. First, SAS is a private corporation, meaning that it can guard itself to a certain degree. For example, private corporations are not required to publish an earnings report to shareholders, because there are no shareholders. All of the company’s financial information is internal.

    Secondly, SAS has incredible resource capital for design and development of additional products. That combined with innovative employees is a significant competitive advantage. We will briefly discuss the elements of Porter’s 5 forces, and then go into further detail of each force later on. SAS’s threat of new entrants into their industry is moderate, and rivalry can be considered moderate as well. Substitute products/services are also moderate because firms using SAS’s software have options other than computer software to aid business decision making. Bargaining of power of buyers is low and bargaining power of buyers we consider high.

    Next we will consider factors of the resource based model. This model incorporates both tangible and intangible resources, and the capacity the firm has to implement these capabilities. The resources SAS has acquired give them a significant advantage over competing rivals, and their capability to implement these resources to grow the firm is significant as well. The use of cross-functional teams is something SAS is capable of using to capitalize on the use of their resources, as well as the ability to hold seminars for customers on how to better utilize their products.

    Furthermore, SAS has a specialized team of consultants that their customers use to enable them to be fully trained on the use of their products. SAS concentrates on a focus differentiation business level strategy. The company concentrates its efforts on creating value for other firms by improving the profitability of their customers. At the same time, SAS receives a premium for their products and services because of the huge economic added value that it provides to its customers. This allows SAS to succeed using a differentiation strategy. We will focus on this business level strategy later on.

    Porter’s 5 Forces At its core, Porter’s 5 forces describes a firms overall ability to compete in a market. We discuss our analysis of the 5 forces and how they affect SAS Corporation and its stakeholders. Please examine Figure 1. 1 to view a diagram that depicts the 5 forces. The model is based on the research findings of Michael E. Porter, a Harvard Business School Professor. The model was recently updated in the late 1990’s and early 2000’s to depict what it is today. As you can see from the diagram, the dominating factor that the forces are based upon is the rivalry faced again existing competitors.

    When competition is high amongst competitors, the forces that revolve around the competition tend to intensify. Porter’s 5 Forces Model Threat of Substitute Products and Services Low for SAS Bargaining Power of Suppliers High for SAS Bargaining Power of Buyer Low to Moderate for SAS Threat of New Entrants Moderate for SAS Rivalry Among Existing Competitors Moderate for SAS Figure 1. 1 First we will discuss the center force that drives competition: Rivalry Among Existing Competitors. In any industry (except for a monopoly), there is competition. If there’s not, investment will flow towards that industry until the market equalizes.

    SAS along with its competing firms are rivals in a monopolistically competitive market. The characteristics of a monopolistically competitive market include: profits in the short run, many firms competing, market power utilization, and zero profits in the long run. Though there are many competing firms in the market, SAS has differentiated itself from its rivals using product differentiation. This allows SAS to obtain a premium for their software applications, because customers are willing to pay the extra money for such a product that creates value for their organization.

    Next we will discuss the threat of substitutes and how they come into play with SAS’s product mix. The following could be considered substitutes for business analyst software: consultants, internal management controls, and internet resources. However, SAS’s customers probably do not utilize these substitutes because they find more cost savings in SAS’s software applications. This is why we have labeled SAS’s threat of substitutes low. The next force we will discuss is the bargaining power of suppliers. Most of SAS’s supply is generated internally from the knowledge and expertise of their employees.

    The only suppliers they rely on are boxing materials for their products, and the physical compact disks used to hold the software programs. Because these suppliers have little negotiating power, and SAS is regarded highly in its industry, the suppliers are probably the ones bargaining with SAS for their business. This allows SAS to leverage itself in regards to its suppliers, giving themselves the upper hand. For these reasons, we describe SAS’s bargaining power with its suppliers as being high. A key to a firm’s volatility of sales numbers depends greatly on the bargaining power of buyers.

