Strategic Alternatives and Recommended Strategy

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PAGE 1 TO 5 INCLUDES STRATEGY FORMULATION for your reference only.
PAGE 6 ONWARDS STRATEGY IMPLEMENTATION including responses of your questions

INTRODUCTION AND OBJECTIVES OF HANDSPRING

Handspring was founded in 1998 by three key executives from Palm Computing, Jeff Hawkins, currently Handspring's Chairman and Chief Product Officer; Donna Dubinsky, President and CEO; and Ed Colligan, the Chief Operating Officer (CEO). At Palm Computing, Hawkins had been the chief inventor, Dubinsky the President and CEO, and Colligan the Vice President (VP) of Marketing. The three veterans of handheld computing were credited with reviving the industry through their successful launch of the Palm Pilot in 1996.
ENSURING PROFITABILITY PROJECTIONS ON THE BASIS OF TREO'S INITIAL SUCCESS
In the midst of Handsprings attempts to refocus its strategy on the communicator market, the young company was still struggling to achieve profitability. It had had a net loss every year since its inception. While its sales were increasing, net profit was decreasing. Now that Hawkins was no longer 100% focused on Handspring, Dubinsky wanted to assure share-holders that the company would continue to successfully execute on its plans for the Treo communicators in both the near and long terms.
Dubinsky needed to decide how Handspring could best realize this goal and considered the following approaches to ensure that the company's profitability objectives were met:
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 edu-cate other consumers.
3. Focus resources on developing an operating system to compete with products offered by Palm, Microsoft, and Symbian.
1. Analysis of Strategic Factors

External Factor Analysis Summary: Here we will analyze the affect of societal forces and to see what trends are like to affect the Handspring:

? Economic Forces: One has monitor the economic trends like GDP trends, Interest rates, Money supply, Inflation rates, Unemployment levels, Disposable income. Currently in USA there is recession but in other parts of world there is growth especially in Asian countries. Individual economies becoming interconnected into a global economy.
? Technological Forces: Impact of Internet, virtual online stores, using Internet effectively to increase the reach and to reduce the cost. Portable Information Devices, Electronic networking, smart mobile robots, increase in the speed of microprocessors will have tremendous impact on business.
? Societal Trends: It is of very much importance to it. The factors like lifestyle changes age distribution of population, life expectancies etc.
? Competition: According to the data given in the case the main competitors are
MICROSOFT, PALM, NOKIA, SAMSUNG ETC.
This analysis will help in determining the opportunities & threats for Wal-Mart:
External Factor
OPPORTUNITIES
Economic development of Asia and other developing countries
Trend of Digital products increasing
Demographics favoring retailing and consumerism
Opening up through WTO

Threats
Increasing government regulations
Strong competition
Technological changes
Foreign trade hindrances
Cultural differences specially in foreign country.

Internal Factor Analysis Summary: Here we will analyze the internal strengths and weaknesses of Handspring in a Brief manner

STRENGTHS

Customer Intimacy
A broad area of expertise is the customer interface: the degree of customer intimacy, community building, and one-to-one marketing
Employee Training & Loyalty
The handspring has capable and outstanding team of human resources.

Weakness
? It does not have its own operating system like Microsoft
? Financial Position
It has not able to deliver profits. Its financial position is a concern.

2. Strategic Alternatives and Recommended Strategy
There are fundamental questions that all businesses must ask themselves to play a pro-active role in the competitive environment.
What to change?
When to change?
How to change?
How FAST to change?
How to ensure the capability to change?
There is a need to constantly renew their processes, their knowledge, their technology, their people, and finally, the strategies.
It is useful to examine the competencies that Handspring possesses in its current operations. It has been theorized that companies deliver superior customer value by performing exceptionally well in one or more of three areas, Operational Excellence, Customer Intimacy, and Product Leadership. Based on the above discussion, it is relatively easy to theorize that Handspring primary strengths lie in the area of
Customer intimacy and product innovation.

A. Strategic Alternatives (From IFAS)
1. Continue current horizontal growth strategy of combining PDA and telecommunications technology into all-in-one PDAs sold throughout the world.
Pro: Uses core competency to build a desirable product.
Cons: May not increase dollar sales, unless market willing to pay more for PDA communicators. Need to significantly increase marketing effort and expenses.

2. Follow vertical growth strategy of creating own operating system.
Pros: No longer reliant on Palm; eliminates licensing fee. May enable better integration between PDA and cell phone.
Con: Likely to significantly increase R&D costs unless Hawkins willing to lead it full-time.

3. Follow vertical growth strategy of acquiring manufacturing facilities.
Pros: May be able to reduce unit costs via process R&D; could improve product development function. Cons: Expensive and capital intensive; would restrict flexibility.

4. Investigate merger with Palm Computing.
Pros: Reunites founders with original company; brings Handspring's superior product development back to Palm; economies of scale and scope possible so can compete with larger companies. May increase sales and reduce costs in every area. Con: May not be enough to compete with very large competitors.

5. Growth through Differentiation focus: In response to the increasing competition and pricing pressure in the ...