"Salesforce to Acquire Slack for $27.7 Billion"article:

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Question 2

COLLAPSE

Question #2: How/why might this merger affect Salesforce's customers? Stockholders? Rivals?

The acquisition of a robust workplace communication tool like Slack will add even more shareholder value. Salesforce CEO Marc Benioff stated that the addition of Slack will aid in making Salesforce become "a key leader in the future of work" as businesses turn more and more mobile (Yahoo!Finance, 2021). Although the agreement, struck in December 2020 for a hefty cost of $27.7 billion, is not set to close until 2nd quarter of Salesforce's fiscal year, Salesforce shareholders are no longer "hopefully" betting they made the right decision; they believe results are already quantifiable and the justification is strong. The integration improved Salesforce's Service Cloud case close rate by 26%. Slack's fiscal results for the first quarter of 2021 exceeded Wall Street's expectations. Slack originally forecasted 156,000 paid accounts for the quarter, but was happy to inform a number on the order of 169,000. Wall Street predicts that Salesforce is a strong buy for stockholders, who should expect to see a target price of $276.04, which is a 12.2% upside (Yahoo!Finance, 2021).

Salesforce customers should expect to see major improvements to the Salesforce platform with the addition of Slack. Things such as Slack's new voice and video tools have generated a lot of excitement for customers who are hoping to gain a superior experience with the new and improved Salesforce company (Miller, 2021).

This vertical integration will help edge Salesforce ahead of its rivals. Vertical integration of a communication-based company like Slack will allow for better sharing of information and better coordination for Salesforce (Besanko et al., 2017). Being the dominant CRM (customer relationship management software) platform of the world, the ability to incorporate improved communication tools provided by Slack will take it that much further. The thing Salesforce will need to remember, however, is continuing to seek alternatives and improvements in the particulars of their business, because several smaller companies are beginning to flourish by focusing on unique, specific aspects that close the gaps Salesforce doesn't provide to the market (Bushnell, 2021).

References

Besanko, D., Dranove, D., Shanley, M., & Schaefer, S. (2017). Economics of Strategy, 7th Edition. Wiley.

Bushnell, M. (2021, January 25). Can Salesforce Stay on Top of CRM Providers in 2021? Business News Daily.

https://www.businessnewsdaily.com/11203-salesforce-crm-competition.html

Miller, R. (2021, June 30) Slack's new voice, video tool should fit nicely on Salesforce platform after deal closes. TechCrunch.https://techcrunch.com/2021/06/30/slacks-new-voice-video-tools-should-fit-nicely-on-salesforce-platform-after-deal-closes/

Yahoo!Finance (2021, June 24). With Slack Acquisition, Salesforce Shows it's no Slacker.https://finance.yahoo.com/news/slack-acquisition-salesforce-shows-no-143510299.html