Casa del Libro

1. What would be your decision? Would you stick to the previously developed Unix platform, or switch to the new Microsoft one?

My decision will be for the management team in casadellibro.com to convince Planeta group that keeping the current Unix platform and redesigning it would be a better decision than switching to the new Microsoft platform via cost-benefit analysis.

2. Which are the most relevant criteria for you to make the decision? Just name each criterion, and explain it very briefly.

In the order of priority, I will be analyzing the following four main factors, at the same time perform a cost-benefit analysis, before making a sound decision.

1. Adjusted Market Forecast – After the dot.com burst, one would have to re-evaluate the market trend in order to decide whether to switch to a new low cost Microsoft platform. If one evaluates that the market will continue to be in a bad shape in a long run (3-5 year horizon), then it would be wiser to switch to a lower cost platform. However, if one forecasts that the internet market would rebound to the 70-80 percent level prior to the dot.com burst within the horizon of 2 years, it might be better to stick to the current system and possibly even consider selling off 2 of the servers. I will lean towards the latter.

2. Key drivers behind this line of business (content management, E-commence and search engine) – The key to success in an online business is to be able to manage content easily so as to create a user-friendly platform for customers to search and make purchases. Adopting the Microsoft platform will lose this competitive advantage as compared to the Unix platform, which in turn lead to unsatisfied customers. Customer satisfaction is extremely critical for a company at its infant stage.

3. Stability & Security – Unix tend to be more stable than Windows. Also, Unix has more security features and is less prone to hackers as compared to Windows. This is important because the last thing a customer would want to face is for his/her bank account password to be hack.

4. Cost – Bearing in mind that the cost incurred for the current system is a sunk cost as well as the additional cost required to purchase the Microsoft platform, the cost saving derived from the low maintenance of the Microsoft platform might possibly require a long period of time to break even. This is of course on the assumption that there would not be any additional upgrade cost incurred by the Microsoft platform in the near future, if not sticking to the current higher end platform might be more cost efficient. However, we see from point 1 that this assumption is not likely to hold true.

In conclusion, saving cost is indeed important, but one must not neglect other more important factors that will directly undermine the existence of the business. And clearly we see Unix as the preferred choice.