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Compaq Strategic Analysis

1474 words - 6 pages

COMPAQ Strategic Analysis
Environment Analysis
The computer industry by 1999 has become a mature commoditized industry. This is reflected by drop in profit margins, slowing growth rates and increased concentration ratio. This industry can be broadly segmented into large and small customers with $1million purchase as the separation between the two. Through porters 5 force analysis this industry looks as follows ...view middle of the document...

• Substitutes - There is no efficient substitute to computers with respect to data storage, ease of information sharing, productivity improvement.
Organizational Analysis
In trying to understand the competitive advantage of Compaq we need to analyze Compaq’s operations within the VRIS framework from the perspective of the channel partner and the end user
Channel Partners
Valuable- The business users are moving away from the indirect channel and moving to the direct channel. 85% of Compaq’s go to market model is through the indirect channel and thus they one of the primary suppliers to the channel partners
Rare – PCs have become a commodity product and its no more rare shown by the dropping prices across the industry segments
Imitable – N/A to the channel partner. The main competitors will imitate a successful product.
Substitutability – The channel partner can easily replace Compaq’s products with other competitors products on their shelves.
End Customer
Valuable- at the home PC level the computer is just a commodity and thus its difficult for Compaq to extract higher prices but at the enterprise level these products can be a source of competitive advantage to the customers and thus Compaq is able to extract a higher profit margin from these customers.
Rare – PCs have become a commodity product and its no more rare shown by the dropping prices across the industry segments
Imitable – technology is similar across the major players and to that extent it’s easily imitable
Substitutability – Compaq’s PC can be easily substituted by other producers product. Ex Dell, HP, IBM etc
Value chain analysis
In the broadly segmented market business and home user market the enterprise market consisting of PC servers and Business PCs offer higher profit margins at 30% and 20% respectively compared to the home PC...

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