Gateway's Strategy

Gateway Inc.

TLO Final Draft, April 26, 2004

M003, Team003

Catherine Flynn

Rebecca Fowler

Jason Gallus

Diego Garcia

Demetra Gartaganis

Alexander Gramajo

Table of Contents

Executive Summary ............................................................ pg 3

Works Cited ..................................................................... pg 28

Individual

Catherine Flynn ........................................................ pg 33

Rebecca Fowler ........................................................ pg 36

Jason Gallus ............................................................ pg 39

Diego Garcia ........................................................... pg 41

Demetra Gartaganis ................................................... pg 43

Alexander Gramajo ................................................... pg 47

Executive Summary

Gateway is one of the main players in the PC industry. By using current IT methods appropriately, it can improve its productivity, efficiency, and business practices to better its ability to succeed against other competitors in the PC market. The following pages will guide Gateway Inc. in effective implementation of IT with respect to sales, supply chain, marketing, and customer service.

Sales are a necessary and vital aspect to all companies, and certainly Gateway Inc. is no different. As such, Gateway must try to use IT to the best of its ability in order to capitalize on potential opportunities. First and foremost, Gateway must eliminate their physical stores, which have proven to generate large overhead costs for the company without providing sufficient revenues to compensate. By refocusing sales through telephone or online channels, Gateway can escape competition with large retail giants such as Best Buy and Circuit City, and can instead provide great customer service and clear sales opportunities at practically no cost.

Gateway needs to support online sales with an easy to use website that allows for quick access to customer service technicians and allows consumers to customize desired features in their products. Additionally, customers enjoy having the ability to track order status and know when to expect shipment arrivals with the use of radio frequency identification. Dell has dominated such practices for quite some time, but under the right guidance, Gateway can surpass similar success.

In addition to the sales aspect of the company, Gateway should also integrate IT that would help create a more efficient supply chain. Using the following technology could reduce inventory levels and overhead costs. We recommend that Gateway use I2 Technologies Inc.'s Factory Planner software, WebSphere Middleware, and an advanced planning and Scheduling (APS) System. These forms of IT would allow Gateway to access company, product, and consumer information all within the same system. More efficient procedures can save time and improve efficiency as well. Lastly, as mentioned before, RFID technology would allow Gateway to track its products and parts, hopefully reducing the costs of inventory and storage backups.

Gateway has partnered with America Online and bought out eMachines to improve its customer range by creating new products and expanding their customer base. It can continue to partner with companies to acquire further knowledge of its markets and combine strengths to improve productivity. It can improve the e-trust of its website to ease the minds of its customers and increase profits. More products will be sold, there will be better customer relationships, and customers will return to the site and be more loyal to the company that they trust. Customer profiling is a very important recommendation for Gateway because it allows them to understand what customers want, what they have purchased in the past, and what they are interested in now. In this case, it would be able to offer the customers the products and services that they desire in order to make more sales.

Gateway has formed an alliance with Verio Inc., which has brought Gateway more customers because Verio offers Internet access and security programs, which a key aspect that customers need when purchasing a PC. To further increase their sales, Gateway needs to create a catalog, which it can distribute to its customers and other consumers. This way, Gateway can reach Dell's standards, which is its main competitor.

Introduction

In the world of business, gaining a competitive advantage is the most important lesson to be learned in order to survive. This may sound like an easy strategy however, nearly 95% of businesses that attempt to break a market fail within their first two years. This happens because in a market saturated with many competitors, new companies cannot grow due to the size and buying power of larger corporations who have long ruled the market. According to Professor Michael Porter, a business should master only one of the three generic strategies for gaining competitive advantage: differentiation, cost leadership, or focused strategy.

When it comes to Gateway, until 2002 it was the most prominent, highest rising personal computer company in the United States. However, somewhere along the line, between rising competitors, and product downfall, Gateway fell from one of the top positions in the world of personal computer retail. The rise of Dell, Apple, and Hewlett Packard has made it difficult for Gateway to gain a competitive advantage in the last few years. Apple gained a competitive advantage by producing exotic computers