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?
o Lowering Gateway prices could jeopardize gross profit margins
o Conversely, unit sales were already down so there was the threat of additional sales loss
· Resource Allocation:
o 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
o 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:
o 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
o However, decisions about continued s, g, a expenses st ...