Avast Software: Company Analysis

Executive Summary

Avast Software is a globally recognized multinational company and leader in the area of providing cybersecurity solutions for individual customers and businesses. The company, which serves users in Europe, the Americas, Asia, and Africa, has been demonstrating stable financial growth. As the leader among its competitors, Avast is increasing its profits while offering an efficient freemium model to 435 million users.

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The company’s leadership has paid and continues to pay close attention to funding research and development activities to remain the leader in the industry. A unique marketing strategy is allowing Avast to distribute its products and services without much advertising. Factors related to production and specific countries have neither significant influence on the company’s ability to expand nor its potential impact on the host country. In addition, the organization’s human resource strategy is oriented toward supporting international employees. Therefore, a plan for Avast Software to enter the market of a developing country to contribute to the progress of its IT industry can be recommended.

Company Description

Background

Avast Software is a multinational company that specializes in producing cybersecurity software. Founded by Pavel Baudiš and Eduard Kučera in 1988, the company is now headquartered in Prague, Czech Republic but operates worldwide, employing about 1,700 people in 25 offices in different countries around the globe (Avast Software 2018a). Serving the needs of more than 435 million users globally, Avast has earned a leading position in the market for anti-malware tools and antivirus applications, reporting annual revenue for 2017 of about $653 million (Avast Software 2018d).

Products

Avast Software offers a range of cybersecurity products, in the form of free and premium services, to its clients. Guaranteeing security for different types of devices and servers, products include Avast Antivirus, Avast Business Antivirus Pro Plus, Wi-Fi Inspector, Firewall, Anti-spam, Behavior Shield, and Web Shield (Avast Software 2018a). These software products are compatible with personal computers and mobile devices. The basic version of Avast Antivirus is free, and purchasing the premium version of the software opens access to advanced features (Avast Software 2018c). For example, Avast Business Antivirus Pro Plus provides identity and data protection as well as password management.

Financial Performance and Success

The financial growth of the company can be described as stable as its revenue over a recent nine-month period increased from $578.4 million in 2017 to $613.1 million in 2018, demonstrating revenue growth of 6% (Avast Software 2018a). During the period 2014 to 2017, Avast Software acquired Inmite, AVG Technologies, and Piriform, expanding the number of product users and increasing sales of premium products (Appendix A; Avast Software 2018a).

News Stories

In May 2018, the company debuted its initial public offering (IPO) on the London Stock Exchange (LSE), listing its IPO where “the offer size of $816.6 million included gross proceeds of approximately $200 million” (Afanasieva 2018, par. 4). About 25% of Avast’s shares were represented on the LSE, the largest IPO since 2017 (Arampatta 2018).

Community Involvement

As part of its involvement in local communities, Avast has been dedicating resources to contribute to the development of communities by supporting volunteering and charity initiatives. For example, the company organized the Avast Foundation to add to the progress of Czech society, an initiative that received the United Nations Sustainable Development Goals Expert Jury Prize for the company’s proposed and funded care program. According to data from 2017, the Avast Foundation supported 86 organizations in terms of their community-oriented projects located in different countries (Avast Software 2018b).

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Company’s International Strategy

Current Strategy

Avast Software’s main business strategy is international in nature; the company is oriented toward serving the needs of customers all over the globe. Most users of the company’s products and services come from Europe, the Middle East, and Africa (about 50%), and a large percentage of users reside in North and South Americas (about 35%) (Appendix B). In addition, about 17% of users come from the Asia-Pacific region (Avast Software 2018a).

These regions boast the highest concentration of Avast offices established to address customers’ needs. The company’s research and development (R&D) activities are concentrated in Europe and the Americas, and more than 45% of employees (600 employees in total) are involved in R&D (Arampatta 2018). The selection of regions for opening offices and developing R&D activities depends on the number of potential customers and costs of R&D and operations in a region.

Competitors and Competitive Advantage

The company’s key competitors include Avira, McAfee, and ESET. Avast Software has assumed a leading position among its competitors because of the number of users of its products, more than 435 million worldwide. Fifty-nine countries around the globe have more than 1 million active users each (Avast Software 2018a). Thus, customer loyalty and high sales volume are among the company’s major strengths. Furthermore, Avast’s acquisition of AVG Technologies in 2017 contributed to improving the company’s position in the market (Avast Software 2018c). One weakness in the company’s strategy is associated with some product features, including scans and password management. Specific performance problems may cause customers to choose alternative security products.

Critique of the Strategy

In considering short-term goals, the company should focus on improving the quality of its current products and developing new solutions to address customers’ needs. Another possibility involves opening more offices in different countries to provide efficient support for users. Long-term goals can be modified with a focus on acquiring more competitors to expand resources and the company’s user base as in the case of acquiring Piriform in 2017 (Avast Software 2018a). Additionally, more attention should be paid to developing ethical practices and improving corporate culture.

Company’s Marketing Approach

Sale Territory

Avast Software promotes its products in Europe, Africa, the Middle East, the Americas, and the Asia-Pacific region as well as other territories. No territory limits restrict Avast from providing services. Thus, the company is interested in increasing the number of customers in different countries, such as additional markets in South America and Asia (Avast Software 2018a). Some countries offer great potential to increase the company’s user base to 1 million and over.

