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Question:

Discuss about the Business of Xero Company.
 
 

Answer:

Introduction

The analysis of business success needs a huge amount of research upon the skills along with business evaluation. Therefore this report is focused on the case study of the company like Xero. For that reason, this report is prepared that will describe the innovative business venture and its establishment in Australia. In that case, the report involves the deep description of the business along with its growth in the Australian market.

 

Background of Xero

Xero is the company that makes the development of the cloud-based accounting software to carry out various processes in the small as well as the medium sized business organization. The company is basically New Zealand based but it has its parts in the UK, US, and Australia. It produces the software that maintains and records the accounting processes within the business organizations (Xero, 2017). In these accounting processes, the software handles all the functional modules during accounting transactions. Further, this functional module handles the general ledger, payroll, accounts payable, accounts receivable and the trial balance. In that case, the accounting software runs the somewhere that can be assessed anywhere and anytime being internet enabled.

Figure 1: XERO

Source: (xero, 2017)

The company entered Australian market and runs very successfully in Australian Securities Exchange in November 2012. Thereafter it went public in other parts of the world and currently used in over 180 different countries. The companies avail its services by selling through subscription. The accounting software is very loved by all its users by including various inventory management as well as contact management features. Further, it supports various unlimited users which are closing its gaps from other software (Xero, 2017). In addition, the market size of Xero is basically designed for small businesses but it also provides numerous options for large sized businesses. In the initial condition, it was founded by Rod Drury in relation to his personal accountant to overcome the outdated process and create a modern process.

 

Business description of Xero

Xero is the company that provides the services in relation to the software that works for the purpose of accounting for various small as well as medium-sized businesses. In the year 2012, it has been established in Australia which further attracted 700,000 users over 180 countries. Therefore the basic primary accounting solution is carried out by Xero is mostly running over 16,000 accounting firms across the globe. It usually boasts remarkable inventory features with robust payroll capabilities that act as the time savers as well as the contact management (Wei, Samiee & Lee, 2014).

In addition, Xero supports unlimited users with its attractive features that close the gap in the race with other accounting software. But keeping aside all the flaws like limited invoice selections or lack of job costing features the accounting software produced by Xero is quite strong as well as incredible (Solomon, 2014). Moreover, Xero has maintained its pricing strategy manageable for every business types. In addition, it offers a trial period of 30 days for a demo. Further, it also provides a 25% of discount over the non-profit organizations and 15% off for multiple companies.

However, as accounting software, Xero has sufficient compatibility with any type of device with an internet access. And most importantly it is designed by keeping in mind the condition of small and medium businesses but on the contrary, it has also unrivaled options for the large sized businesses as well (Verbeke, 2013). 

 

Evaluation of Factors affecting future prospects of Xero

The evaluation of the future prospects of Xero is quite necessary for the growth of its business. The organization and its set up enabled it with much excellence to acquire numerous companies since the time of its launch. The acquisition allowed Xero to make the integration of payroll during the offering of Australian product within Australia. For that reason, it is necessary to measure the SWOT analysis of Xero as well as PEST analysis of Australia (Baker, 2014).

Figure 2: XERO Acquisitions made in 2015

Source: (xero, 2017)

SWOT Analysis

This analysis will clearly figure out the strategic process that signifies the businesses as well as operations of Xero (Bharadwaj, et al., 2013). Therefore the calculation of the strengths, weaknesses, threats and opportunities will help Xero in showing its competitive advantage in the Australian market. The SWOT analysis is carried out as per Appendix I. The strengths of Xero is in its high growth rate as well as in its experienced business units.

Similarly, the weakness of Xero is in its small business units and its opportunities are in its global markets as well as new acquisitions done by Xero. The vital part is its threats that arise in its technological problems as well as the rising cost of raw materials. Another threat is in growing competition as well as lower profitability. Basing upon these analyses the future prospect of Xero can be analysed (Slack, 2015).

 

PEST Analysis

Like the SWOT analysis of Xero will show the way for its growth for its future prospects, the pest analysis will enhance this prospect by having the detailed analysis of the Australian market. The PEST analysis is done as per the Appendix II.

