Compaq and HP Strategies Analysis

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Questions and Answers

Based on the text, what was a key factor in Compaq's success in the early 1980s?

  • Developing innovative manufacturing techniques.
  • Prioritizing research and development efforts.
  • Focusing on a specific, growing market niche. (correct)
  • Expanding into emerging market segments.

What aspect of HP's ink jet printer development exemplifies the 'beachhead strategy'?

  • HP's development of a product platform that led to a family of printers
  • HP's parallel development of different printer platforms, like the '500', '600', and '800' (correct)
  • HP's focus on improving cost, quality, and speed of their printers
  • HP's use of a chance discovery at their Palo Alto laboratory

What can be inferred about Compaq's approach to research and development (R&D) based on the information provided?

  • Compaq heavily relied on external partnerships for technological innovation.
  • R&D investment was prioritized over other business areas.
  • R&D was considered crucial to Compaq's growth strategy.
  • R&D spending was limited despite significant sales growth. (correct)

What is the key characteristic of a 'product platform'?

<p>A product platform uses standardized components to create new products efficiently. (D)</p> Signup and view all the answers

What is the primary goal of Step 1 in the process for defining platform strategy?

<p>Create a visual representation of market segments and price-performance tiers. (B)</p> Signup and view all the answers

How did HP's ink jet printer technology initially differ from dot matrix printers?

<p>Ink jet printing produced higher quality output than dot matrix printing. (B)</p> Signup and view all the answers

Which of the following is NOT a type of data required to identify growth areas in Step 2?

<p>The profitability of each market niche. (D)</p> Signup and view all the answers

What is the primary focus of the 'beachhead strategy'?

<p>To quickly gain a dominant position in a specific market. (C)</p> Signup and view all the answers

What is the significance of looking forward in time when segmenting markets in Step 1?

<p>To anticipate potential changes in customer preferences and technology. (A)</p> Signup and view all the answers

In the context of HP's ink jet printer development, what does the term 'beachhead' represent?

<p>A small but significant initial market presence. (D)</p> Signup and view all the answers

What is a potential drawback of defining "the business" too narrowly in Step 1?

<p>It might limit the development of new platform initiatives and their commercial potential. (B)</p> Signup and view all the answers

What is the primary purpose of defining current platforms in Step 3?

<p>To understand how existing platforms fit within the market segmentation grid. (D)</p> Signup and view all the answers

What was the core innovation that led to HP's development of ink jet printers?

<p>The discovery of a way to control jets of fluids using electrical stimulation. (B)</p> Signup and view all the answers

Which of the following is NOT mentioned as a step in the process for defining platform strategy?

<p>Develop a detailed financial plan for platform development and launch. (C)</p> Signup and view all the answers

How did HP's product family renewal impact the low-end printer market?

<p>HP's products became the dominant force in the low-end printer market. (C)</p> Signup and view all the answers

What is the primary reason that HP's '500', '600', and '800' platforms represent 'horizontal leverage'?

<p>They offer a range of products with different features and price points. (C)</p> Signup and view all the answers

What is the key principle behind the new product strategy proposed in the text?

<p>Replacing older products with newer, improved versions to maintain competitive excellence. (A)</p> Signup and view all the answers

Which of the following is NOT a component of the “power tower” model for managing innovation?

<p>Organizational infrastructure. (B)</p> Signup and view all the answers

What is the "beachhead strategy" as described in the text?

<p>A strategy that utilizes horizontal leverage and vertical scaling to expand market reach (B)</p> Signup and view all the answers

How does the Hon Furniture Company exemplify the "beachhead strategy"?

<p>By entering the low-cost, low-performance segment and subsequently scaling upwards (D)</p> Signup and view all the answers

How do customers generally react to companies that continuously innovate and introduce better products?

<p>They are generally receptive to dealing with strong innovators. (A)</p> Signup and view all the answers

What is the primary objective of the “power tower” model?

<p>To manage the evolution of a product family in a comprehensive manner. (B)</p> Signup and view all the answers

What is the potential threat posed by low-end manufacturers to high-end producers?

<p>Low-end manufacturers may scale up their platforms to invade higher-price segments (D)</p> Signup and view all the answers

Which of the following companies exemplifies the "retaking the low ground" scenario discussed in the text?

