Iteam Inc Case Study

Introduction & Background

iTeam Inc is based on Walnut Creek, California just outside of San Francisco. It produces, markets, and sells its own line of computer systems, peripherals and consumer electronics to corporate customers and electronics retailers. They house their own research and development team and have historically found success by being a low-cost provider over the past five years. Their sales are currently focused

only in the United States, and they have generally sold mainly locally. Their growth has caused them to expand to a more national scale, and they are now considering sales on a global scale. They have outsourced their call centres to India and Ireland, and have outsourced much of their production to China. This has resulted in a reduction in product quality, though they have continued to grow due to their low prices. Now that they are competing with larger, global conglomerates, they have found that they can no longer be the low-cost provider at this scale. These larger competitors are realizing lower costs due to economies of scale, and already have distribution systems in place throughout the world. iTeam's sales force has always been somewhat lax in that there are few formal sales techniques used. They rely heavily on aggressive individual sales efforts, and they traditionally have not focused

on building relationships with customers or retail partners as it was not necessary with their low prices. Andrew Taylor, entrepreneur and CEO is looking for a strategy to bring iTeam into the future despite these hurdles.

Analysis

iTeam is currently facing several key issues with respect to their growth. These stem from both the internal workings of the company as well as their external environment. This section will outline these key factors.

The Internal Environment

Strengths

1. Strong Research and Development Team

One of iTeam's greatest strengths is their research and development team. This team has worked to provide a solid platform for growth to date, developing the company's computers, peripherals, and consumer electronics. The strength of this team might be better suited to a more focused

approach (fewer, more specialized products) as more of their resources could be used rather than scattered over several product lines.

2. Aggressive Sales Team

While some may see an aggressive sales team as a weakness, the fact is that aggressive sales yield results. A related strength is that, should they develop a formal sales program, they could channel the aggressiveness of their sales team into enthusiasm, which could increase sales drastically. Seeing as the sales team is paid on a commission basis, it is only natural that they would be aggressive, as they need results in order to earn a living.

Weaknesses

1. Lack of a formal sales program

iTeam grew very quickly, and a formal sales program got lost in the shuffle. iTeam's core sales technique is composed of individual, aggressive salespeople. There has been very little overall management of the sales team, and sales are commission-based. There is no formal selling technique practiced by the company, which causes inconsistencies with respect to their sales. For example, if a second salesperson services a past customer, their technique could widely vary from the original salesperson's causing concern or confusion amongst customers. Another point of concern with the lack of a formal sales program is that different salespeople may be selling different products to the same customer (e.g. one salesperson selling to the corporate level and another for that corporation's retail outlets). Again, this could cause confusion for customers.

2. Rising Costs

As mentioned earlier, government restrictions are expected to increase costs. iTeam as already stemmed this to a certain extent by outsourcing elements of their business to lower-cost service providers (call centre, production). The major weakness however, is their inability to take advantage of the economies-of-scale that their larger competitors are enjoying. Andrew's attempts to drive down costs by outsourcing have, to some extent, backfired and it is now back to the drawing board as they work to develop a more sustainable, long-term solution.

The External Environment

Opportunities

1. Foreign Expansion

iTeam has an opportunity to expand into foreign markets, which could prove to be very profitable if they use a smart growth strategy. They are currently reluctant to do so because foreign expansion would essentially require a new company infrastructure. They would have to redesign their sales force, distribution channel, and marketing practices.

2. Specialty Provider

iTeam is in a unique position in that they are still in the early stages of growth. They are not yet a household name, and this provides them the opportunity to be a specialty provider. If they can no longer compete on the basis of price, they can certainly find some other differentiating factor to focus on. This would mean a shift in focus, whether the differentiation is quality, distribution, or specialty electronics, to a niche market where they could potentially sell more products to fewer customers.

3. New Relationships

iTeam could theoretically continue with their growth pattern, but as mentioned this could be a lot of work, building new relationships with suppliers and customers. While this would affect their bottom line in the short term (building the infrastructure for the expansion), it could have very positive results over the long term. Another option might be to work with their competitors in joint-venture project for certain products or distribution channels.

Threats

1. New, Larger Competitors

Due to iTeam's growth, they are now facing new competition. This competition is from companies much larger than iTeam and is companies with established market positions. They have already set up distribution and sales