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... e the Palm i 705, Sharp Zaurus SL- 500, Sony Clie Peg-N 760 C, Company iPAQ 3835, Rim/Blackberry 957, Samsung SPH-M 330, Kyocera Smartphone QCP 6035, Nokia 9290 Communicator, as well as the Microsoft Pocket PC Phone (Hunger & Wheelen, 2004, Case 11, pp. 11 - 9 - 11 - 10). Since Handspring was a novice in the smartphone arena, a number of industry analysts predicted that succeeding in this market would be a huge challenge for Handspring. The Treo product line presented Handspring with a number of potential prospects. In an effort to achieve their goal of high profitability, Handspring first chose to form the Enterprise Alliance Partnership or EAP Program to enhance its existing working relationships with retailers, enterprise-focused resellers, corporate systems integrators, and wireless service providers to expand into the corporate communications market (Hunger & Wheelen, 2004, Case 11, p. 11 - 12). Additionally, Handspring formed strategic partnerships with firms like Neomar, Wireless Knowledge, Visto Corporation, Aether Systems, and Synchrologic to increase its distribution channels (Hunger & Wheelen, 2004, Case 11, p. 11 - 12).
Furthermore, Handspring realized that in order to truly compete in the corporate market, it must devote a substantial amount of investment as well as research on operating system compatibility. Since majority of information technology personnel preferred products that were compatible with their companies' operating systems, products such as the Microsoft Pocket PC Phone had a significant edge over the Palm operating system device such as Treo (Hunger & Wheelen, 2004, Case 11, p. 11 - 12). Hence, Donna Dubinsky, the CEO of Handspring decided that allocating its resources on operating system development would be a worthy strategic approach to acquire greater financial strength. Handspring reached beyond the consumer market and became a force in the corporate wireless market by moving the traditional PDA into the communication market. After introducing the Treo product line, the margins had significantly improved. Margins moved from 9. 2 % to 24. 5 % over the prior fiscal year end, and without experiencing any pricing pressure from competing products, Handspring remained confident that its new line would be successful in the marketplace with profitability.
In an effort to ensure the company would meet their profitability objectives with the new Treo product line, Dubinsky set the following guidelines to follow: 1. Accelerate the company's plan to phase out of the Visor product line and concentrate all of Handspring's resources on the development and marketing of the Treo communicators through increased alliances with telecommunications service providers. 2. Dedicate resources to a costly marketing and advertising campaign to increase awareness of communicators rather than rely on the early adopters of the new Treo products to educate other consumers. 3. Focus resources on developing an operating system to compete with products offered by Palm, Microsoft, and Symbian. (Hunger & Wheelen, 2004, Case 11, p. 11 -- 13) Alternative strategies for Handspring include keeping the Visor product line, vertical growth, and merging with Palm Computing.
Alternative Strategies Pro's Con's Keeping Visor Product Line Customer demand was high (40 %), cost ($ 169 -$ 229), and features (black and white or color). Hyper competitiveness (decrease profitability), advancements in technology, new entrants to market (Microsoft). Vertical growth Integration of transaction cost (decrease cost of raw materials), assimilation of cell phone and PDA device. Higher research and development cost, capital cost increase. Merge w/ Palm Computing Development of a superior product, increase in intellectual and financial resources, increase in ability to compete in larger market. Workforce conflict, only one corporation will survive. "Strategy is implemented through organizational structure." (Miller, Boehlje & Dobbins, 2005) Handspring Corporation's desire to compete in the market against Palm, Microsoft, and Symbian can be achieved through horizontal growth and product diversification.
Horizontal growth will allow Handspring the opportunity to diversify its products and services offered in the current market. In addition it strengthens the current strategic alliances and joint ventures with Sprint PCS, Neomar, Wireless Knowledge, Inc, Vista Corporation, Aether Systems, Avnatogo, Extended Systems, and Synchrologic. (Wheelen & Hunger, 2004, p. 11 - 12) Handsprings differentiated product strategy may include: (Miller et al. , 2005) o End- user focus: the focus is on the final consumer. Historical study of consumers to find out preferences and dislikes study of current market trends o Distribution / marketing mentality: expectations of consumers are as important as production considerations ease of use, multifunctional, portable. o Value- added production: additional revenue by further processing and distribution joint ventures and strategic alliances.
o Smaller scale of operation: focus is on customer market and niche corporate wireless market. o In source resources: intellectual resource in Hawkins as the creator of Palm technology. "Growth into areas related to a company's current product line is generally more successful than is growth into completely unrelated areas." (Wheelen & Hunger, 2004, p. 146) The strategic recommendation is to obtain market share and profits by horizontal growth and diversification. This will be accomplished through the phasing out of the Visor product and focusing on the Treo line. This focus includes continued partnerships with Sprint PCS, Neomar, Wireless Knowledge Inc, Vista Corporation, Aether Systems, Avnatogo, Extended Systems, and Synchrologic. Emphasis will be placed on wireless service. Joint ventures with Ipod, for the purpose of adding music will be explored, and Fujitsu Corporation will be contacted regarding fuel cells. "Fujitsu has made progress in development of a key component for direct methanol fuel cells, which are viewed as a future power source for portable equipment." (PCWorld, 2005) The first part of Handsprings implementation would be to enter into joint ventures with Sprint PCS, Ipod and Fujitsu.
