Digital Divide Data

Introduction 

Digital Divide Data (DDD) is a social enterprise which began its operations back in 2001 with a small office in Phnom Penh with their first contract to digitize the Harvard Crimson. The company came into being when one of its co-founder and CEO Jeremy Hockenstein visited Cambodia and saw the effects of poverty first hand (Digital Divide Data) . He took up the challenge to provide an opportunity for the youth of Cambodia to continue their education system by providing them with scholarships and allowing them to work at the company during the four years in college. The initiative was purely for social advancement and not profit generation. 

Following its successful ventures, the company has opened two additional offices in Battambang and Laos. Seeing the change its initiative has brought among its target communities; the company would like to further expand into a global enterprise. The reason for the expansion is to scale up its social impact globally. However, it faces logistical challenges in its bid to expand. The company wants to adopt a strategy that is less costly regarding infrastructure and resources as compared to when starting a new site. The strategy it sticks with, will determine the future of the company and as such requires careful analysis before first deciding on the way to go. 

Problem Identification 

DDD has faced several challenges in its established enterprises in Cambodia and Lao. In Cambodia and especially in Phnom Penh, DDD faced challenges concerning human resource management. The economy of Cambodia had grown significantly before the global financial crisis. Many businesses were established in Cambodia all of which demanded professional management. The shortage of experience managers was magnified with the increase of businesses. Given the limited financial resources for DDD, it could not compete with others in the market for the limited local management talent. The only leverage it had was its mission which worked in some instances. 

The company’s training program produced talented managers and high-performing operators. At the same time, the Cambodian IT industry was growing rapidly hence an increase in demand for personnel with IT knowledge. In the middle of all this, DDD found it difficult to maintain its trained managers and operators (Anju, Grete, Jaime, & David, 2009) . The trainees looked for greener pastures elsewhere where they would earn higher salaries as compared to what DDD could offer them. 

Human resource, therefore, posed a great challenge for DDD even as it expanded into Lao. It was hard for the company to get skilled managers and because they were in demand, they were also quite expensive. The nature of human resource DDD needed was beyond the ability to meet technical requirements of the job description. Such a person should be equally passionate about social mission advanced by DDD, something which proven to be a challenge. 

Infrastructural challenges, especially in Battambang, made it difficult for it to carry out its operations. The significant difference in development between Battambang and Phnom Penh made movement between the towns difficult (Anju, Grete, Jaime, & David, 2009) . The roads were in bad conditions and were unpassable during the rainy season. Supply of electricity was unreliable, broadband connections were extremely expensive and limited private sector support. These challenges meant that some business could not be done at Battambang for the uncertainty as to whether the job will be completed and sent to the client on time. 

The infrastructural challenges made it difficult to transfer skills from towns and the managers in Phnom Penh were unwilling to transfer to rural Battambang. Recruiting locally was a challenge because those with skills moved to the city. On a brighter side, retention of human resource at Battambang was not a problem because it was the sole IT Company at the time. 

The realities of the educational system in Cambodia proved to be challenging for both the offices (Anju, Grete, Jaime, & David, 2009) . The education system concentrated more on theory and was lecture based rather than interactive, and it was common for students to have attended classes for several semesters without actually interacting with an actual computer. The level of education varied and in Battambang recruiting high school graduates proved challenging because the quality of education was lower compared to Phnom Penh. 

In Lao, getting business for its services was challenging. Lao is less developed than Cambodia and demand for the nature of services they provided was very little. Finding business locally was hard and the company had to use its NGO network to capture sales. Local businesses only came on board once DDD proved that its western and European contracts were successful. 

The company faced additional operational challenges. Competition in the market to get lucrative contracts was stiff. In areas where it could not deliver, it had to outsource and learn from experience. The social component gave it an advantage when bidding, but because its operations were rural, it proved challenging to have a standardized project management system. This, in turn, limited its potential profitability. 

Internal analysis 

Mission, Vision and Core Values Discussion 

The company was founded with a vision of; the world in which youth develop themselves through education and employment. Its mission is to create a better future for disadvantaged youth in developing countries through employment in financially sustainable businesses. It is founded on four core principles; a positively motivated workforce, a collaborative environment, people empowerment and a high performing organization (Digital Divide Data) . 

