Gateway
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Gateway Inc.
Issues:
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.
How should Gateway respond to Dell and its recent price cuts?
Lowering Gateway prices could jeopardize gross profit margins
Conversely, unit sales were already down so there was the threat of additional sales loss
Resource Allocation:
Should Gateway focus on US consumer sales more or US business sales?
Keeping in mind that Gateway planned to discontinue company-owned operations outside North America at the end of 2001
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)
How much emphasis should be placed on PC’s and PC-related units v. “beyond-the-box” products and services?
Where should Gateway’s marketing efforts be directing customers: telephone and its website or to its Country Stores?
Operating issues in regards to selling, general and administrative (s, g, a) expenses:
Overall company s, g, a expenses would decline due to:
Closing of North America manufacturing, sales and service operations
Reduction in the number of Country Stores
Less advertising fees and expenditures
End of alliance with OfficeMax
However, decisions about continued s, g, a expenses still needed to be made:
Does the Gateway store concept need more thought pertaining to Gateway’s business model of operating as built-to-order?
Gateway’s gross margin and operating costs needed attention in order to once again be profitable
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 and viewed as crucial elements to Gateway success
Strengths:
2000,