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Lexmark International Business Strategy Analysis

Lexmark International Business Strategy Analysis. By: Devon Choo May Huang Ajay Jagsi. Today’s Agenda. Company Background Summary of Business Strategy Critique of Strategy Recommendations for Improvement Conclusion Q&A. Company Background.

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Lexmark International Business Strategy Analysis

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  1. Lexmark International Business Strategy Analysis By: • Devon Choo • May Huang • Ajay Jagsi

  2. Today’s Agenda • Company Background • Summary of Business Strategy • Critique of Strategy • Recommendations for Improvement • Conclusion • Q&A

  3. Company Background • Developer & Manufacturer of Printers & Printing supplies • Target Market • Individual consumers • Corporate customers • Market Share • 25% of domestic ink jet printer market • 10% of international ink jet printer market • Key competitors • Hewlett Packard • Epson • Canon

  4. Summary of Business Strategy • “Razor & Razorblade” Model • Manufactures own ink cartridges internally • Incorporates most of actual print head technology on cartridge, unlike its competitors • Match competition on two key dimensions • Speed • Image Resolution • Offers comprehensive, one-year warranty

  5. Critique of Business Strategy • Heavy reliance on cartridge sales • Threats • Re-manufacturers • Refillers • Refill kits • Highly protected strategy due to: • Legal and technical barriers to commoditization • Consumer ignorance Is this strategy sustainable? NO!

  6. Recommendations • Refocus R&D efforts on developing a • “Smart Chip” • Standardized cartridge that fits all Lexmark printers within a product range • Rationale • Switching costs shift from hardware to complements • Competitive pricing • Brand loyalty

  7. Conclusion • To achieve first-mover advantage • Introduce “smart chip” and standardized cartridges in 3 years. • Time to phase out existing printer models and complements. • Time to step R&D efforts.

  8. Q&A

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