Customization

The key advantage of Avast’s marketing strategy is its focus on offering free products according to the freemium model. A user who chooses the free antivirus has the option to pay for advanced features if required, and free products contain embedded advertisements. Users are offered a wide range of security products, from antivirus to business solutions, browser cleanup and security tools, password management, and firewall protection, among others (Prague Post 2015). As a result of this scheme, while only 4% of Avast users choose premium options, more than 400 million actively use Avast’s other products and services (Avast Software 2018a).

Distribution Channels

Avast has a unique approach to promoting and distributing its products, focusing on targeted sales, specific business-oriented marketing, and word of mouth. Avast does not rely on pre-installation for its antivirus, and the company pursues no direct nor traditional sales of its products and services (Avast Software 2018a). Instead, users download and buy Avast’s products directly from the company’s online store or from partners’ websites. The company is also focusing on promoting security tools for mobile devices through browser advertisements and applications.

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Communication Method

The communication model used by Avast Software in different countries does not differ significantly from one region to another. The company uses advertising in free products, pop-ups, and messages to promote its own and partners’ services. Partners’ websites, albeit rarely, may also contain advertisements for Avast products and services (Avast Software 2018a; Avast Software 2018c). The company chooses to communicate to potential consumers about the merits of its products with the help of social media and a word-of-mouth approach.

Company’s Logistics Approach

Production Location and Country Factors

As mentioned, Avast is headquartered in the Czech Republic, where operations related to design and development of its cybersecurity products take place. Most of the company’s employees work there, a strategy that the executives assert is the most cost-efficient approach (Prague Post 2015). The company has opened offices in other countries around the globe to meet the necessity of providing effective support in regions with millions of Avast users, including the Americas, Europe, and Asia. No specific cultural barriers preventing the operations of Avast in the countries where it has its offices have been identified.

Technological and Product Factors

Technological factors that can influence the operations of Avast are associated with the development of the latest technologies in the spheres of cybercrime and cybersecurity to address threats. Although the company’s R&D centers are concentrated in the Czech Republic, Avast also uses the R&D base of the companies it has acquired, such as Piriform in London (Avast Software 2018a). All production operations are realized virtually, using the company’s intranet services and resources. Therefore, no specific physical production processes nor transportation is involved.

Company’s Human Resource Management (HRM) Approach

International Employees, Staffing Policy, and Incentive Policy

For its international offices, Avast recruits local employees and relocates experienced managers to develop operations in new offices. The emphasis is on hiring the most qualified individuals without reference to nationality, ethnicity, gender, or age. The company promotes [email protected], a program designed to support women’s rights regarding employment and to help avoid discrimination (Avast Software 2018b). In addition, Avast has implemented talent and development programs for its employees globally to train them and to refocus on innovation. According to the company’s incentive policy, the main aim is to pay employees fair compensation; Avast has also developed and adopted a rewards program (Avast Software 2018b).

HR Philosophy and Impact on Host Country

Avast’s HR philosophy is based on the idea of providing all employees opportunities for development and growth while contributing to innovation and excellence in performance. Teamwork garners much attention, and the company has created and continues to promote a positive, cooperative atmosphere to design effective products in the context of a customer-first approach. Supporting innovativeness through filing patents by employees is another company focus (Avast Software 2018b). Thus, Avast’s HR approach offers great potential to contribute to developing the IT and cybersecurity industry in the host country with a focus on attracting skillful individuals.

Analysis

Benefits

While doing business in a developing country, Avast can contribute to the progress of that nation’s IT industry and businesses based on online operations. Considering the high cybercrime rates in developing countries, in entering a new country, Avast can contribute to the local effort to overcome cybersecurity threats to large enterprises and to the government (Avast Software 2018a). Furthermore, Avast’s orientation toward high-skill professionals means that the company will provide locals with job opportunities fitting their educational level without provoking an outflow of human resources. In addition, the presence of Avast in the market of a particular developing country will contribute to enhancing its online market area and e-commerce.

Costs and Risks

Risks associated with Avast’s activities in a developing country include taking a leading position in the industry, thereby suppressing local companies that may try to enter the market. Another risk is associated with the development of the customer-first approach in the company. Additionally, the corporate culture of Avast might be unfamiliar for employees from developing countries (Avast Software 2018b). However, it is possible to note that the overall costs of opening Avast offices in one more country are minimal for the community.

Recommendation and Conclusion

It is possible to recommend that Avast open offices in one or more developing countries because of the potential benefits for a host country’s growth. Risks to a country that might be associated with Avast’s entry into the market are minimal, while the advantages are evident. Thus, Avast will contribute to the development of the new host country’s IT industry and market and provide effective cybersecurity solutions for large businesses and the host government.

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Moreover, while contributing to the progress of innovation and advanced technologies in the selected developing country, Avast Software will create job positions for talented young employees. This approach will add to preventing the type of personnel outflows typical in developing countries. Therefore, the specifics of Avast’s operations facilitate recommending the expansion of this company in a developing country.

References

Afanasieva, Dasha. 2018. “Cyber Security Firm Avast Falls in LSE’s Biggest Debut of the Year.Reuters. Web.

Arampatta, Indraneel. 2018. “Avast to Become One of London’s Largest Software Stocks.” Megabuyte.com. Web.

Avast Software. 2018a. “Analyst Presentation.” Avast Software. Web.

Avast Software. 2018b. “Culture.” Avast Software. Web.

Avast Software. 2018c. “Growth and Competitive Advantage.” Avast Software. Web.

Avast Software. 2018d. “Results, Reports and Presentations.” Avast Software. Web.

Prague Post. 2015. “Avast Becomes Most Valuable IT Company in the CR.” Web.

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