Key Resource Capabilities 

The company has access to; tangible, intangible, and human resource (Helfat & Peteraf, 2009) . Its resources capabilities make it one of the largest social entrepreneurial companies globally. Some of the tangible resources include its physical resources and financial resources. DDD has three offices so far, two in Cambodia and one in Lao. Its financial resources are generated mainly from donations towards its social course and money from the contracts it gets especially from the western countries. The financial resources are limited, and in some instances, it has crippled its operations. It has difficulty maintaining its human resource or even employing talented managers because of financial constraints. 

Intangible resources are attributes of the company’s reputation, and technology (Helfat & Peteraf, 2009) . The company prides in its social agenda to better the lives of youths in developing countries, and this has given it an edge even when bidding for contracts against other companies with a similar set of skills. 

The company still faces human resource challenges with regard to getting the best and maintaining some of its trained managers and operators because the company is not able to cater for their financial needs (Helfat & Peteraf, 2009). This can be partly attributed to the financial constraints as well as the nature of the company. Getting people who are passionate about its driving agenda can prove challenging at times. 

Strategic Group Map 

DDD has had to compete with much larger IT providers such as Aptara, SPI Technologies and Apex Data Services for international contracts. Because of its small size, partnerships proved to be important to the company. These partnerships have helped it compete with the likes of Apex for international contracts. 

Competitive Strength 

Financial constraints proved to be the greatest challenge. The level of its financial resources put it in a position where it could not compete with other companies for the limited human resource available. The human resource it trained, moved on to better-paying companies. The financial constraints have been the biggest challenge for DDD which has, in turn, resulted in other challenges. 

Financial Ratio/Cash Flow Analysis 

The company relies on donor funding and the success of it contracts especially from the west. The money is used to finance the operations of the company and to give scholarships to the students under its programs. The cash generating activities are few and cannot sustain the needs of the company fully. 

Strength and Weakness Assessment 

The strengths of the company (Thompson, Strickland, & Gamble, 2007) include its ability to deliver on its projects fully and also its ability to accept challenges which may be difficult to deliver and to outsource where necessary. The company has a very strong drive behind it which is to improve the lives of youth in developing countries, and it has success stories to show for its dedication to ensure it achieves whatever it was set out to do. This is a major strength as it has been a way of getting finances through donor funding and even creating meaningful partnerships with others who believe in its work. The major weakness for the company is majorly the financial constraints. 

External Analysis 

Environmental Analysis 

DDD is a technology company with a social agenda. It places it in a unique position in the competitive market of IT. The profitable nature of the business attracts new entrants every day which present a threat to the company. The company faces competition from other established IT companies globally. The nature of the market for IT services keeps growing by day and thus it can sustain the equally growing number of companies (Thompson, Strickland, & Gamble, 2007) . The unique attributes of DDD place it at an advantage against competitors. 

Key success factors 

The company has proven its capabilities by delivering on the jobs it has taken up making it viable for even larger contracts. In instances where it faces challenges of delivering, it outsources assistance and learns to improve its technological capabilities. It has taken a learning posture which has always placed it at an upper hand. 

Market Segmentation 

The market for IT products is big and the demand varies depending on the segment of the market. The major segments targeted by DDD are the large international companies that are outsourcing IT services or which need IT products developed for their specific needs. The company also seeks to get local contracts in the areas it is based. 

Opportunities/ Threats 

The IT market is large and is still growing. The customer base is big and the demand for IT products and services increases by day. The opportunities are only limited by ones sense of imagination. The major threat is that the nature of the company makes it difficult for it to have a standardized project management system. This has however not derailed the resolve of the company in any way. 

Driving Force 

The driving force for DDD is not profitability but rather provision for the social wellbeing of young adults in developing countries. The company was set up to provide education and employment for youth and persons with disability in Cambodia who were not able to advance to the next level due to poverty. The company seeks to empower these young ones with skills that could place them on a job market and be able to get access to good paying jobs so that they can be able to take care of themselves and their families as well. 

SWOT Analysis 

The major strengths for DDD include its internal abilities, passions and resources and the reserve fund which has proven helpful during expansion and market changes. Its weaknesses include credit card debts and macroeconomic complexities. The opportunities are mainly concerning industrial enlargement and its threats range from loss of employees, rapid technological advancement, the continuous change in demand by the consumers to competition from larger corporations. 

Strategies 

The company is trying to expand its operations into other continents and countries. It has its eye in India especially. Global expansion is a bold move and goes to show how passionate the company is to reach the largest number of people and bring change to them. The motivation for expansion is very noble which requires careful consideration of the different strategies open to it and identifying the one that will best suit its financial capabilities and at the same time make it possible for it to meet its goals. 

