Argo Interactive (A): Surviving in the Roller-Coasting Mobile Industry

Prats, Mª Julia; Sosna, Marc; Darsch, Dave

Product #:EFC-0001-E

Supplier:IESE Publishing

Discipline:Entrepreneurship

Setting:Reino Unido, 2001-2008

Details:Case (PDF) • 9 pages • 2011-01-12

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This FocusCase is about a young VC-backed technology company in the UK, trying to turn around from a near-death crisis after their market did not pick up. The company Argo Interactive focused, with their innovative software product, on the newly emerging WAP-market. However, after burning through 14 million pound sterling of venture capital, the market had still not shown any signs of life, and the senior management team needed to make an urgent decision on how to continue. On September 11, 2001 - while they were having their crisis meeting - they found out that the regular newspapers were already distributing printed copies with color photos of the terror attacks on the World Trade Center, while even CNN did not mention it on their WAP-site until many hours later. After their main investors had heard about this news and about management's plans to make significant changes, they invoked a material adverse change clause, preventing the firm from drowning down any further cash from the previous round. Would the best option be to shut down the firm immediately or should the management team try to turn the firm around? If deciding for the latter, which decisions should they take with regard to financing, market focus, product (re-)development, HR issues, positioning and the overall survival strategy of the firm?

Learning Objectives

1. To understand how to manage innovative technology products in highly uncertain markets: a) to explore strategic reorientation with regard to products, markets and clients; b) to rebundle or redevelop products and c) to rebrand and reposition a business. 2. To explore what it means to manage through a near-death crisis: a) to apply multiple finance strategies while being restricted by a very tight budget; b) to execute extreme downsizing while retaining core knowledge and c) to respond to shifting customer needs. We strongly recommend using the complementary material (Case B: EFC-5-E), which illustrates the decisions of the management team, the strategies applied, the outcome and so forth.