The current strategies and mission of Red Hat

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Red Hat, Inc refers to an American software company involved in providing open-source software products to the worldwide community.

The technology industry is one of the most competitive sectors of the economy. Firms operating in this industry face various obstacles and their survival depends on how they adapt to changes. Red Hat is one of the key players in the industry, being a worldwide provider of open source solutions to consumers. Some of the popular products offered by Red Hat include the Red Hat Enterprise Linux, which is a core enterprise operating system; Red Hat middleware; and Red Hat JBoss. The firm also offers virtualization, storage and cloud computing products. Unlike other technology companies, such as Microsoft, Red Hat uses the open source development and licensing approach, which deploys a collaborative effort from the global community to improve its software. The company actively engages in such community-oriented development process, frequently in a leadership role. In addition, the community-oriented development process enables the company to improve its technologies (Hendrickson, Magoulas, O'Reilly, 2012). In relation to this, the paper discusses both internal and external analysis of Red Hat. In addition, this study will also discuss the SWOT analysis of Red Hat.

External Analysis of Red Hat, Inc

This paper uses the PESTEL analysis to study the general external environment of Red Hat. PESTEL refers to Political, Economic, Social, Technological, Environmental and Legal (PESTEL) factors that affect the business (Hendrickson, Magoulas, O'Reilly, 2012). The business has no control over these external factors and they affect the business differently. This implies that the external environment of Red Hat, just like other businesses, comprises of the external factor, which it cannot control. As a result, Red Hat needs to adjust to these factors in order to remain operational in the competitive technology industry.

Political factors affecting the operation of Red Hat in any given region refer to government policies, which might include its involvement in the economy (Koch, 2005). Government’s intervention in the economy has various effects on many businesses and Red Hat is not an exception. For example, some governments might regulate the production of certain goods by imposing huge taxes. On the other hand, some governments might subsidize firms to increase the production of certain goods. Governments that subsidize firms provide conducive business environments, therefore, improving their economy. Some governments might priorities their support for businesses as stated in the policies. Governments that tend to support technology firms will provide suitable business environment for Red Hat, which will enable it to grow and increase its market share. Some political decisions might significantly affect many vital areas of the business such as health, education of the workforce and infrastructure quality, such as telecommunication. If a government’s decision affects the health of the nation, then many customers will tend to prioritize their spending by acquiring medical services (Hendrickson, Magoulas, O'Reilly, 2012). This, in turn, will affect the demand of technological goods or services, which can be detrimental to firms such as Red Hat.

Economic factors are another component of the external environment that might affect the operation of Red Hat (Feller, Fitzgerald, Hissam, Lakhani, 2005). These factors include changes in taxation, interest rates, inflation, economic growth and exchange rates among others. Economic changes have significant effects on the operation of Red Hat. Higher growth in national income might boost the demand for Red Hat’s technological products and services. On the other hand, inflation provokes higher wage demands among employees. This has the effect of increasing production costs and reducing profitability of the firm. High interest rates hinder investment because it is costly to borrow capital. This results in slow growth of businesses. In addition, a strong currency has the effect of making exporting difficult, since the currency raises the price in terms of foreign currency (Hendrickson, Magoulas, O'Reilly, 2012).

Social factors are the third component of the general external environment of the Red Hat Company. The factors can also be referred to as socio-cultural and they refer to all areas involving shared attitudes and beliefs of the consumer population. According to Feller, Fitzgerald, Hissam, Lakhani (2005), socio-cultural factors refer to changes in social trends and they have an effect on the demand for products. Social factors also affect the willingness of individuals to work. The factors include age distribution, population growth, health consciousness and career attitudes among others. Socio-cultural factors tend to have a direct impact on how marketers of a product comprehend customers. Some countries, such as the UK, have an ageing population, which has an effect on increasing costs of production through payment of pensions (Koch, 2005). This is because firms operating in regions with ageing population have personnel that live long. As such, Red Hat needs to put into consideration the social factors of region before expanding its business. The United States has a distributed growth of population, which is a suitable factor for the Red Hat Company.

