Wednesday, September 18, 2019
Gateway Essay -- essays research papers
Gateway Inc. Issues:  ·Ã‚     The US personal computer market continued to struggle and Dell had just lowered its prices about 20%. As a result, its stock price rose 13% and it gained more market share.  ·Ã‚     How should Gateway respond to Dell and its recent price cuts? o     Lowering Gateway prices could jeopardize gross profit margins o     Conversely, unit sales were already down so there was the threat of additional sales loss  ·Ã‚     Resource Allocation: o     Should Gateway focus on US consumer sales more or US business sales?  §Ã‚     Keeping in mind that Gateway planned to discontinue company-owned operations outside North America at the end of 2001 o     How should Gateway run its sales and advertising operations? (Keeping in mind, the 2001 advertising budget is about $20 million less than in 1999 at $239.6 million)  §Ã‚     How much emphasis should be placed on PC’s and PC-related units v. â€Å"beyond-the-box†products and services?  §Ã‚     Where should Gateway’s marketing efforts be directing customers: telephone and its website or to its Country Stores?  ·Ã‚     Operating issues in regards to selling, general and administrative (s, g, a) expenses: o     Overall company s, g, a expenses would decline due to:  §Ã‚     Closing of North America manufacturing, sales and service operations  §Ã‚     Reduction in the number of Country Stores  §Ã‚     Less advertising fees and expenditures  §Ã‚     End of alliance with OfficeMax o     However, decisions about continued s, g, a expenses still needed to be made:  §Ã‚     Does the Gateway store concept need more thought pertaining to Gateway’s business model of operating as built-to-order?  ·Ã‚     Gateway’s gross margin and operating costs needed attention in order to once again be profitable o     The influential aspects among its customer sales mix, its product sales mix and its sales mix across its 3 distribution channels needed to be monitored a... ...f both and combat Dell’s lower prices. Ways in which this could potentially happen is by offering basic beyond-the-box products with the purchase of a PC and aggressively encourage upgrades and additional features customers can’t refuse. Another way to counter other PC manufactures is through differentiation. By Gateway focusing on operating its build-to-order method as efficiently as possible, exploiting its distinct third channel of stores and staying technologically as innovative as possible, it is able to differentiate itself apart from its competitors.      Lastly, in addition to its pursuit of the consumer market, I think Gateway could benefit from more assertively targeting the business segment that has been ruled by Dell. It’s a fact, that PC’s sold for business-use tend to be of a higher quality and therefore, more expensive with higher margins. In 2000, 65% of Dell’s PC sales went towards the business sector whereas Gateway’s main market was from consumer sales, which is often less profitable. If Gateway could go after the business market, without completely losing its consumer sales base, it would be able to better compete, especially with Dell.
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