Corporate Strategy – The good and the bad examples


Lately, a lot of things are happening in Tech sector. As I have been observing some strategic decisions, I feel like listing some of them here.

IBM Vs HP

IBM

Verdict: Thumbs up.

IBM has done a good job by shedding off its PC market. Sometime back it sold out its PC business to Lenovo which was the IBM’s exit from the PC market. IBM has been building up its software portfolio very well for quite some time. On the other hand it kept its dominance in the server hardware. By discarding its PC division, IBM freed itself from a low margin market while investing in a higher margin areas like Services and Software. It’s a good strategy which has already been paid off.

HP

Verdict: Thumbs down

Unlike IBM, HP has stuck to its PC business. Being the largest PC maker in the world and having big chunk of its revenue out of it, HP cannot completely exit the PC market. However, it could have strengthen its software suite of products by acquisitions which it didn’t take place. It has caused HP to fall behind in the more lucrative area while Oracle and IBM have been reaping the fruits. Though HP tried its luck in the services sector by acquiring EDS, the move itself was a late move. Now HP is suffering from reducing PC market by the arrival of Tablet PCs while it cannot venture into Software are as well.

CISCO Vs Amazon

CISCO

Verdict: Thumbs down

Cisco seems to be the company that has recently set itself as an example of strategic failures. Its strategy of entering the consumer products market back fired. It has been suffering with decreasing market share in its core areas like Switches and Routers. Cisco recently announced the closure of its Flip camcorder line of products which is acquired two years back. At the time of acquisition Cisco’s plans for Flip were sky high which have been proved wrong. Within two years of acquisition Cisco called it the end for the product line. Though Flip was accepted as one of the successful products, the inclusion of video recording features in smart phones made the presence of Flip meaningless. Interestingly within two months of Flip’s acquisition, video recording capabilities were introduced in iPhone. Cisco has clearly failed in anticipating the advancements in the field. In my opinion, entering into new product-markets is necessary to expand the business. But what went wrong with Cisco was neglecting its core business. Probably it would be the most basic rule to follow while making any strategic decisions. Never ever neglect the core business while venturing into new businesses.

Amazon

Verdict: Thumbs up

Amazon has been trying out new things apart from its core business of selling books online what it started with. Now Amazon sells almost anything from clothes to watches and jewelery to books to furniture and what not. It has been trying out some unconventional businesses like Cloud Computing Services, online music store, online video streaming etc. While growing organically it has been acquiring companies like Zappos. At the same time it has set the trend in its core business of selling books by introducing Kindle. And it stills leads its core business while making its hands dirty with some experimental ventures. All in all Amazon would be the second most innovative company after Apple, in my opinion.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s