Technology is another component of the external competitive environment. Technological innovations have various effects; for example, new technology can result in the creation of new product and simplified production process (Feller, Fitzgerald, Hissam, Lakhani, 2005). Innovations such as MP3 players, online gambling, computer games, and high definition televisions are some of the new markets that resulted from advancement in technology. The invention of bar coding, online shopping, and computer-aided design are some of the improvements that have affected the way firms conduct businesses. Technological innovations can cut down production costs, enhance the quality of a product or service and lead to other innovations. The innovation not only benefits companies but also consumers. However, technology can also come with disadvantages and it can even result in the termination of a business. For instance, an innovation might result in unemployment. Companies that have latest technologies tend to have competitive advantage over other firms in the same industry. Firms such as Microsoft might be a threat to Red Hat because they have sufficient technology that serves as a competitive advantage.

Environmental factors refer to weather and climate of the region in which the company operates. With the occurrence of climate changes resulting from global warming, environmental factors are becoming a major consideration for firms. The growing desire by governments to protect the environment is having effects on many industries. As such, governments place more taxes on goods and services to deal with the changes in the environment. In addition, governments across the world tend to initiate measures that promote the production of environmentally friendly goods. Red Hat might suffer from increased taxation, directed towards making the environment conducive.

Legal factors refer to legal environment in which the company operates. They include equal opportunities, health and safety, consumer rights and laws, product safety and labeling and advertising standards (Hendrickson, Magoulas, O'Reilly, 2012). It is apparent that firms need to understand what is constitutional and what is not constitutional to trade successfully. However, firms that trade internationally, such as Red Hat, experience some difficulties in understanding what activities are legal. This is because every country has its own set of laws and regulations. Red Hat has no control over the components of external environment; therefore, it should adjust its trading activities to compete successfully.

Industry Dynamics and Competitors of Red Hat

The open source software model emanated from academic and research environments. Collaborative development of software provides a basis for the open source model deployed by Red Hat (Red Hat, 2012). Software developers develop the code or obtain the components from other vendors under the proprietary software development model. The vendor only authorizes to the user the object code version of the software, having no or limited rights to copy, inspect, modify or redistribute the code. The growth of internet has substantially increased the level and efficacy of open source software development via the presence of collaborative technologies such as code repositories and email lists (Red Hat, 2012). These technologies have allowed large communities of independent software development to collaborate on sophisticated open source projects.

Red Hat competes with various large and well-established firms, which have substantially greater financial resources, large development personnel and widespread marketing distribution abilities. Competitors of Red Hat include other firms in the technology industry, such as Oracle and Microsoft. Each of these competitors has its own hardware-independent and multi-user operating system that offers competition to what Red Hat offers. Other competitors include IBM, HP and Unisys Corporation and they offer the UNIX operating system with their own hardware and other additional software. This poses a challenge for Red Hat to penetrate the customer base already established by these firms. Citrix System, Inc. offers virtualization products that serve the same as those offered by Microsoft, Red Hat and VM ware. Because of the stiff competition, Red Hat does not have an assurance that efforts to compete will be adequate. These competitors have various advantages that hinder the growth of Red Hat. As aforementioned, such competitors as Microsoft have huge customer base, a lot of personnel and adequate capital that serves as a competitive advantage.

Internal Analysis of Red Hat (SWOT)

The internal analysis of Red Hat involves examining its Strengths, Weaknesses, Opportunities and Threats (SWOT) (Feller, Fitzgerald, Hissam, Lakhani, 2005). Red Hat has various strengths that are necessary for surviving the stiff competition. The first strength of Red Hat is the massive programming expertise. The company has huge pool of about 120000 programmers globally. The programmers are distributed worldwide. The open source model is self-scaling since the more important the project is the more programmers will want to be affiliated. Another strength of Red Hat is the research and development activity covered by volunteer labor (Hendrickson, Magoulas, O'Reilly, 2012). The volunteer labor saves Red Hat huge amounts of money as compared to firms that develop their own operating systems. Some studies indicate that companies developing their own operating systems spend approximately 80 million dollars yearly in conducting research and development studies. Many programmers contribute to Red Hat out of personal interest or as a hobby. The quick release rate of software is also the company`s strength (Koch, 2005). Red Hat releases patches and fixes very quickly. For instance, their software version of 2.0 might iterate about 34 versions within two years. The culture of sharing gives Red Hat a competitive advantage over other companies. The GNU General Public License has encouraged programmers to share.