    Buyers are a key stakeholder group that keeps firms afloat; they are the lifeline of the organization. The elasticity of a product has much to do with bargaining power. The demands for SAS’s products are not extremely sensible to price increases, meaning that they are inelastic for the most part. This gives their customers little bargaining power. This relates to the principle we mentioned regarding the value-added benefit SAS’s customers receive from their products. This benefit is high, and for that reason, bargaining power from the buyer’s perspective is low.

    They are willing to pay huge sums of money for products that benefit the sales numbers of their organization. Since SAS has achieved economies of scale in the business they’ve built, the treat of new entrants to the industry are only moderate. Though similar firms with similar products exist, the barriers to entry for new firms are extremely high due to SAS’s competitive advantage it has in its workforce. High barriers of entry suggest that a huge risk is taken on by companies who attempt to come into to play the market. SAS Resource Based Model Theory

    We can categorize SAS as using the resource-base model by the foundation of how the company assumes each of its individual components create the SAS company. The uniqueness of each in the organization, their resources and capabilities, contributes to the whole. Utilizing each component leads to the firms strategy of striving for above average returns. In order to fully understand this basis of how SAS uses the resource-based model we will discuss in more detail each of the components that creates the process of utilizing the theory. RESOURCES

    SAS’s two types of main resources are tangible and intangible. Their key tangible resources include: employees, valuable information, investments, and technical support such as computers and compact discs. Intangible resources include: Tacit knowledge of employees, patents, government copy write protection, reputation to employees and customers, product quality (software), and the SAS name/brand. Based off research from SAS’s company website, we’ve concluded these are the top four resources the company values and utilizes. Tangible Resources

    Employees are all treated equally, and communication within the organization is excellent. Employees also operate with a certain degree of anonymity. While SAS is very proud of its culture, only a select number of potential employees will be able to effectively work within its cultural environment. SAS’s organizational structure supports the corporate culture, which has been a key success driver. Valuable information of SAS includes knowledge and innovation of their employees. SAS recruiting strategy revolves around targeting employees based on their potential for fitting into its organizations culture.

    Its outstanding local and national reputation as an excellent place to work and its ability to develop a family-friendly culture of teamwork, both contribute to its abilities to recruit applicants who value its corporate culture. Investments include financial investments and cultural investments. SAS’s financially invests in other businesses by establishing powerful relationships with leading technology organizations. By combining their capabilities with others of high level industry dominants, SAS creates opportunities for large above average returns.

    Cultural investments would include the organizational culture SAS strives to maintain. The company mirrors a number of organizational characteristics described in the Robbins and Judge’s book including the decentralization of decision-making, flat and informal structure, organizational layers, and span of control, organic attributes, bureaucratic, and team structure organizational features. Larger organizations tend to have more vertical levels and departmentalization. Many of SAS’s characteristics defy the norms of organizations of its size.

    In order to maintain organizational efficiency, high-level managers have fewer direct reports. It is important to note that any changes to SAS’s organizational structure will have dramatic effects on its organization’s culture, and in turn employee morale. Lastly, the technical support of SAS includes the hardware the employees use to create the software. Computer and compact disc make the transition of newly created software easily accessible to their customers. Intangible Resources Because SAS is so critical and selective of their employees, tactic knowledge employees posses is a major resource and advantage they utilize.

    Due to SAS respectable reputation in the software industry, it is difficult for other companies within the same industry to compete. Maintain and keeping this knowledge is vital to the company. In order to maintain this dominant hold in the software industry SAS has the intangible resources of patents and government copyright and protection. By implanting these at an early stage in SAS’s creation, the patents and copyrights are constantly renewed or extended in order to keep SAS competitive threshold on their competitors. SAS’s reputation toward its customers, employees, and partners is what also creates its name brand.

