I like to start the semester with a “ripped from the headlines” case. This is especially helpful if some of one’s cases are older. This semester, Zoom is a great alternative. The current market capitalization is about $80B which puts it well above many more established companies (including the combined value of the 7 largest airlines). I have compiled a short packet of news articles for the case. In addition, I have created a spreadsheet that guides students through key scenarios and how they would affect the value of the company (Do rivals match on quality? Is there a price war, Does Zoom keep innovating?). This highlights how qualitative analysis affects assumptions in quantitative models. It is also an introduction to decision trees as a simple tool for modeling complex sources of uncertainty (this is available in a separate instructor spreadsheet that uses PrecisionTree to model the uncertainty). The Zoom context hits just about every key aspect of a strategy course so you can circle back to it repeatedly:
- What is Zoom’s strategy? I use the strategy diamond framework (arena, vehicles differentiators, staging/pacing…) but one can use a standard set of questions to explore this.
- Trends/PEST. The industry was growing at about 10% — what were the drivers of this and how will this change in the future?
- Industry analysis:
- Why was the videoconferencing market attractive (pre-COVID)? (e.g., network effects, value produced)
- How did COVID change the market attractiveness?
- Rivalry: Competitors like Microsoft and Cisco are putting substantial resources into their products. Will they match the quality? Will there be a price war?
- Evolution: How will the industry change going forward?
- Resources and Capabilities:
- Why has Zoom been so successful even before the COVID pandemic?
- Why has Zoom been more effective than rivals during the pandemic?
- Will they be able to keep up the rate of innovation after COVID?
- Corporate strategies. Do business portfolios confer an advantage to rivals?
- Consider Microsoft’s complementary assets (e.g., MS Office) – Why might they be important?
- Consider Cisco’s complementary assets (e.g., enterprise networks) – Why might they be important?
- Zoom has entered the hardware industry through multiple alliances with DTEN, Poly, NEAT and others. Evaluate both the strategy to enter the hardware arena and the vehicle (alliances).
- Zoom’s global strategy? Zoom has operations all over the world. What is their global strategy? Is it sound?
- Technology/Entrepreneurship. Of course, these are key aspects of the context. Why did Zoom CEO, Eric Yuan, leave WebEx? Why did his nascent company do so well against established, well-resourced, rivals.
There are many videos you can bring into this including (Thanks to Rich Makadok for suggestions):
- How Microsoft Ruined Skype (11 min)
- Zoom company story: How Eric Yuan defeated Skype (11 min)
- Lots of zoom humor on youtube…
Contributed by Russ Coff