Red Hat faces various weaknesses, which makes it vulnerable to elimination from the industry (Red Hat, 2012). The first weakness of the company is the lack of “ownership.” Many software users want some accountability and a proprietary firm seems more tangible than “open source.” This is because these proprietary companies can position themselves as trusted caretakers. For example, Microsoft uses a marketing technique known as the Fear, Uncertainty, and Doubt (FUD). The technique uses gossip and casts doubts on individuals who intend to change their technology product`s supplier. Another weakness of Red Hat is the less user-friendliness because of its weak Graphical User Interface (GUI) (Koch, 2005). Red Hat might have been developed for programmers instead of the non-technical users.

The company has various opportunities that need exploitation. The first opportunity is internet connectivity (Red Hat, 2012). The productivity and number of open source programmers increases with the increase in internet connectivity. The availability of internet connectivity has enabled Red Hat programmers to contribute on daily basis. The increase in internet connectivity will continue expanding Red Hat and other open source projects by availing the software to a larger number of people worldwide. Internet components, such as websites and email lists, have also encouraged the growth of open source. Many distributors are another opportunity that Red Hat possesses. Distributors provide Red Hat software packages with various integrated tools and they act as an intermediary between customers and the quick development of software. In addition, Red Hat distributors escalate the operating systems’ evolution by adding features as they compete against each other. This improves the product and saves on advertising costs. The competitive support structure is an opportunity for Red Hat (Red Hat, 2012). The openly available source code for Red Hat and other open source projects allow sellers to learn the open source platform and provide necessary structure. The quality of support increases because sellers of Red Hat products compete to provide support. In addition, the support structure of Red Hat is self-scaling. This implies that the more users that become accustomed to the open source software, the more they learn and become able to support each other.

The company faces threats that pose some risks of elimination from the industry (Hendrickson, Magoulas, O'Reilly, 2012). The first threat is the risk of fragmentation. Code fragmentation occurs when many incoherent versions of the code of the project are evolved. This might take place when programmers attempt creating alternative ways for a code to play a more primary role than in the base product. The lack of compatible applications is also a threat to Red Hat. The number of software written to Red Hat is increasing at an unbalanced rate compared to the rate of other operating systems. Many companies choose software that meets their requirements before choosing an operating system that suitably supports this software. As such, the more famous the software, the more the users being trained (Feller, Fitzgerald, Hissam, Lakhani, 2005). The Red Hat Company needs to convince the users of its application that their applications are compatible to other operating systems. Corel is one of the companies that have released an application compatible to Red Hat. Sun Microsystems released the StarOffice, which is compatible to Red Hat. Another threat is the need for version regulation. Version regulation can emerge as issue if the system demands integration and involvement. As such, Red Hat programmers need to ensure that integrated application versions are compatible.

Competition is a crucial threat to Red Hat. This is because it possible for other companies to initiate strategies focused against Red Hat (Red Hat, 2012). The success of Red Hat has labeled it as a competitor in the industry. Companies, such as Microsoft, have created a formal competitive assessment and a strategy focused against Linux’s open source model, including Red Hat (Hendrickson, Magoulas, O'Reilly, 2012). The Microsoft’s internal strategy memorandum gives an evidence of the strategy against open source movements (Feller, Fitzgerald, Hissam, Lakhani, 2005).