    Having quality software products, an excellent customer support makes SAS the number one software supplier in the industry. Being a privately owned company, SAS is able to offer employees a 35 hour work week, and have many benefits on site such as complimentary healthcare services, childcare services, workout facilities, and leisure activities. Tangible Resources| Intangible Resources| Employees| Tactic Knowledge of Employees| Explicit Information| Patents, Governments Copyrights Protection| Investments & Bonds| Reputation to Employees and Customer| Computer & Customers| Product Quality Software | SAS Brand Name| CAPABILITIES Once SAS has pooled together all their resources in an effective manner; they have successfully created their capabilities associated with the company. Human resources, strong management leadership, company seminars, cross-function teams, and research and development form the core capabilities of the corporation. Human capital is by far the most significant of the organizations capabilities. Strategies in recruiting and maintain their employees, as discussed earlier, are vital to SAS utilizing their resources in order to create and maintain this capability.

    Jim Goodnight, SAS’s CEO and founder, has created a workplace cultural with strong ethics and leadership styles. Having strong management to organize and delegate the companies resources effectively and tastefully make the capabilities of SAS work together and form quality products. The process isn’t degraded by mishaps or setbacks. Cross fictional teams work independently on their own projects, and once completed work with a different group to form specialized and customizable software for their customers. By having the knowledge to utilize these resources they can successfully transfer it among their other business units.

    SAS’s research and development team take innovated steps in keeping SAS the leader in software creation. Maintain and recruiting top employees from in-house referrals and around the country help develop the sophisticated quality software solutions the company provides. With digital technology rapidly growing, and more consumers moving toward a paperless, wireless lifestyle, SAS continues to have rapid transformation of their innovated technologies into their software products. This type of digitally technology is a core and vital capability to maintain competitive advantages in their industry.

    Every year, SAS provides a multiple of seminars for their employee, consumers, and investors. By having these workshops, SAS maintains strong relationships with each of their main stakeholders. These seminars range from training workshops on their products, leadership and management skills, to why investing is SAS is a great tool and financial reward for prospective partners. CORE COMPENTENCIES SAS’s core competencies are their capabilities that serve as a competitive advantage over firms in their same industry. It distinguishes them competitively and reflects the personality of the company.

    These evolve over time. There are four specific criteria of sustainable competitive advantage that we use to determine SAS’s core competencies: valuable, rare, inimitable, and non-substitutable. Valuable As we continue to see, employees of SAS are extremely value and rare to acquire. They are provided with many great benefits and incentives, it is extremely rare they quit or voluntary leave the company. Retaining these knowledgeable and innovated employees is human capital for SAS, and many competitors cannot compete, much less imitate these employees.

    The differentiation SAS Company provides is rare in the fact that no other company has been able to compete on the level SAS has. Their entire work culture and organization in their business creates such a huge margin from direct rivalries in the industry, thus creating the valuable brand name. Worldwide, SAS is known as the number one in software technology and innovated leader in software technology creation. Their brand name is worth much more than the company itself, and by this no competitor can compare. The brand name has created value and a respectable impression of the company and thus allocates it as a core competency.

    Rare The research and development SAS’s employees provide is a rare commodity in the software industry. Having their employees on an open basis where new ideas and critical thinking are free of judgment, continually creates the innovate software the company provides. This tactic knowledge of employees makes this core competency rare in the fact that it is hard to find. Again, the patents and copyrights of the ideas and process of SAS are mirrored in their competencies for competitors are unable to legally acquire them.

    Inimitable The human resources SAS provides, such as free healthcare, an easy stress free working environment and many other benefits make it inimitable. Because SAS is a privately owned company, it is able to offer its employees more option when working for the company. It doesn’t have to worry about healthcare premiums, and employees are more at ease knowing they are provided with an abundant of free resources (as stated earlier, healthcare, childcare, professional mental support, leisure activities, etc. ).

    Therefore, SAS takes a passive approach in regards to recruiting and focus efforts on areas within the Southeast. SAS primarily relies on employee referrals, internal promotions and newspaper advertisements for more than 70 percent of its hires, and more than 40 percent of its hires come from referrals and internal promotions. Also, SAS’s primary relies on its reputation to attract talent, and its strategy of using its reputation works. SAS also recruits from local universities to find candidates who are interested in working in North Carolina.

