Parsek Llc Case Study

Margaret Zheng

HEIP240 | Sec 0201

September 24, 2011

Case Study: Parsek LLC

Parsek LLC was not always the business that it is today; in fact, it was the product of a chain of seemingly irrelevant events that eventually shed light on an innovative opportunity. The corporation actually started in a university environment with a group of undergraduate students from the University of Ljubljana. These students worked collaboratively on a project using one of the economics research labs at the University that was headed by a professor of entrepreneurship. At the time, this group of students had an idea to start a "Yearbook of Classmates" for the 8,000 students at the university. The activities of this start-up firm included establishing a sales force of 20 students who sold advertising space and gave discounts on advance yearbook sales for start-up funds. This idea eventually required a database-driven application to collect the profiles of the students in the yearbook, which evolved into an online version of the yearbook called "Studenet". However, Studenet faced significant budgeting challenges--the student group already had insufficient funding for office rent and basic technical equipment; bandwidth Internet on which they could host Studenet was out of the question for the cash-strapped firm. From this obstacle sprouted the realization that there was a necessity to "sell bandwidth Internet access to the household market" (96).

Initially, the Parsek entrepreneurial team included many autonomous members whose roles were based on promoting personal capabilities and competencies; therefore, the original organizational structure was highly independent and focused on the company itself, rather than on external partners. However, there was still a large need for financing and the start-up's first major goal was to secure cash flow liquidity, as well as acquire new projects and clients. Parsek LLC was approached by a UK-based venture fund in 2000 and offered US$1.5 million for a 76% equity stake. Although this meant losing majority ownership and sacrificing the autonomy that the firm so greatly valued, Parsek accepted the offer and the corporation became restructured as a financially dependent corporation. Parsek LLC was largely interested in working solely with blue-chip companies but the new investment allowed the company to additionally revise its business strategy to include specialization in the interactive and media divisions of Internet technologies; as a whole, Parsek LLC participated in different layers of business-to-business Internet service-related activities in the Interactive, Professional IT Services, Internet Solutions for small- and medium-sized enterprises, and Media Business divisions. Within these divisions, Parsek LLC offered standardized, integrated, and customizable application development for targeted client markets from larger corporations and government institutions to smaller enterprises. They created many brands such as EasyWeb and HttPool, some of which quickly became the world standards in Internet and marketing technology. The generous external funding further allowed the corporation to expand internationally into neighboring regions, such as Yugoslavia and Slovenia.

Parsek has been extremely successful in conducting its business. The corporation was able to be successful in developing its business due to a thorough evaluation of market forces and execution of internationalization strategies. The Internet technologies market had enormous growth potential, especially in the media business market with a 45% per annum growth rate. As entrepreneurs, the employees at Parsek were able to identify opportunities for the development of innovative products in these new market segments. Therefore, the corporation was able to take the "first-mover advantage" since it was the initial significant occupant of a market segment. According to an analysis of the industries and competition in Parsek's divisions--Interactive,