<p>Volkswagen with the Beetle and Honda/Toyota in the automotive industry (C)</p> Signup and view all the answers

Which of the following is NOT a benefit of continuous product platform renewal?

<p>Lower product development costs. (C)</p> Signup and view all the answers

Which of the following is NOT a key component of the first step in defining a platform strategy?

<p>Analyzing the competitive landscape of each segment (A)</p> Signup and view all the answers

Why is it important to incorporate emerging market segments in the first step of platform strategy?

<p>To identify potential future growth areas and opportunities (B)</p> Signup and view all the answers

What is the potential consequence of defining "the business" too narrowly in platform strategy?

<p>It can limit the potential of new platform initiatives (A)</p> Signup and view all the answers

In the context of platform strategy, how are major market segments and price-performance tiers represented?

<p>In a market segmentation grid (D)</p> Signup and view all the answers

What was the primary catalyst for Black & Decker's renewal of their power tool portfolio?

<p>The requirement to implement double insulation (D)</p> Signup and view all the answers

What is the purpose of using high-level block diagrams when defining product platforms?

<p>To identify common subsystems and interfaces across a range of products. (B)</p> Signup and view all the answers

What was the main issue with Black & Decker's product portfolio in the early 1970s?

<p>The products lacked a unified design and manufacturing approach. (D)</p> Signup and view all the answers

What is the primary objective of analyzing competing products in the context of product platform strategy?

<p>To understand the strengths and weaknesses of your product platforms. (B)</p> Signup and view all the answers

Which of the following was NOT a contributing factor to Black & Decker's inefficient manufacturing process?

<p>The use of advanced, specialized tooling (A)</p> Signup and view all the answers

What is 'horizontal scaling' in the context of product platforms?

<p>Expanding a platform's capabilities to include a wider range of products. (B)</p> Signup and view all the answers

What is the underlying principle behind the mindset proposed for new product strategy?

<p>Continuously creating and implementing new product platform iterations. (B)</p> Signup and view all the answers

What was the primary consequence of Black & Decker's uncoordinated product design?

<p>The company faced high production costs and inefficiency. (C)</p> Signup and view all the answers

What is the significance of the fact that Black & Decker's competitors followed a similar product development approach?

<p>It implies that the company was not at a disadvantage compared to its rivals. (B)</p> Signup and view all the answers

What is the potential downside to a company's continuous product platform renewal strategy?

<p>Negative impact on employee morale and customer loyalty. (B)</p> Signup and view all the answers

What key insight does the case of Black & Decker offer about product development?

<p>The significance of having a clear and cohesive product strategy. (D)</p> Signup and view all the answers

What is the main difference between horizontal scaling and vertical scaling in product platform strategy?

<p>Horizontal scaling focuses on expanding product capabilities, whereas vertical scaling focuses on reducing production costs. (C)</p> Signup and view all the answers

What does the term 'putting skin into the game' signify?

<p>Taking proactive measures to drive product innovation and stay competitive. (B)</p> Signup and view all the answers

Why was Black & Decker's product portfolio considered “uncoordinated” in the 1970s?

<p>The products lacked integration and shared components. (D)</p> Signup and view all the answers

What can be inferred from the fact that Black & Decker had 60 different motor housings and 104 different armatures for their power tools?

<p>The company's product portfolio was fragmented and lacked standardization. (A)</p> Signup and view all the answers

The text states that corporations need to recapture the entrepreneurial essence of their early years. What is the most crucial element of this entrepreneurial essence?

<p>A commitment to continuous product innovation. (D)</p> Signup and view all the answers

Flashcards

Product Platform

A set of common components used to create and launch derivative products efficiently.

Key Product Parts

Major components, like the motor in power tools, that are fundamental to a product platform.

Hewlett Packard's Ink Jet Development

HP pioneered ink jet technology in the 1980s, leading the low-end printer market.

Dot Matrix Printers

Older, noisier printers that HP aimed to improve upon with ink jet technology.

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Deskjet Platforms

Product platforms including the '500', '600', and '800' series for ink jet printers.

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Beachhead Strategy

A market entry strategy using platforms for horizontal leverage and vertical scaling.

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Horizontal Leverage

Using a common platform to create multiple products across markets.