    Non-substitutable The CEO and founder, Jim Goodnight supports the informal flat structure. He is closely involved with all hiring and position tracking activities within SAS. Mr. Goodnight wants his employees to run their own areas, and his leadership style supports a decentralized decision-making processes. Mr. Goodnight interferes as little as possible with departmental functions, but his number of direct reports implies otherwise. Moreover, SAS relies heavily on Jim Goodnight’s individual abilities.

    If the company ever requires a new CEO, its organizational structure would be difficult for someone other than Mr. Goodnight to imitate. Business-Level Strategy: In determining the type of business-level strategy SAS has, it appears they follow a focus differentiation strategy to gained success. They mostly focus on computer market solutions and research for companies that need information to help them develop their competitive advantages, help plan their next year’s sales, or help them figure out if their strategies are working.

    SAS is also differentiated by the technology they use to produce such results. In determining the relationships with their customers, the reach, richness, and affiliation of what they do will be related upon. SAS’s reach is great. They have many connections with customers to satisfy their needs. SAS transforms the companies’ raw data into essential intelligence needed for them to conduct their business, and they do this by delivering the technical solutions and services the companies need. SAS’s richness is very in-depth with the knowledge of their industry.

    Their consultants are the best in the field, and their immense knowledge and real world experiences help manage the results of their projects with their clients. SAS’s affiliation with their customers is vast. Their consultants take the time to meet and sit with the client, and listen to what exactly they are looking for and needing to get done. Their consultants take the time to learn about their clients company’s business challenges, and goals to help them establish a strategic advancement for the company.

    By doing in-depth learning of their client and client’s needs, this enables the consultants to deliver the right SAS technology and tailor their services to solve companies’ unique business requirements. SAS has of course focuses on the computer market solutions. To help them make sure that they are able to reach to everyone, they have split the market into segments. Here is a chart of their segments they have split the computer market solutions into and with a few companies they have categorized to go under those segments. Industry| Companies|

    Banking| Bank of AmericaViseca Card ServicesVUBAnd more…| Capital markets| GE MoneyHua Nan FinancialHolding Company IDS GmbHAnd more…| Communications| Telekomunikacja PolskaVerizonVodafone GlobalInformation SystemsAnd more…| Education| ACTBryant UniversityKennesaw State UniversityAnd more…| Government| Rhode Island Department or RevenueState of Wisconsin Department of RevenueThe HagueAnd more…| Health Care| Clinton Health Access InitiativeExcellus BlueCross BlueShieldHorizon Blue Cross Blue Shield of New JerseyAnd more…| Insurance| EurovidaFCCI Insurance GroupMax New York LifeAnd more…| Life Sciences| AstraZencaLillyLivzon Parmeceutical GroupAnd more…| Manufacturing| AstraZenecaGE Consumer& IndustrialTransitions OpticalAnd more…| Retail| Chico’sRedcats USAShopper’s StopAnd more…| Services| Dun & BradstreetFairmontVenetianAnd more…| Utilities| ConocoPhillips NorwayEDF EnergyLubrizolAnd more…|

    In determining what needs to satisfy for their customers, SAS has implemented many solutions for companies to choose from. These solutions help the companies to succeed, change, or even find a new competitive advantage. Here is a chart of solutions they implement and some services they due under them. Solutions| Services| Business Analytics| | Compliance| General, Anti-Money Laundering, Basel II| Corporate| General, DataFlux| Customer Intelligence| General, Credit Scoring, Cross-Sell/Up-Sell, Customer Analytics, Customer Retention, Customer segmentation, Interaction Management, Marketing Automation, Marketing Optimization, Marketing Performance Management| Data-Driven Decision Making| | Drug Discovery and Development| | Enrollment Management| |

