Steve Shamrock, an experienced businessman, launched Cyberplay as an educational, high-tech computerized family “edutainment” center - Cyberplay Essay introduction. Steve had exceptional people skills that enabled him to raise money for Cyberplay among family and friends. Cyberplay promptly won several national awards for retail store design and technological innovation in education, and was featured in the several business magazines. The company prepared to rapidly deploy 200 stores.
After two years, only two stores were open and it was apparent that the original business concept was not going to work. Cyberplay had a competitive edge that it could maintain until other trainers started offering the same accommodations. One of the greatest threats to Cyberplay was the constant lowering of computer prices, enabling potential Cyberplay customers to buy their own computer systems and play the games at home. The company made a strategic shift to corporate software training, and quickly garnered some major contracts.
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The implications of this shift were profound on core competencies, organizational structure, staffing, marketing, capital commitments etc. The case picks up with Shamrock trying to sort out what must change and what can remain the same. These dilemmas are compounded by the strong corporate culture, and cash flow concerns. Moreover, Cyberplay is contemplating whether it should take its training online, and if it does, what further changes would be required.
The cash burn rate was about $250,000 per month and the company’s capabilities no longer seemed to match its strategy. Statement of Problem Cyberplay has incurred significant losses during its first three years in business with losses of approximately million of dollars that being lost within the past year alone. The company had defaulted on million of bank debt and of corporate debt putting it in desperate straits in terms of keeping its doors open and repaying its obligations Cyberplay needs to turn its business around start making a profit and pay off its debts.
Proposed Solution Cyberplay billed its clients on a per-student per-course-taken basis; hence, it needed to be working with its clients to ensure that employees received the training. Cyberplay has a chance to recover its losses and begin making higher profits if it locks in its corporate customers to longer contracts (1-5 Years) and uses the extra money for a dual purpose-paying off its debts and developing new training paradigms that it can patent. Learning Application
Corporate-level strategies are important to the diversified firm because developing and implementing multi-business strategies is necessary for effective utilization of excess resources, capabilities, and core competencies that have value across multiple businesses. Product diversification concerns the scope of the industries and markets in which the firm competes, and how managers buy, create and sell different businesses to match skills and strengths with opportunities presented to the firm.
Value can be created through either related or unrelated diversification if the strategies enable the firm’s mix of businesses to increase revenues and/or decrease costs when implementing business-level strategies. Low firm performance, uncertain future cash flows, and opportunities encourages diversification to reduce overall firm risk.
(“Cyberplay Strategy”) Cyberplay Strategy. Retrieved from http://nacra. net/nacra/abstracts99/strat99. htm (“Cyberplay Debt”) Cyberplay Debt. Retrieved from http://articles. orlandosentinel. com/keyword/comdex/recent/3