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Vertical Scaling

Enhancing the capabilities or features of a product within a platform.

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Product Portfolio

A collection of products offered by a company.

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Black & Decker

A major player in consumer power tools, known for innovation.

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Double Insulation

A safety feature in power tools that prevents electrical shock.

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Armatures

Components that connect the motor to the working part of a tool.

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Economies of Scale

Cost advantages gained by increased production and shared components.

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Uncoordinated Designs

Product designs that lack consistency and standardization.

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Production Line Changeovers

The process of switching production from one product to another.

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Customer Loyalty

The tendency of customers to repeatedly buy products from a brand.

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Entrepreneurial Mindset

The approach to quickly innovate and improve products continually.

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Product Family Evolution

The need to manage a range of products that share common elements and platforms.

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Market Applications of Technology

Using technology to create products that meet the needs of different customer groups.

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Common Technical Building Blocks

Foundational components that support the development of various products within a product platform.

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Continuous Product Platform Renewal

The strategy of constantly updating products to maintain competitiveness.

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Hon Furniture Company

A low-tech example of successfully using a beachhead strategy in office furniture.

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Upper Market Tiers

Higher price-performance levels aimed at affluent consumers.

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Low-End Market Entry

Entering markets that are under-served by existing competitors.

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Market Segmentation Grid

A tool to categorize markets by customer segments and product tiers.

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Emerging Market Segments

Newly developing areas of potential business growth.

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Derivative Products

Products developed from a main product platform with variations.

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Competitive Benchmarking

Analyzing competing products' functionality, cost, and quality.

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Performance Drivers

Factors that significantly affect product performance and cost.

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Future Platform Initiatives

New strategies for developing product platforms competitively.

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Horizontal Scaling

Expanding product offerings across different markets or segments.

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Skin Into The Game

Investing efforts into innovating products to stay relevant.

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Compaq History

Compaq began selling portable PCs in 1982 and quickly grew its sales.

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Revenue Growth

By 1995, Compaq's annual sales reached nearly $15 billion.

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R&D Spending

Compaq’s R&D spending in 1995 was about 2% of sales.

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Market Segmentation

Step 1 in platform strategy: identify major market segments and price-performance tiers.

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Growth Opportunities

Step 2: Identify growth areas using sales volume and market share data.

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Market Niche Data

Five data types needed for each niche: sales volume, market share, growth rate, competitors, needs.

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Defining Platforms

Step 3 involves defining major product platforms based on market segments.

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Emerging Segments

Identify and include emerging market segments in planning.

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Study Notes

The Power of Product Platforms

  • The book is about building value and cost leadership through product platforms.
  • The authors, Marc H. Meyer and Alvin P. Lehnerd, dedicate the book to mentors, colleagues, and readers to help transform wishes into a future that is productive and prosperous.
  • The book covers product families, platforms, derivative products, and their renewal using specific rules and tools.

Contents Overview

  • Preface: Discusses the importance of robust products for corporate success and continuity in technology transitions. Highlights companies like Motorola, HP, Intel and Microsoft as examples of successful product renewal. Explores what differentiates successful companies from failing ones in the context of product innovation.
  • Chapter 1: Discusses the power of product platforms in product-making enterprises. Explores product portfolios evolving through technology enhancements, highlighting those that lead to market success and those that do not. Discusses the creation of product families (related products sharing common technology to address market demands).
  • Chapter 2: Focuses on efficiently managing product platforms over successive generations. Discusses examples of how new product development can be systematically planned using platforms rather than individually; this includes the example of Hewlett Packard’s ink jet printers. The chapter also talks of a thought architecture composed of 5 fundamental principles for management.
  • Chapter 3: Delves into platform strategy, showing how product platforms can unlock new market opportunities, using examples of market segmentation grids to determine the company's strategic fit.
  • Chapter 4: Explains "composite design" methods for the effective engineering of platform architectures.
  • Chapter 5: Detailed instruction on organizing and structuring efforts in product development.
  • Chapter 6: Provides new metrics for evaluating product family performance.
  • Chapters 7 & 8: Extend the discussion of platform and product family principles to software and information products, and their respective applications, including internet-based products and services.
  • Chapter 9: Summary of all previous chapters, providing a process for effective product development management.

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