    Financial Intelligence| General, Activity-Based Management, Capital Allocation and Management, Financial Reporting/Planning| Fraud Prevention and Detection| General, Claims Fraud| Health and Condition Management| | Human Capital Intelligence| General, Human Capital Management, Predictive Workforce Analytics, talent Scorecard, Workforce Budgeting/Planning| Information Management| | IT Management| General, Charge Management, Resource Management, Service Level Management| Merchandise Intelligence| General, Merchandise Planning, Revenue Optimization| OnDemand Solutions| | Partners| | Performance Management| | Profitability Management| Customer Profitability| Ratemaking| |

    Risk Management| General, Asset/Liability and management, Credit Risk Management, Firm-wide Risk, Liquidity Management, Operational Risk Management| Service Intelligence| General, Service Parts Optimization, Warranty Analysis| Strategy Management| | Supplier Intelligence| General, Sourcing Data Quality, Spend Analysis| Supply Chain Intelligence| General, Demand Management, Quality Lifecycle Analysis| Sustainability| | Web Analytics| | SAS’s core competencies are what make this company successful. It didn’t take SAS long to figure out what was necessary to satisfy their customer’s needs. As discussed earlier in resource base model, it is plain to see that SAS’s employees are a key ingredient to their overall accomplishments. Without their knowledge and dedication to their job, SAS would not be what it is today. Another key success to the company is their top management.

    Without them giving their employees the atmosphere they have now, their employees would not have been motivated to do their job, able to come up with the software their clients are expecting. Recommendations: Since its birth in the 1980’s, SAS has been a 100 percent privately owned entity. There are no public shareholders and SAS has no future plans of going public. That statement is assumed, however, as if there would be no benefit to the company to publish this sort of information in the event that there were plans of going public. Being private is a competitive advantage SAS holds against its rivals as most other large software consulting firms are public entities. Staying as a private company is a key to SAS’s continued prosperity, and this is our first recommendation.

    There are many advantages to being a privately held company; the main one is the benefit of not having to report to shareholders. Though SAS has a Board of Directors, many of its key decisions revolve around the judgment of the CEO, Jim Goodnight. Furthermore, unavailability of company resources are a mystery to the public and competitors alike. Our second recommendation has to do with future succession planning of SAS Corporation. Though Mr. Goodnight probably has this subject under control, there is no public information about his succession plans. We recommend that the company bring in a team of outside consultants, including succession experts and attorneys, who have experience in succession planning. These attorneys and consultants should review Mr.

    Goodnight’s succession plan to make sure that SAS has a bright future ahead of them in the event of the unexpected death of the CEO. The livelihood of SAS’s stakeholders, including customers, employees, and the community, to name a few, rests in the hands of Mr. Goodnight’s succession plan. Our next recommendation suggests that SAS strive to keep its corporate culture intact. The happiness of their employees has much to do with Mr. Goodnight’s business decisions over the years. In order to sustain their happiness, SAS should continually keep their employees in mind and continue to establish incentives to attract and maintain the highest quality workers.

    Though it is expensive to implement new amenities and value added incentives for employees, it is vital that SAS continues to be generous to its employees In the beginning we mentioned that SAS’s success is based on how the company’s products add value to deficient markets by allowing customers to potentially increase their profits by up to 67 percent by implementing and utilizing their business enhancement software. With that said, we recommend that SAS continue to set aside up to 20 percent of their profits to the research and development department. This is vital to furthering value added resources available to its customers. SAS is able to receive a premium for their software packages because of the lack of equivalent substitutes available. With the service that comes along with the application purchase, customers feel that the benefits ultimately outweigh the costs in regards to improving their firm’s success.

    Ceteris Paribus, benefits that outweigh costs, is ultimately all that matters when it comes to customer’s perspectives of a product, not matter what that product may be. Our last recommendation has to do with the following saying: “Don’t fix it if it aint broke. ” This is referring to SAS’s ability to utilize its resources to create acquisitions and mergers. SAS should avoid large acquisitions and mergers at all cost, that is unless the project is more than 90 percent likely to add significant benefit to the company. Going by this rule, the company would reduce its level of risk and “economy proof” itself. However, the company should continue to advance and enhance their current partnerships, and continue to move forward with new and valuable partnerships.

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