Harvard Case - Desktop Printer Industry in 1990
"Desktop Printer Industry in 1990" Harvard business case study is written by Elizabeth Olmsted Teisberg, Theodore H. Clark. It deals with the challenges in the field of Strategy. The case study is 23 page(s) long and it was first published on : Jun 29, 1990
At Fern Fort University, we recommend that desktop printer manufacturers in 1990 adopt a multi-pronged strategy to navigate the rapidly evolving industry landscape. This strategy should focus on innovation, market segmentation, strategic alliances, and globalization to secure a sustainable competitive advantage.
2. Background
The case study 'Desktop Printer Industry in 1990' highlights the burgeoning desktop printer market, characterized by rapid technological advancements, fierce competition, and evolving customer needs. Key protagonists include established players like Hewlett-Packard (HP), Canon, and Epson, as well as emerging startups like Lexmark and Tektronix. The industry is grappling with the transition from dot-matrix to inkjet and laser technologies, while navigating the complexities of pricing, distribution, and market penetration.
3. Analysis of the Case Study
3.1. Industry Analysis:
- Porter's Five Forces:
- Threat of New Entrants: High, due to low barriers to entry and the availability of technology.
- Bargaining Power of Buyers: Moderate, as buyers have a range of choices and can switch easily.
- Bargaining Power of Suppliers: Moderate, as key components like printheads and toner cartridges are sourced from a limited number of suppliers.
- Threat of Substitutes: Moderate, as alternative technologies like fax machines and electronic document sharing emerged.
- Competitive Rivalry: Intense, driven by numerous players, rapid technological advancements, and price wars.
3.2. SWOT Analysis:
Strengths:
- Technological advancements: Rapid innovation in printing technologies (inkjet, laser) offered opportunities for differentiation.
- Growing market: The desktop printer market was expanding rapidly, driven by increasing computer penetration and business needs.
Weaknesses:
- Price wars: Intense competition led to price erosion and profit margins.
- Limited differentiation: Many printers offered similar features, making it difficult to stand out.
Opportunities:
- Market segmentation: Targeting specific customer segments with tailored products and services.
- Strategic alliances: Collaborating with software companies and distributors to expand reach.
- Globalization: Expanding into emerging markets with high growth potential.
Threats:
- Technological disruption: New technologies like digital printing and online document sharing posed a threat.
- Economic downturn: A recession could dampen demand for printers.
3.3. Value Chain Analysis:
- Primary Activities:
- Research & Development: Developing new printing technologies and features.
- Manufacturing: Efficiently producing printers and consumables.
- Marketing & Sales: Promoting products and building brand awareness.
- Customer Service: Providing support and resolving customer issues.
- Support Activities:
- Human Resources: Attracting and retaining skilled talent.
- Infrastructure: Maintaining a robust supply chain and distribution network.
- Technology: Investing in R&D and IT infrastructure to stay ahead of the curve.
3.4. Competitive Advantage:
Companies could achieve competitive advantage through:
- Cost Leadership: Focusing on efficiency and economies of scale to offer lower prices.
- Differentiation: Developing unique features and functionalities, such as high-quality printing, speed, and user-friendliness.
- Focus: Targeting specific market segments with specialized products and services.
4. Recommendations
4.1. Innovation and Product Differentiation:
- Invest heavily in R&D: Develop innovative printing technologies, such as higher-resolution printing, faster speeds, and improved ink efficiency.
- Focus on features: Offer unique features like wireless connectivity, mobile printing, and automatic duplexing to enhance user experience.
- Develop specialized products: Target specific segments like home users, small businesses, and professionals with tailored products.
4.2. Market Segmentation and Targeting:
- Identify key segments: Target home users, small businesses, corporate offices, and educational institutions with distinct product offerings.
- Develop targeted marketing campaigns: Tailor marketing messages and channels to resonate with each segment.
- Offer value-added services: Provide services like printer maintenance, consumables supply, and technical support to enhance customer loyalty.
4.3. Strategic Alliances:
- Partner with software companies: Integrate printers with software applications to offer seamless printing solutions.
- Collaborate with distributors: Expand reach and market penetration through partnerships with retailers and online platforms.
- Joint ventures: Explore joint ventures with complementary companies to leverage each other's strengths.
4.4. Globalization:
- Enter emerging markets: Capitalize on the high growth potential of developing economies by adapting products and marketing strategies.
- Establish local partnerships: Form alliances with local distributors and retailers to facilitate market entry and distribution.
- Develop global supply chains: Optimize manufacturing and distribution networks to serve international markets efficiently.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: Focusing on innovation, market segmentation, and strategic alliances aligns with the core competencies of printer manufacturers and their mission to provide high-quality printing solutions.
- External customers and internal clients: Addressing the needs of diverse customer segments and building strong relationships with partners will drive long-term success.
- Competitors: Staying ahead of the competition through innovation, differentiation, and strategic partnerships is crucial.
- Attractiveness: The recommendations are expected to lead to increased market share, improved profitability, and sustainable growth.
6. Conclusion
The desktop printer industry in 1990 presented a dynamic and competitive landscape. Manufacturers needed to adopt a proactive approach to navigate the challenges and opportunities. By focusing on innovation, market segmentation, strategic alliances, and globalization, companies could secure a competitive advantage and achieve sustainable growth.
7. Discussion
Alternatives not selected:
- Cost leadership: While cost leadership can be effective in the short term, it can lead to price wars and erode profitability.
- Mergers and acquisitions: While M&A can provide access to new markets and technologies, it can be risky and expensive.
Risks and Key Assumptions:
- Technological disruption: New technologies could emerge and render existing printing technologies obsolete.
- Economic downturn: A recession could significantly impact demand for printers.
- Competitive intensity: The competitive landscape could become even more intense, leading to price wars and margin compression.
Options Grid:
| Option | Advantages | Disadvantages | Risks |
|---|---|---|---|
| Innovation | Differentiation, competitive advantage | High R&D costs, risk of obsolescence | Technological disruption |
| Market segmentation | Targeted marketing, higher margins | Increased complexity, potential for cannibalization | Changing customer preferences |
| Strategic alliances | Access to resources, market expansion | Loss of control, potential conflicts | Partner reliability |
| Globalization | New markets, growth potential | Cultural differences, logistical challenges | Political instability, currency fluctuations |
8. Next Steps
- Develop a strategic plan: Define clear objectives, strategies, and action plans for each recommendation.
- Allocate resources: Commit resources to R&D, marketing, and international expansion.
- Monitor progress: Track key performance indicators (KPIs) to measure progress and make adjustments as needed.
- Stay agile: Continuously adapt to changing market conditions and technological advancements.
By implementing these recommendations, desktop printer manufacturers could navigate the dynamic industry landscape, secure a competitive advantage, and achieve sustainable growth.
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Case Description
The desktop printer industry in 1990 is characterized by significant uncertainty about new technologies and about the types of features customers may demand in the next decade. The case looks at the positions of Hewlett-Packard, Canon, Kodak, Xerox, and IBM enabling students to consider different approaches competing firms may take to manage strategic risks in a rapidly changing, high technology industry.
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