1.

What are the firm’s most important external opportunities and

threats?

External opportunities for Rosetta Stone Inc are

● Rosetta Stone obtains most of its product from a third party
contract manufacturer so lowering the shipping cost can bring
down the cost Rosetta Stone Inc product thus providing an
opportunity to the company to boost its profitability.
● Rosetta Stone has worked hard on the software updates. And
the newer version of program featured improvements in
images, audio sample used and the presentation of the content.
Other benefits include speaking activities, grammar and
spelling components, simulated conversations and advanced
speech recognition technology that can bring up new
customers.
● Rosetta Stone software was designed to handle complexities of
languages. So it can support languages written from right to left
such as Arabic and Hebrew, these features gave them an
opportunity to become global.
● Roumen Vesselinov, PhD, studied the effectiveness of Rosetta
Stone’s offering and found out 55 hours of study using Spanish
program, students will be able to achieve a WebCAPE score at
a level to fulfill the requirement of one semester. And
Rockman’s study also shows that 78% of the students
participating in its study increased their oral proficiency by at
least one level on the seven-level scale developed by ACTFL .
This research will provide an opportunity to the company to
promote the product for classroom level.

Major threats to Rosetta Inc are

● As the company is operating in various countries, the company
is exposed to currency fluctuations especially in the politically
volatile area of the world.
● New technologies developed by the competitor impose great
threat to the market share of the firm. For example
 Livemocha.com a company with $14 million in venture capital
financing, offered language lessons on a social network en-
vironment for more than 38 languages.Users corrected each
other's writing assignments and their profiles displayed points
and medals won from language games
● As the local distributor strength grows it presents great threats
as the competition is paying higher margins to the local
distributors.

2. What are the organization’s major strengths and weaknesses?

Rosetta Stone major strengths are

● Rosetta Stone marketing campaigns are one of the major
strengths of the company, Rosetta Stone advertisements
featured U.S. Olympic gold medal swimmer Michael Phelps.
Another marketing campaign depicted a farmer hoping to
impress a supermodel with his Italian-speaking abilities. And
the company tracked the effectiveness of its advertising by
asking customers to indicate the marketing campaigns that
caught their attention. The company's website provided a space
for users to leave testimonials and reviews
● Over the years Rosetta Stone Inc. has invested in building a
strong brand portfolio. This brand portfolio can be extremely
useful if the organization wants to expand into new product
categories.
● Over the years Rosetta Stone Inc. has built a reliable
distribution network that can reach the majority of its potential
market.

Rosetta stone major weakness are

● Rosetta Stone needs more investment in new technologies.
Given the scale of expansion and different geographies the
company is planning to expand into, Rosetta Stone Inc. needs
to put more money in technology to integrate the processes
across the board.
 ● There are gaps in the product range sold by the company. This
lack of choice can give a new competitor a foothold in the
market.
● Not very good at product demand forecasting leading to higher
rate of missed opportunities compared to its competitors. One
of the reasons why the day's inventory is high compared to its
competitors is that Rosetta Stone Inc.

3. How would you describe the organization’s financial condition?

Financial condition of Rosetta Stone is good because from 2004 to
2009 company revenue increased from $25.4 million to $252.3
million, representing a 58% compound annual growth rate.
For the year 2009 consumer revenue was $199.3 million, and it was
19% up from the previous year. This growth was the result of 14%
increase in unit sales and 4% increase in the average selling price of
each unit. The increase in sales resulted in a $23.8 million increase in
revenue, and the price increase accounted for a $7.8 million increase
in revenue. Product revenue represented 96% of total consumer
revenue, and subscription and service revenue represented the
remaining 4%.

Institutional revenue amounted to $53.0 million in 2009, increasing by

$11.3 million, or 27%, since 2008. This increase in revenue is
because of the expansion of Rosetta Stone's direct sales force. This
expansion increased education revenue by $4.8 million, government
revenue by $3.9 million, and corporate revenue by $2.0 million.
Product revenue
represented 52% of total institutional revenue for the year ended
December 31, 2009, and subscription and service revenue
represented 48% of total institutional revenue.
4. What are the firm’s existing strategies and objectives?

Rosetta Stone existing strategies and objectives are

● To expand the consumer channel so it increased its number of
kiosks from 150 to 242 in 2009 which resulted in $6.2 million
additional kiosk operating cost.
● To increase sales in the institutional channel and for that
Regional sales managers were assigned to sales territories and
supervised account managers who maintained the customer
base.Rosetta Stone promoted interest within this channel with
onsite visits, speaking engagements, trade show and
conference demonstrations, seminar attendance, direct
mailings, advertising in institutional publications, and responses
to request- for-proposals and to calls based on
recommendations from existing customers.
● For international channels to facilitate growth, the company
planned to develop its international business through its
subsidiaries and to explore opportunities in additional markets
in Europe, Asia, and Latin America.

5. Who are the firm’s competitors, and what are their strategies?

Rosetta Stone competitors and its strategies are

● Random House Ventures LLC - It was developed by US
government experts and offered books, CDs, digital downloads,
and online courses in 28 different languages. Among its
offerings were applications for the iPod or iPhone and niche
references on language learning for babies and bilingual
children.
●
6. What objectives and strategies do you recommend for this
organization? Explain your reasoning. How does what you
recommend compare to what the company plans?
7. How could the organization best implement what you recommend?
What implementation problems do you envision? How could the firm
avoid or solve those problems?