Lexmark International Business Strategy Analysis

1
Lexmark International Business Strategy Analysis

• By
• Devon Choo
• May Huang
• Ajay Jagsi

2
Todays Agenda

• Company Background
• Summary of Business Strategy
• Critique of Strategy
• Recommendations for Improvement
• Conclusion
• QA

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 RD 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 RD efforts.

8
QA