Dropbox Case Study: Market Analysis, Issues, and Recommendations

This case study examines Dropbox, a leading file backup and sharing software, focusing on its background, challenges, and strategic decisions. Founded by Drew Huston, Dropbox has revolutionized file syncing and backup. The analysis identifies key issues such as intense market competition, customer acquisition costs, and maintaining product originality amidst evolving user demands. The study applies Porter's Five Forces and the Value Chain Model to assess Dropbox's competitive environment and internal activities. Recommendations include short-term strategies for retaining product originality by addressing customer needs, medium-term goals for improving customer acquisition through referrals, and long-term approaches for securing customer loyalty and staying ahead of competitors through continuous innovation and robust security measures. The case emphasizes the importance of a competitive pricing policy and a dedicated team focused on technological advancement to maintain Dropbox's market position.

Case Study: DROPBOX
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Background
Dropbox is one of the leading file backup software that can be easily downloaded from different
platforms and installed in on computer or mobile phone with a single click. This has been one of
the most useful software that has transformed how users share, back up and sync their
information and files over different computer devices. Drew Huston is the cofounder and the
CEO of the company and has managed to grow the company from scratch over the past 10 years
since it was launched in the year 2008. The ide of developing a platform that users could use to
sync all their files came to him while he had forgot carrying his USB cable that was used for the
transfer of files from either one’s phone to the computer or vise versa. With his skills in
computer engineering he partnered with his current cofounder and they developed the software
that currently has grown into one of the biggest applications used by people all over the world.
Dropbox has revolutionized the simplicity in backing up your files and making changes to the
files over the years. The free storage package offered by the company has managed to generate a
huge traffic of users who download the application and later on end up upgrading to a premium
package which offers more storage space. The company has also managed to thrive due to its
different managerial decisions and marketing strategies which have helped them compete in the
competitive data backup industry where multiple companies have been offering the same
services. The company has managed to specially identify it self in the market due to its technical
approach to the services it offers the customers. Dropbox over the years has faced many
challenges that have affected the growth rate of the company but has managed to overcome all
these due to its vibrant team off professionals and the wise decision-making processes involved
in the company. From the early stages of the development face, the company has been based on a
simple organizational structure that has cut don its expenses and has always had a future view of
where the company is to be in the next few years to come.
Issues
1) Competition – Dropbox is in one of the most competitive markets in the technological
industry. Back up of data is one area within technological advancements that many
companies have ventured into. As seen from the case reading, Dropbox faces competition
from multiple companies which offer the same services but in different approaches such
as Carbonite and Mozy. These companies offer several similar services to those of
dropbox such as the free storage. This increases the rate of competition in the industry.
Google has also been identified as a possible treat. This should be in the front cover of
the company’s check list to ensure that the rival companies do not end up kicking them
out of the competition.
2) Customer Acquisition – this has been a major issue for the company. Dropbox has had a
rough experience in attaining the best customer acquisition strategy. In return the
company has ended up using most f its finances trying to identify get the company more
customers. From the case it is evident that some of the approaches used by the company
have ended up costing the company more as compared to the end result of such
marketing strategies. There are multiple means of getting customers and this needs to be
a major focus for Dropbox so as to facilitate the size of their market share.

3) Maintaining the product originality – Dropbox was developed to offer as simple back up
solution and a sharing platform for user files and information but over time the users of
the system have had multiple request on how this would be modified to meet more of
their need. According to Huston Dropbox was meant to be a simple software that could
be used based on both individua and corporate use. The issue of advance development of
the application with the integration of new features that may end up complicating the
software original design as a simple application has resulted to other issues that the
company needs to incorporate. How to make these changes for instance and avoid
interfering with the applications performance or intended purpose which is referred to as
the application originality.
Analysis
Different frameworks will be used for the analysis of the case study but the first one to be
applied will be the Porters 5 competitive forces model. As seen Dropbox is in one of the most
competitive markets hence the best analysis is by the use of a framework that thrives in such an
environment.
Threat of New Entry: High – this threat is high due to the fast changes and evolutions with
the technology. With this in mind the industry has seen new entry companies that have come
in with new technologies and significantly changed the course of the entire market. This has
made the technology-based industry such a volatile market for businesses to thrive. With this
in mind Dropbox needs to be aware of this.
Bargaining Power of the Buyer: Low – Moderate - The reason why this is moderate is
because since other competitors maybe offering similar services, customers may tend to
compare prices and start picking the different offers that are thrown at them by the other
companies. This leads to the company placing its pricing at a moderately relative price with
the other companies for instance, Mozy’s offers free storage space of up to 2gb but charges
for the unlimited storage at $4.95 per month while on the other hand Carbonite does not offer
any free storage space but offers 15 – day trial and a single computer annual storage at
$54.95. this is motivated by the bargaining power of the buyers. Dropbox is significantly
affected by these rises and has to offer the services relative to what the customers are getting
in the market.
Bargaining Power of Suppliers: Low-Moderate – it is moderate because for Dropbox they
manage to deliver their services via the Amazon S3 cloud storage platform, through this the
company manages to cut down on the infrastructure investment expenses and also this has
positioned the company in ap position to scale rapidly.
Threat of Substitution: High – it is high due to the advancement of other companies that offer
the same services. With his in play the customers have a variety of other options that offer
the same service hence the chances of the customers shifting to the other service providers
increases with time. With this in mind, the company needs to figure out a solution that can
help reduce the high risk of substitution from the customers side.

