Hewlett-Packard Company: Network Printer Design for Universality

Supply Chain Management BAD13-09

Declaration: "This is my original work and not a copy of someone else's work"

1) Persistent technological innovation is a prerequisite when a company aims to compete with a differentiated product line. If they fail in doing so, they are subjected to compete on price or other dimensions. In general, competing on price gradually reduces the product margins to zero and hence is not a sustainable competitive advantage. In light of HP, some of its business units encounter the difficulties of price competing product lines. Other aspects of the changing market condition are the broad availability and the ease of use regarding the products. In a sense the latter two dimensions imply that HP must enhance its customer services.

Additionally, HP faced the constantly shrinking product life cycles and thus suffered from missing business opportunities. Furthermore increasing lead times in the laser printer division negatively affected HP’s flexibility. Since, this flexibility gradually became more important in order to successfully catch business opportunities, HP faced another major challenge.

2) As a solution to the though challenges encountered, HP introduced the Rainbow printer, which offers an additional amount of configurations. The Rainbow is a network laser printer that enables for instance stapling, memory and firmware. In a sense, HP aims to differentiate itself from its competitors by offering multiple supplementary configurations. This naturally implies that they are able to increase the product margin of the Rainbow network laser printer. Therefore the most significant benefit is that they do not have to compete on price anymore. Nevertheless the multiple configurations also demand a higher lead-time and because the product cycles are continuously declining the enhancement inherently also is a major cost.

New product development is mainly guided and preformed by the “Rainbow” design team and the manufacturing engineering...