According to COO Colligan, "By working with the best integrators and back-end software providers in the industry, we can leverage each other's experience to give corporate customers exactly what they want. " (Wheelen and Hunger, p 11 - 12) This is part of the TQM philosophy. By forming these alliances, Handspring is expanding their knowledge, meeting the corporate customers' needs and is better able to increase its marketing and distribution channels. Joint ventures will allow the companies to share the risks and the costs involved. In order to introduce the new Treo smart phone, which uses the Sprint PCS cellular network, it would be offered on the Treo Communication website for an initial dollar amount and on Sprint PCS' website and retail stores for less money with a one-year service agreement and even less with a two-year service agreement.
This will allow the consumers to save money initially by locking them into a contract longer making the two companies more money. The next step Handspring would take would be to phase out Visor. The Visor products were hardware-based, and only expandable through hardware additions as opposed to software additions like the Treo. The Visor was also under price pressure from its many competitors. This was eroding the margins and making it less profitable. With the elimination of the Visor line, the company can focus on the Treo.
This will also increase the resources available for marketing the Treo and upgrading software continuously. The final phase of implementation that would need to be established would be an increased focus on R& D. Technology is continually improving and in order to ensure continued growth, Handspring must stay ahead of the competition through improving current products and innovating new products. This needs to be done within an acceptable budget. As upgrades are made to the Treo, consumers would be able to trade in their old units for the new unit with rebates for limited times. When they trade their units in for rebates, they would be required to sign service agreements again.
This would make for assurance in retaining established customers. Before actual performance can begin, Handspring must make certain that they are staffed adequately and organized appropriately to carry out its plans. Hawkins was no longer totally focused on Handspring. It is evident to move forward it would be necessary for him to step down from his position as Chairman of the Board and become the Head of Product Development.
This way he could focus his time at Handspring on his strength, product development. TQM is a management philosophy and set of practices that emphasize top management commitment, customer focus, supplier relationship, benchmarking, quality-oriented training, employee focus, zero defects, process improvement and quality measurement. TQM is very important to the success of the new strategy. To achieve horizontal growth and diversification, and ensure profitability, there will be a need for strong leadership from top management, employee training, empowerment of lower level employees, and teamwork (Wheelen and Hunger, p 232). The focus on TQM should increase the profitability of the Treo. With a plan devised for the company's release of the Treo and a goal for higher profitability set, Handspring's CEO Donna Dubinsky would be expected to figure the pro forma gross profit, total expenses, profit before taxes, taxes, and profit after taxes.
This will be done by taking the financial statements from the previous year each year and the goals set for the current year. So if they set a 10 % profit goal, then she would have to take the gross profit from the previous year and multiply that by 110 %. She will also have to take into consideration the increase in materials to make the finished product, and the 10 % more products that will be needed to in order to reach the 10 % sales goal. In order for Handsprings to reach their goal of higher profitability, it is important that in the first year they at the least re-cover the losses they accrued the previous year.
With the new product release of Treo, it is imperative to keep track of performance levels. Without tracking and doing constant evaluations of the product, it wouldn't be possible to keep track of progress and make corrections where needed. Tracking of the new product will need to be done on a weekly, monthly and quarterly basis. A goal will need to be set at the beginning of each month for projected revenue by department managers, and each week they will need to meet to discuss productivity, performance, and updates. By breaking down each department in the weekly meetings, it will make it easier to track performance results based on the different areas of production.
If reengineering a process is necessary, the exact point of weakness will be easy to track. It is necessary to have these meetings on a weekly basis because if there are any disconnects in any of the processes, it is much easier to fix if it is caught immediately vs. a month later. Once a bad habit is formed, it is hard to break, so problems need to be addressed right away. All goals will be set by the managers and all managers will be reporting to Donna Dubinsky, Jeffrey Hawkins, and Ed Colligan, the three founders of Handspring, Inc. With Handsprings main goal being profitability, it is important that each month a budget is set and compared against the weekly standings.
Included in the monthly budget would be cost of general operations, advertising, and administrative. The goals will be compared to the actual numbers, and actions will be taken as necessary. References Hunger, J. D, & Wheelen, T. L. (2004). Strategic management and business policy.
Upper Saddle River, NJ: Pearson, Prentice-Hall. Miller, A. , Boehlje, M. , Dobbins, C. (2005) Doing the Right Thing. Retrieved August 11, 2005, from Purdue University Web Site: web Palm (2005). Treo smartphone.
Retrieved August 9, 2005, from web PCWorld. Prototype device delivers more power, but when will it be available? Retrieved August 11, 2005, from web
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