Rivalry among existing competitors: High – As seen the simplicity of Dropbox has seen it
grow in respect to the customers wants but with the changes in customer demand, most of the
customers need more complicated serves from the company which other companies uh as
carbonite have been offering for instance the carbonite pro. Other companies have been
offering extremely enticing offers and as technology advances. This shows the need for
Dropbox to improve the services offered to their customers o reduce the chances of being
kicked out of the market by the competitors or losing their market position.
The second framework that would be applied to the issues and this case is the value chain
model. It addresses the activities that create, deliver and support a company’s products or
services. In our case this is the best analysis for Dropbox which will help us analyze the
company’s primary activities and the support activities. It will slightly address on competition
although not in great depths since this ha been analyzed in the previous framework.
Primary Activities: it’s important to understand the primary activities are which activities
specifically in a company. These are those activities that relate directly to the value created in a
service provided by the company. In our case the primary activities under Dropbox are those
activities that see to it that the development of the services is met. Since the company offers
specific services the developing team for instance means a lot to the primary activities of the
company. With the current need by the customers for additional functionalities from the system,
it implies that the engineering team is expected to evaluate these requirements and certify that
delivering these requirement does not violate the company’s intended service provision.
Support Activities: these are those activities that make it possible for the company to meet the
primary activities. These are inclusive of the organization, the technology, human resource and
purchase. For Dropbox, two support activities are highlighted the most, these are technology and
organization. Technology fuels all the services that are offered by the company. The file sharing,
backup and sync of this data is basically dependent on the technological aspect of the company.
This has helped the company a lot in ensuring the rival companies for instance if the company
fails or is left behind not implement some of the latest technologies and is evident that the
primary activities of the company are affected and in return gives the competitors an added
advantage.
Recommendation
Short-Term: this will align with the third issue that is facing the company. The challenge being
retaining the products originality. Since the company is motivated by ensuring the customers
receive the best services it would be important for the company to address the needs of their
customers. This will help increase the customer loyalty wit the company for instance. As seen
from the case Dropbox customers have identified multiple functionalities that will significantly
impact their user experience with the system. The more the services in line with the customer
needs the system offers the better positioned the company will be in the competitive market.
Medium Goal: this will help the company meet the issues on market acquisition. As seen from
the case, the company has struggled in trying to acquire more market and sign up new customers.
The company needs to focus on retaining the existing customers. These can be used to refer new
clients for the company hence grow the company’s client base. Through such approaches the
company will end up reducing the unproductive expenses it incurs in trying to advertise to the

public but with little outcome.Long term: this is an approach that will help the company face the
growing competition in the market, the company needs to identify the right measures that can be
used to gain customer loyalty too its services. This will help the company attain a strategic
position in the industry that will help secure it from the growing competitors. In the
technological advancement, any company that is to remain relevant in the industry requires a
well-established team that is responsible for ensuring that the company is ahead of the other
companies in the sector. Dropbox also needs to ensures that all the customer information is
secure and is not interfered with. This has been the main reason for the failure of multiple
companies in the sector. With the current positioning of Dropbox in the industry, they are
required to maintain their systems mode of operation since so far this has managed to give the
company a stronger hand over the other competitors. Finally, the company pricing policy which
involves the setting of prices in a competitive manner.
Reference: Eisenmann, T., Pao, M., & Barley, L. (2012). Dropbox: 'It Just Works. Harvard
Business School Case 9-811-065. (Retrieved September 25, 2018)