Oracle Case Analysis

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Case 1 : Oracle System Corporation^[1]

Syndicate 9

Ayu Kusuma Ning Dewi         ID : 29115554

Aziz Fauzi                            ID : 29115688

Nico Vincent Perangin-angin        ID : 29115612

Tiara Rizky Fitria                ID : 29115613

1. Background

             Oracle Systems Corporation was founded in 1979 by Lawrence J. Ellison to commercialize an innovative data-base management systems (DBMS) that he had just developed for an American intelligence agency. Under Ellison’s aggressive leadership, Oracle more than doubled its sales every year from 1980 to 1989 and became the fastest growing software company in the world with sales $971 million in the fiscal year ended May 31, 1990.

        There are four main strategies the company adopted. Firtst, it Sell aggressively.  Company set high target sales. The firm was particularly generous to representatives who achieved or exceeded their objectives. Those who fell short of their quotas were summarily fired.Second is Maintain technology and product leadership.  Oracle’s current technological leadership benefited from an early lucky decision to use SQL computer language and this language became the industry standard. Third, product diversification. The company had expanded out of the production of software and into computer consulting services and then into the area of systems integration. Last, international expansion. Oracle had established subsidiaries and exclusive distributors in more than 70 countries around the world.

1. Issue Identification

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1. Case Analysis

1. Revenue and Trade Receivable Analysis

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                The graph demonstrated that from 1985 to 1990, the revenue of Oracle System increased significantly (inflation is neglected). Nonetheless, with assumption that the company apply the accual basis in its accounting records, the revenue was mostly generated from trade receivable and its proportion steadily rised from 45,34 % in 1987 to 59,45 % in 1990 of its total revenue. The account of receivable is not as reliable as cash since there is possibility to be uncollectible. In fact, the number of doubtful account receivable inclined from 1987 to 1990 ( see the table below).

1. Profitability Ratio Analysis

The profitability of Oracle System is measured using Net Income that is  compared to its Sales, Assets, Capital as well as Equity. With exception to Net Income/Sales, the other ratios shows that Oracle is profitable as it surpasses the industry average.

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1. Liquidity, Activity and Leverage Ratio Analysis