Data Bases • Custom Term Papers • Free Term Papers • Free Research Papers • Free Essays • Free Book Reports • Plagiarism? Links • Top 100 Term Paper Sites • Top 25 Essay Sites • Top 50 Essay Sites • Search 97,000 Papers @ DirectEssays.com • Search 101,000 Papers @ ExampleEssays.com • Search 90,000 Papers @ MegaEssays.com Free Essays • Term Paper Sites • Chuck III's Free Essays • Free College Essays • TermPaperSites.com • My Term Papers • Get Free Essays • Essay World • Planet Papers	Search Lots of Essays Back to Subjects - Computers Gateways strategic analysis Gateways strategic analysis Gateway was founded in 1985 and went public in 1993 (NYSE: GTW). During the company's initial start up, Gateway developed and implemented a customer-focused growth strategy. Gateway's customer-focused strategy has been the driving force behind the company's success in the personal computer market. With the rapid change in technology and increased competition, Gateway can no longer depend on consumer loyalty in the PC market. Today, Gateway has expanded their client-relationship strategy beyond the traditional PC market and has developed a new customer based strategy, termed "beyond-the-box". The "beyond-the-box" strategy has four key initiatives, which include training, ISP expansion, increased web activity, and better access to products through the Gateway Country stores. The overall intent is to provide consumers with a "fully bundled package of products and services designed to meet each of its customers technology needs" (investor.gateway.com). On the company's corporate level, Gateway's management realized that they must move away from their unilateral strategy, and form strategic alliances to help strengthen the company's "beyond-the-box" approach. By forming strategic alliances with companies such as Office Max, Gateway expects to enhance their already successful "multi-channel distribution model" (investor.gateway.com). Through this alliance a Gateway country store will be placed in all Office Max retail outlets. In addition, Gateway has begun vertical movement within the industry by forming strategic alliances with companies such as Sun Microsystems, esoft, and AOL. This strategic move will prove beneficial in helping Gateway achieve their target of 40% non-system revenue in the coming years. With technology changing at exponential rates, and increasing pressure from competitors, Gateway's "beyond-the-box" strategy should provide the necessary elements to attain their growth goals. The "beyond-the-box" strategy will allow the company to move into other markets outside of their traditional PC business. Though the Gateway line of personal computer sales continues to grow, increased pressure from competitors forced prices to drop approximately 13% in 1999. This price reduction in conjunction with previous price reductions has created an environment of low margins in the PC market, forcing Gateway to engage in related diversification. In a highly competitive market, related diversification through mergers and strategic alliances are considered common practices to remain competitive. Gateway is not immune to the pressures of the market and must diversify to remain intact. Their move to expand beyond PC manufacturing and enter areas such as internet management, e-commerce, web hosting, and network management systems will provide effective alternatives in helping the company meet its growth goals. It is believed that, "the market for U.S. business Internet services is projected to grow to 56.6 billion in 2003 from 7.7 billion in 1999" (investor.gateway.com). Gateway recognized the unlimited possibilities that lie within this market and have altered their strategies to remain strong in a rapidly changing environment. Gateway's strategies to expand into the Internet area will not only help support their core product (i.e. the PC) but will also provide essential non-system revenue, in the event the PC market fails. Gateway has set a strategic course for growth and expansion through diversification into new areas. Growth continues to be the focus of Gateway's strategic plan by making their products and services more accessible to the consumer. Gateway's market development strategy has helped to enhance their current multi-channel distribution model as well as develop new distribution channels. Gateway has created a new, low cost distribution channel by forming an alliance with Office Max. This new channel will allow Gateway to reach a broader range of consumers within the business sector. By focusing on the business sector, Gateway believes that new customer groups will be established. Gateway's success can be attributed to their focus on a direct and personalized sales approach. The direct approach allows consumers to have a personal computer built to meet their specific needs. Utilization of this method helps Gateway keep their costs down due to little or no inventory. In addition, the direct method eliminates costly intermediaries in the sales process and passes these savings on to the clients. Though Gateway's multi-channel distribution model has been successful in supporting their direct approach. Gateway's current strategy calls for in excess of 1,000 new Country stores by the end of the year. Gateway should be cautious of expanding too rapidly to avoid losing the personal touch with their customers, and adding to the already, over-saturated market. Gateway has developed a strategy that is consistent with today's market. Gateway has built growth and diversification into their strategic plan while maintaining their core philosophy of "keeping it personal, making it simple" (Gateway.com). Based on expectations of tomorrow's market, Gateway's strategic plan is structured in a way that will allow the company to move in a direction of growth through diversification. Though Gateway's strategic plan will more than likely be effective in achieving their goals, there are several external factors that could adversely affect the business. For example, if there are significant changes in economic conditions, personal computer sales will decline as with personal Internet usage. In conjunction with changes in general economic conditions, competitive factors such as reduced pricing or component shortages could adversely affect Gateway's core PC line. Overall, Gateway has developed a strategy that appears to be working in today's environment. Last year, Gateway's profits increased 23.5% while revenues increased 15.7% over the previous year. Since Gateway's strategy only allows for related diversification, the organization could be in trouble if the PC market fails in response to a downward trend in the economy. Bibliography: BIBLIOGRAPHY Gateway News. 20 September 2000 . "Gateway Unveils Wide Ranging Initiatives In Its Beyond the Box Strategy". 9 September 2000 http://investor.gateway.com/news/20000627-17295.htm. Konrad, Rachel. "Gateway Pins Hopes on Six-Pronged Strategy." CNET News.com. 9 May 2000. 26 September 2000 . Word Count: 908
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