Political

Economical

The Australian markets can be one of the efficient markets for the growth of many companies due to its stable political environment in whole Asia Pacific region. Not only had a stable political environment it also engrosses a well-developed ad educated business environment that brings innovation and sophistication within the business (Cavusgil, et al., 2014).

This country involves a higher amount of growth rate due to a low amount of unemployment. Further due to less stable interest rates as well as rising exchange rates helps the Australian economy lowering down any type of risk in its economy. A low rate of inflation also accounts for the growth of GDP of the Australian market (Grant, 2016).

Social

Technological

The changes in various social trends can have its effect on the effectiveness of the products in Australian markets. It will also affect the willingness of various classes of individuals to work as well as their availability (Gummesson, Kuusela & Närvänen, 2014).

With the emergence of new technologies, there will be the creation of a new variety of products with new processes. Thereafter the growth of technological advancements will enable Xero in developing their software with improved quality and innovations. Moreover, it will be beneficial for the customers as well as their organizations (Helm & Gritsch, 2014).

Appropriate Business Model for Xero

It is well known till now that Xero works for the production of the accounting software that basically makes the recording and processing of the accounting transactions of the companies. So basically this accounting information system is developed in-house or purchased from the third party or it can be a combo of third party and the local modifications. The success of the accounting software relies upon the service model that paves its way towards success. This model is the SaaS model.

The specification of this model is it handles the cost of customer acquisition, lifetime value of customers and many more vital functions. It is a model used for software licensing as well its delivery which is mostly based on the subscription. Most importantly it manages the management software (Lusch & Vargo, 2014). The inclusion of management information system software helps the organization to enhance the effectiveness and efficiency of the decision that will maximize the benefit of the organization as well as its business processes.

The company will be able to analyze their strengths and weaknesses along with a clear picture of the company (Pelham, 2015). It also helps the organization in gaining their competitive advantage by being an efficient communications and planning tool. Moreover, it helps in taking any strategic decision upon any important topic within a quick time.

Conclusion

The important facts highlighted in this write-up provide the enough idea regarding the case study of the company Xero that has been established itself in the Australian market since five years. In addition, it has gained ample amount of customers in the Australian market. Therefore the analysis provided in the report will definitely provide the detailed idea of the case study of Xero. 

 

References

Baker, M. J. (2014). Marketing strategy and management. Palgrave Macmillan.

Bharadwaj, A., El Sawy, O. A., Pavlou, P. A., & Venkatraman, N. V. (2013). Digital business strategy: toward a next generation of insights.

Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014). International business. Pearson Australia.

Grant, R. M. (2016). Contemporary strategy analysis: Text and cases edition. John Wiley & Sons.

Gummesson, E., Kuusela, H., & Närvänen, E. (2014). Reinventing marketing strategy by recasting supplier/customer roles. Journal of Service Management, 25(2), 228-240.

Helm, R., & Gritsch, S. (2014). Examining the influence of uncertainty on marketing mix strategy elements in emerging business to business export-markets. International Business Review, 23(2), 418-428.

Lusch, R. F., & Vargo, S. L. (2014). The service-dominant logic of marketing: Dialog, debate, and directions. Routledge.

Online Accounting Software – Free Trial, Free Support | Xero. (2017). Xero Accounting Software. Retrieved 25 March 2017, from https://www.xero.com/

Pelham, A. M. (2015). The Influence of Managerial Disagreement on Industry Characteristics and Strategy on Small Firm Performance. In Proceedings of the 1998 Academy of Marketing Science (AMS) Annual Conference (pp. 310-310). Springer International Publishing.

Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd.

Solomon, M. R. (2014). Consumer behavior: Buying, having, and being (Vol. 10). Engelwood Cliffs, NJ: Prentice Hall.

Verbeke, A. (2013). International business strategy. Cambridge University Press.

Wei, Y. S., Samiee, S., & Lee, R. P. (2014). The influence of organic organizational cultures, market responsiveness, and product strategy on firm performance in an emerging market. Journal of the Academy of Marketing Science, 42(1), 49-70.

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