Atlantic Computer Case Study

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Atlantic Computer: Case Study
Strategic Management
Mitchell D. Upchurch
Dr. Johnny Eluka
July 19, 2011

Amidst an emerging U.S. marketplace opportunity, Atlantic Computers tasked the newly appointed product manager, Jason Jowers, with marketing and selling the company’s new product, the Atlantic Bundle. A server, software combination, the Atlantic Bundle would offer performance up to four times faster than the competitions standard speed, all within one machine.
External Analysis: Externally, Atlantic Computers had one major competitor in the basic server market, Ontario Computer Inc. A company solely concentrated on the low-end server market, they produced the Zink product line. The Zink product line claimed fifty percent of
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The overall cost savings (possession costs) may not balance out the acquisition costs which would not benefit the customer in the long-term.
Based upon the alternatives mentioned above, Atlantic Computers would be best suited to price their servers using the conservative approach to the competition based pricing, selling their servers for $3,400. Out of the four alternatives presented, this option would provide the best return to Atlantic while still providing value to their customers without having to significantly overcharge. When compared to the Status Quo method, Atlantic will be able to recoup the costs related to the software by charging an additional $1,400 per server. Based on the assumptions from the cost-plus method about Atlantic’s market share in the basic server market, using status quo, Atlantic would recognize roughly $42 million over the next three years compared to roughly $72 million under the competition based, a value of $30 million that would be foregone if they go with the status quo approach. To target, the $3,400 cost should be used as it provides the best benefit to them. As is seen in ‘PESA’ can provide a 4:1 benefit in web servers, which is the need of, as well as
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