You are on page 1of 15

Inc. Publishing as Prentice Hall Copyright © 2009 Pearson Education.Gateway: A Direct Sales Manufacturer Presented By S/Lt Danish Ramzan PN S/Lt Hamza Khan PN S/Lt faiq Ali Shah PN Copyright © 2009 Pearson Education. Slide 9-2 . Inc.

280 retail stores in the United States  Does not carry any finished inventory only used for order Slide -3 . and one in Malaysia. a plant in Ireland. By January 2002.  In the late 1990s.Introduction  Gateway is a manufacturer of PCs that was founded in 1985  Gateway was one of the first PC manufacturers to start selling PCs online  company had three plants in the United States. Gateway introduced retail stores throughout the United States.

click or come in.  These are referred to as “call.Introduction  Gateway utilizes three main sales channels for the consumer market:–  telephone sales. Gateway shares had dropped to less than $4m Slide -4 .”  this strategy and raised the stock price to more than $80 per share in late 1999  By November 2002. and  company-owned stores.  online sales.

 The company was looking to sell its PCs through electronics retailers such as Best Buy and Circuit City. Ireland. and Malaysia were closed down.Introduction  Gateway was losing a significant amount of money. Slide -5 . Plants in Salt Lake City.

 Why did Gateway have multiple production facilities in the      US? What advantages or disadvantages does this strategy offer relative to Dell. which has one facility? What factors did Gateway consider when deciding which plants to close? Why does Gateway not carry any finished goods inventory at its retail stores? Should a firm with an investment in retail stores carry any finished goods inventory? Is the Dell model of selling directly without any retail stores always less expensive than a supply chain with retail stores? What are the supply chain implications of Gateway’s decision to offer fewer configurations? .

Why did Gateway have multiple production facilities in the US? What advantages or disadvantages does this strategy offer relative to Dell. which has one facility?  US was main market of gateway  No inventory stores direct supply no contract with any shipping company Slide -7 .

Disadvantages  Operating cost is important consideration  More professionals required  cost increases  Difficult to manage quality  Different polices for employees Slide -8 .

Advantages  Low labor cost  May be un available because of disaster  Low price raw material  Cheaper logistics  Shipping  Tax Incentives Slide -9 .

 specially Malaysia plant were have high loses Slide -10 .What factors did Gateway consider when deciding which plants to close  The markets which were saturated  showing poor results.

Doing so.Why did gateway choose not to carry any finished product inventory at its retail stores?  Gateway was really clever in deciding whether to keep such items in inventory or not. Slide -11 . customers could wait. As gateway knew that people don’t wait for FMCG product for the alternative but when its about computers. they had no inventory on risk.

Should a firm with an investment in retail stores carry any finished goods inventory Yes. it can Slide -12 .

law and order situation)  Logistic support ( transport.Is the Dell model of selling directly without retail stores always less expensive than a supply chain with retail stores?  Yes. display items) Slide -13 . the DELL model of selling directly without retail stores is always less expensive than a supply chain with retail stores because of a number of cost cutting factors which make the product available to consumers at a cheaper cost. few of which are:  Manpower (it is always the largest cost in running a buisness)  Retail outlets (rents. energy.

Few implications are as follows:  Holding a fixed inventory  Suppliers inflexibility  Ineffective assembly line Slide -14 . extra ordinary configurations help the product reach masses and grow bigger.What are the supply chain implications of Gateway’s decision to offer fewer configurations? Supply chain is not of the view of fewer configurations.

Thank you Slide -15 .