Materials

Along with sales representatives and customer support offered in each of the countries’ language where Anubis expects to compete, the company should also take actions to help being perceived as physically establish in the clients’ markets. Therefore, according to market entry time line it should create versions of the website designed for those customers:

• 2009 – Opening Brazilian version of the website.

• 2010 – Expand website versions according to the countries where operating.

IV. Money

2009 – €350.000

With the beginning of operations in Brazil, €250.000 every year will go for the sales representative as this his reserve price to accept leaving his current job. Because the sales representative will cover a large geographic region it is expected him to be constantly travelling. Expenditures with travelling and hotels are then estimated at €20.000.

The company’s products life-cycle is short, and require continuous R&D efforts. Thus, additional €30.000 is allocated for this purpose.

Human Resources will also have to be expanded and subject of on-the-job training. For this activity the company should around €50.000 – the cost per year of three new product development technicians plus language training (see Appendix 11).

2010 – €500.000 Total Investment so far

In addition to the €350.000 invested in 2009, with the investment required in the management staff, either by recruiting externally or by submitting some of the current elements to a post-graduation in Management, this figure is expected to raise by an additional €50.000. Plus, and as in 2009, new computer technicians will be recruited for an extra € 50.000. Moreover, the opening of specific language websites plus the expected growing number of workers will demand additional €50.000, raising the year’s investment to €500.000.

2011-… – €700.000

Moreover, since the company is now expected to be operating throughout Latin America €200.000 should be canalized for this market to support additional travelling and hotel expenses plus additional marketing. This figure is an estimate, since speaking to the Brazilian contact for needs assessment was not possible. For instance, establishing an office will obviously mean an investment but it will vary according to the location and if it a rental or if the company decides to purchase the premises.

For 2011 onwards it is difficult to plan the amount of investment required. First, planning for four years ahead must allow for flexibility as many variables are quite uncertain. Plus, depending on the ability to perform abroad, resources will be more or less available and the management team will have revise the plan yearly. In addition, shareholders’ injections of capital are also uncertain and, in case Anubis is not able to sustain its expansion through profits, it will have recur to bank loans or, in a worse case scenario, will have to review its expansion goals.

The important aspect is that the total figure presented (€ 1.550.000) is within Anubis budget for internationalization (€1.500.00). Finally, Anubis is still a start up. Although having ambitious plans is part of what drives successful companies to the top, the company must be prudent not to take actions that put both its home market performance and, even worse, the company’s ability to remain flexible – its top competitive advantage against global players.

Appendix

Appendix 1

Fig. 1.1 – Simplified 3 Step Internationalizon Process with the six legal entry forms1.

Appendix 2

Company Organigram and number of workers per department

1

Adapted from Professor Sónia Dahab’s workshop about the internationalization process.

Reasons to Go Abroad Joint Venture Agent / Distributor Office Wholly-owned Subsidiary License Franchise Acquisition Country Selection Legal Entry Modes Executive Management

Systems and Support (3 persons)

Sales (2 persons)

Product Development (4,5 persons)

Architecture and R&D (1,5 persons) HR and Accounting (1

person)

Board (2 persons)

Appendix 3

AnubisNetworks, SA Annual Sales Volume.

Source: Company Internal Report

Appendix 4

Appendix 5

Product Configurations

Software (Corporate Market and Service Providers Market) – This is any software deployed at the mail server or at simple mail transfer protocol (SMTP) gateway level that filters out spam, viruses and other malware from messaging traffic.

Appliances (Corporate Market) – Are machines, similar to computers but with no screen, which have e- mail security software integrated into pre-configured hardware, and are sold as a single product. Appliances are generally “plug and play,” and require very little time to install at the customer premises.

Hosted Services (Corporate Market) – E-mail security and filtering services, hosted by the security companies themselves. All the hardware is installed outside the customer premises. Messaging traffic is deviated and analysed through the security provider data centres before reaching customer networks.

Appendix 6

Industry Mapping: Suppliers and Customers Spammers

Open Source Anti-Spam

Software

Space Renters for Data Centres Third Party Providers of Technical Support Hardware Manufacturers E-mail Security Providers Service Providers Corporate Clients

Appendix 7

Porter’s 5 Forces Detailed Analysis of E-Mail Security Market Firm Rivalry

With so many firms, competition is indeed strong. The Corporate market has witnessed severe price competition, even “price wars” in Francisco Fonseca’s own words. The broad number of competitors and the product’s short life-cycle lead to constant improvement of the solutions offered and companies must be innovative and at the same time remain costly effective as this market – the Corporate – does not allow for large margins. Because a company needs scale, in order to achieve cost savings, competition is tough for every segment of this market.

As for the Service Providers market, competition is not as fierce, and firms compete in other dimensions than price. Because the product can be highly differentiated (customization according to clients’ specific needs) for this market, innovation and product development to fit the client drive competition. Since the product is differentiated by client, scale economies are hard to achieve and costs are higher.

Entry Barriers

There aren’t many significant structural barriers for these markets as clients’ switching costs are low, overhead investment is not very high, raw materials – software base codes to build on – are available to and there is no need for special government permits.

The significant structural barriers for the corporate market are the existence of network externalities and the competitive advantage of scale economies. Incumbents, with greater market share, have a differentiation advantage, as they are perceived as being more reliable in the service; hence brand equity is a relevant asset. Moreover, the incumbents with larger scale are more cost effective and are able to create strategic barriers such as limit pricing, the practice of setting prices low to discourage new entrants.

The Service Providers market presents one additional structural barrier, which is the steep know-how

learning curve. Customized solutions require greater technical expertise that takes time to acquire and

the more you develop or the longer you are operating in the market the greater will your know-how be from experience. However, networks externalities and scale economies are not entry barriers for this market, given the specific features of the product offered.

Buyers Bargaining Power

Buyers leverage over this industry varies according to the market. Corporations have greater leverage than Service Providers.

First of all, the corporate market is a broad one whereas the Service Providers is a niche. Also, because the service the corporations are buying is not essential for their businesses, the importance of this product is only relative. This, combined with the existence of so many competitors, and with the relatively low clients’ switching costs, raises corporations’ bargaining power is substantial, especially for clients with larger dimension.

Service Providers, although a niche, is a relevant market. But, because the service provided by this industry is essential for SP, their leverage is not as great as in the corporate case. There aren’t as many sellers and because the product is differentiated doesn’t allow low switching costs.

Suppliers Bargaining Power

This industry relies on several kinds of suppliers from hardware to software, which are common for both markets. Hardware suppliers have some leverage over this industry as they are able to discriminate prices according to orders volume, for instance. Additionally, the importance of this industry for the hardware suppliers is relative, as they sell for many other significant markets. As for software developers, and in this case we are talking about anti-spam related, the importance of this industry for them is significant thus leading to low bargaining power.

Substitutes

The product at focus aims at securing e-mail communications. At the moment, there is no other alternatives that can play the same role as what the companies in this industry are doing. There are, however, very indirect substitutes could be suggested within the corporate market. Corporations can always use other communication systems such as FAX, phone and p-mail. These alternatives are, however, unrealistic, more expensive than, and often not as time saving as, e-mail communications. In fact, the e-mail is a communication channel that companies cannot afford to ignore. Thus, the threat of substitutes is not a substantial one at this stage.

Appendix 8

Table 1 – Number of companies with significant market share (>1%) in each segment and respective concentration level. Font: Confidential Data provided by Anubis Networks, SA.