Since it’s emergence into the PC industry in the early 1980’s, Compaq had become a growing, extremely profitable product leader eventually named Forbes “Company of the Year” in 1997. Many years of success were hurt by poor decision making in both recognizing vital firm opportunities and managing the strategy of the firm leading to lower profits, then losses, and the ultimate disappearance of Compaq as a corporate entity when it was acquired by H-P.
The following case analysis discusses some of the reasons why Compaq ended in such poor fashion and explains what Compaq could have done to proactively avoid such a surprising corporate failure. Core issues such as their inability to recognize shifts in the basis of competition, increased market segmenting, emphasis on growth through acquisition, and a lack of effective strategic management will be examined to understand Compaq’s downward spiral. Recommendations regarding what Compaq should have done are included in the conclusion. ... As core technology for the new product matures, and as multiple suppliers compete for customer attention, suppliers must make rapid improvements in product features and functions to survive. ... Compaq concentrated on product functionality during and after it’s emergence. ... The Compaq “drive for product leadership” exhibits the continued emphasis on product functionality in such areas as faster application runtime and increased hard disk size (e. ... “PC’s became a commodity…making it increasingly difficult to leverage R&D investments in a way that enabled it [Compaq] to maintain its product leadership.” So Compaq needed to understand the shift in BOC and focus their efforts on the attributes their customers hold most important. ...
Increased Market Segmenting
A fundamental tenet of technology management is that all markets are segmented.
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