Intensive strategy 

The company is open to many strategies. It is looking into going in it alone. The advantage of this is that it could establish the new offices immediately without having to waste time on negotiations with potential partners. The disadvantage, however, is that it requires a lot of financial resources to be able to turn out successfully. 

Cooperative strategy 

A cooperative strategy is also open to the company. The company has an option of partnering with a local entrepreneur who is in IT outsourcing or not. This strategy will avail to the company a partner who has knowledge of the local market among other advantages. The downside, however, is that it may be time-consuming in identifying the viable partners who believe in the course as well as negotiating the terms. 

Diversification strategy 

Social franchising is also a strategy in consideration by the company. This would be something new for the company, and as much as it might take a long time to select the franchise, negotiations while be more controlled as the franchises will have to sign a standardized contract. Franchising will develop local revenue reducing dependence on that which is generated by the US based office. Work allocation may be challenging in the case of franchises. 

Global strategy 

The company has an option of partnering with an International organization. This has advantages because the NGO has resources at its disposal, it would take care of some of the challenges faced by DDD. The organization will provide the human resource as well as the financial resource for DDD, resources which the company has had to struggle to have in sufficient quantities. 

Mergers 

The last alternative for the company was merging with a large international IT outsourcing company and work as a subsidiary. While this would provide more opportunities, DDD will lose its independence which has worked to its advantage in the past. All these are the strategic options the company is pursuing in a bid to expands its operations to a global scale. 

Available Strategic Options 

The alternative of becoming a subsidiary of an International IT company will less advance the vision and mission of DDD. It might end up being restricted by parent company on what ventures to deal in and how to use its profits and even restrict donor funding. These restrictive rules may make it difficult for the company to continue its social contributions to the community. Organic growth may not be an option given how expensive it can be. 

The other alternatives will not affect its driving agenda. Finding the best partners who believe in advancing the well-being of youth in the specific countries as passionately as DDD may be difficult. Venturing into social franchising may not yield results in practice and there is a need for careful consideration and a lot of time and resources need to be put in place to identify the right franchises to invest in. linking its forces with an international organization is also an alternative. 

Strategic Evaluation Criteria 

So many strategic options are available to DDD. Determining which would be the best to push its agenda is the real challenge. The company has to look at several factors before settling on the strategy that will best serve its interests and enable it to achieve the goals it has set out for itself without putting a strain on the available resources. 

In determining which strategy will best suit a company, the first consideration is cost. How expensive is the new venture and which alternative is less costly? The costs to be incurred should be considered carefully regarding long-term implications for the company. A less costly strategy may prove more expensive in the long term. There is a need for careful cost implications in the short term and the long term. 

Carrying out a SWOT analysis is important before deciding on the strategy. Identify the strengths of the company and at the same time the weaknesses. A model that amplifies the strengths rather than the weaknesses should be considered. An analysis of the opportunities and threats should also be done. The strategy chosen should venture into the opportunities the company is open to and try to minimize the threats it faces. 

There is a need for an understanding of the nature of the industry in which the company operates in. The five force analysis could be done to create an understanding. Identifying the nature of the market, the rate at which new entrants join the market, the potential of the customer base to expand, the competitors in the market as well as the sustainability of the industry in nature. In making all these considerations, the company will then identify the best way for expansion and the strategy that will be best suited towards that goal. 

The final and most important consideration are the objectives of the company, its mission, and vision and core values. The object of the company should always be at the back of the mind when deciding which strategy to go with. The strategy should most importantly be able to advance the goals of the company for social development. 

Recommendations 

Partnering with an international organization could bring about the desired results. The networks of the organization can be exploited by the company for maximum benefit to the communities. Given that the organization will provide both human and financial resources for the company is a plus and makes this alternative more appealing. The nature of the organization will not derail the company from the purpose it has set to accomplish. 

References 

Anju, M., Grete, R., Jaime, V., & David, Y. (2009, September 15). Saintleo. Retrieved from Saintleo website: http://www.saintleo.edu 

Digital Divide Data. (n.d.). Digital Divide Data . Retrieved from Digital Divide Data web site: http://www.digitaldividedata.com 

Helfat, C. E., & Peteraf, M. A. (2009). Understanding dynamic capabilities: progress along a developmental path. Strategic organization, 7(1) , 91-102. 

Thompson, A. A., Strickland, A. J., & Gamble, J. E. (2007). Crafting and executing strategy. The quest for competitive advantage. Concepts and cases .