Strategies of Red Hat

The first strategy of Red Hat is to increase the adoption of its technologies globally (Red Hat, 2012). The rising numbers of users perceive Red Hat JBoss Middleware and Red Hat Enterprise Linux as conventional enterprise technologies meant for critical areas of IT infrastructure. Many users deploy Red Hat JBoss Middleware as a complete middleware. The company seeks to foster further use of its technologies via expanding the depth and breadth of service and product offerings (Red Hat, 2012). The company intends to stick to this strategy by developing products that can support high computing, storage, high performance and messaging. As such, Red Hat proposes that it will bring new management services to aid in marketing, improving the infrastructure of technology and offering expanded services to organizations. In addition, Red Hat also intends to foster users of free application versions to become paying subscribers by assisting them comprehend the value of subscriptions offered. Another business strategy for Red Hat is to continue expanding their cloud computing services and products.

The company intends to control and improve its technologies in order to improve performance and private, public, and hybrid cloud computing environments (Red Hat, 2012). Red Hat continues expanding virtualization, storage and other platform products as a strategy. According to Koch, (2005) the company is channeling resources towards developing virtualization suite of clients, servers and management products. This will allow customers to increase their use of virtualization in business environments. The expansion of routes to the market is another strategy. Red Hat expects to achieve this by growing their direct sales channel and networks on universal grounds. Additionally, the company is improving relationships with various system integrators, which will enable it to reach customer relying on system integrators.

As opportunities arise, Red Hat anticipates continuing to pursue discerning acquisition strategies to expand and complement its products. As such, developing strategic alliances is of great significance. The firm also plans to continue growing its presence in the worldwide market. Currently, Red Had operates in America and Asia and it has over 75 offices internationally. As such, the company plans to spread its operations geographically and exploit the international market (Red Hat, 2012). Lastly, the company plans to continue investing in the creation of open source technologies in areas such as messaging, cloud computing, virtualization, real-time computing, management, middleware and security among others. The strategies of Red Hat are extremely important since they serve as a shield against threats that pose risks of elimination from the industry. Sticking to these strategies will guarantee the survival of Red Hat in the competitive technology industry (Red Hat, 2012).

Recommendations

In order to remain competitive, the Red Hat Company needs to leverage on some strengths. The first strength that it should capitalize on is the research and development covered by volunteer programmers (Koch, 2005). This will increase the competitive advantage of Red Hat by cutting down production costs. Many companies in the technology spend huge amounts of money paying hired programmers, which increases their operational costs. The research and development studies will also enable the firm to develop products that meet the consumer needs. This will increase their profitability and, hence, their survival in the competitive environment. Red Hat should also leverage on the culture of sharing. Open source software development model eliminates the loss linked to duplicated work. Many computer problems in engineering cut across a wide range of applications and fields. By leveraging on this strength, Red Hat will not experience economic waste that tends to hurt the productivity of companies in the US. It can also acquire a competitive advantage by leveraging on this strength (Red Hat, 2012).

In relation to strategies, Red Hat needs to concentrate on developing user-friendly operating systems. This will enlarge its customer base, which will increase its profitability. Currently, many people shy away from using Red Hat due to its command line nature, which requires proficiency. In addition, many people also feel that Red Hat only meets the needs of programmers and is useful in mission-areas such as large organizations. Developing a strategy that will lead to a production of a user-friendly applications and software will increase the company`s profitability.

Conclusion

Red Hat operates in a competitive environment that requires the deployment of strategic management. It has various strengths that are competitive advantages. The first strength of Red Hat is the massive programming expertise. Other strengths include research and development, volunteer labor and quick releases. The company also faces some weaknesses that pose risks of elimination. Examples of the weaknesses include lack of “ownership” and less user-friendliness. Opportunities available to the firm include internet connectivity, many distributors and competitive support structure. Threats that also pose risks include competition, fragmentation and lack of compatible applications. The company has initiated various strategies that will ensure survival in the competitive technology industry.

This article is written by Scott Allen who is an editor at https://exclusive-paper.net/24-hours-essay.php

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