Gateway: Implementing Innovative Strategies in the IT Industry


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Case Details:

Case Code : BSTR067
Case Length : 16 Pages
Period : 2003
Organization : Gateway Inc.
Pub Date : 2003
Teaching Note :Not Available
Countries : USA
Industry : PC

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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EXCERPTS Contd...

The Problems and Measures Taken

Notwithstanding its brief success, Gateway started facing problems due to the slowdown in the technology industry in the later half of 2000.

Moreover, its 'beyond-the box' services faced stiff competition from leading ISPs, computer training institutes, finance companies and consultancy firms.

Gateway reported dismal results in the fiscal 2000-01 with revenues going down by 37 percent - $6.1 billion compared to $9.6 billion in 1999-2000.

The company reported a huge loss of $1.03 billion in 2000-01 compared to $241.5 million net income in 1999-2000. Analysts were quick to comment that Gateway's management emphasized too much on 'beyond-the-box strategy,' that made sense theoretically, but not practically. The strategy led to Gateway's costs going out of control...

The 'New' Strategy

In October 2002, Gateway introduced its new business strategy that had three key components - a changed logo, retailing of many new consumer electronic products, and a new focus for GCS. The company did away with its old 'cow-spot' logo to a variation of the letter 'G.'

The new logo showed a computer power button symbolizing a more high-tech appeal (Refer Exhibit V). Gateway released more than 150 new electronic products. Prominent among them were camcorders, digital cameras, handheld computers, MP3 players and plasma television, all to be sold through GCS. It also forayed into providing broadband access and home networking services...

Exhibits

Exhibit I: Comparison of Gateway's Financial Performance with its Competitors (2000-02)
Exhibit II: A Brief Note on the Strategies of Gateway's Competitors
Exhibit III: Gateway's Products and Services
Exhibit IV: 'Beyond-The-Box' Strategy
Exhibit V: Gateway's Changing Logos - Old & New
Exhibit VI: Seven Reasons to Shop at GCS

 

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