COMTEC CORPORATION

FOHANNO MéganeLE CORRE Cassandre

Overwiew of the case ( ½)

January 1984

Cambridge, Massachusetts, USA Amsterdam, Netherlands Manchester, England

Comtec Corporation is facing a financial crisis

Lack of competitiveness

Overwiew of the case (2/2)

Dr Daniel Needham

President of Comtec Corp.

Max Mendel Head of Comtec Corp.

Amsterdam

Mr Harry Otto Vice President of Comtec

Corp.

Ms Roberta Malcolm

Computer Consultant

Susan T. West Director for

Mechanical Testing Manchester Metals

Mrs Malcolm’s recommandations

1. Closing down the European office in Amsterdam and concentrate on the US market

2. Shift from hardware to software emphasis (IBM compatible software)

3. Shift Comtec’s advertising and sales promotion :

from heavy reliance on journal advertising and press releases to direct mail advertising and trade show exhibits.

Dialogue (1/2)

Dialogue (2/2)

Strengths and Weaknesses -

Communication

Strengths Weaknesses

Mr Needham considering all recommendations from both Mrs Malcolm and Mr Otto

Even if reluctant to change, Mr Otto is considering changing the advertising strategy

Mr Otto is reluctant to change

Strengths and Weaknesses - Management

Strengths Weaknesses

Mr Needham is willing to take a decision to save Comtec

Mr Needham let Mr Otto express his opinion

Mr Needham doesn’t seem very involved

No decision made after the discussion with Mrs Malcolm

Statement of Problems

Comtec is facing a financial crisis and has to take a stretegic decision. However, changing the company strategy could be risky.

Should Comtec take a radical decision?

Option 1Don’t change anything and wait for the

result of the new campaign lauched in the early falls to come

Strengths Weaknesses

No additional costs Risk that no order come

Mrs Malcom was hired for no reason

Option 2Shifting advertising and sales promotion

Strengths Weaknesses

Reach the right target

No more reliant to journal advertising and press release

Be more proactive

Give more information to prospects

Cost and time

Option 3Reducing the price of Comtec 100 Microcomputer

Strengths Weaknesses

Allows to compete with IBM

Could increase number of orders

Decrease margin of Comtec

Option 4Shifting from hardware to software

Strengths Weaknesses

Be more competitive

Reach a larget target : convert Comtec’s softwares to be compatible on IBM PC

Stop competing with IBM PCs that are less expensives

Reduce costs

Reduce Comtec’s markets

Risk that Comtec is not competitive enough on the software market

Bad image : it shows that Comtec is facing problems

Option 5Closing down the European office in

Amsterdam

Strengths Weaknesses

Concentrate on the domestic market

Stop an activity wich is not profitable

Reduce costs

Loss of 30% total sales

The European office seems to have potential orders to come

Bad image : it shows that Comtec is facing problems

Discussion

How can a company decide on which Business Strategy to implement?

At which moment is a strategic drift unavoidable?

Who is responsible for such a decision?