Capstone Project on "Output Diagnosis Analysis of Palm, Inc"

Capstone Project 6 pages (1856 words) Sources: 3

[EXCERPT] . . . .

Diagnosis/Palm Inc.

Output Level

At the output level, Palm produces a couple of major products. Palm's core business is in smartphones, where the company produces the Pre and the Pixi. There is also the Veer coming soon. These phones are available in a number of different brand extensions and are oriented towards both the business and consumer markets. The company also has a few other products that it produces and sells. Among these are applications for the company's phones, as well as accessories. Both of these products are complementary to the phones and their income is therefore going to be highly correlated with phone sales. The company is planning to introduce a "touchpad" tablet this summer in conjunction with HP.

With respect to performance, Palm's objectives for the smartphone industry remain high. The company was one of the early innovators in the industry and as a result continues with the long-term expectation of being an industry leader. The stated objective in the 2009 Form 10-K is "to establish Palm as a leading global mobile device company." The company seeks to "increase Palm's share of the growing smartphone market." The company does not explicitly state numerically what its market share objectives are. With respect to this particular objective, Palm has not seen much success. Palm's market share in the three months ended November 2010 was 3.9%. This represented a decline from the 4.6% share the company held in the three months ended August, 2010 (Virzi, 2011). If Palm's most significant measure of sales success is market share, then Palm is not succeeding as the decline in market share has been an ongoing issue for Palm, a company that

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was once a dominant player in the smartphone market.

There are other output measures for the organization as well. While market share is important in the long-run, sales figures are important in the short run. Because the smartphone industry is growing so rapidly, total unit sales are not bad, but the company has found that its unit sales have been below expectations, and this has led to factory shutdowns in order to manage inventory levels (Gonsalves, 2010). However, in terms of revenues and profits, Palm has struggled mightily in the past few years. Revenues peaked in 2006 with $1.578 billion and slipped to $735 million in 2009. In 2006, Palm recorded EPS of $3.33, but the company lost money in 2008 and 2009, the latter being a $6.51 per share loss. Palm's equity went from $1.062 billion in 2007 to a negative figure in 2009. By all measures of basic business success, Palm has failed. Its revenues, profits, equity and market share are all declining.

Group Level

There are a few different group level outputs. These are for the most part different ways of organizing the same information contained in the corporate-level outputs. The first way Palm organizes its outputs is by customer. The company has three main customers -- Sprint Nextel, Verizon Wireless and at&T. Palm tracks the percentage share of its revenues represented by each company. Spring Nextel represents the largest and growing share of business for Palm. Verizon Wireless also saw an increase in importance to Palm, while at&T declined in importance. This provides mixed results in comparison with Palm's objectives at this level. Palm had tied its product to the smallish Sprint Nextel operation, but when it realized that this was limiting its growth prospects, Palm brought its product to the two larger carriers. Although the objective of this move was not explicit in terms of numbers, clearly Palm wanted to expand sales and over time increase the importance of the two largest networks to its business. In that respect, Palm has not succeeded. The sales woes have already been discussed, but Palm has Sprint Nextel explode from 24% of its revenues to 43% between 2007-2009 (Palm 2009 Form 10-K). This cannot be viewed as a success for Palm as the company wanted to move into larger carriers, but was unable to convince those carriers to market Palms as aggressively as they market phones for which they have exclusive rights (Gonsalves, 2010).

Although a company dominated by its U.S. business, Palm breaks out its businesses geographically. The company's U.S. revenues and international revenues have both fallen strongly in recent years. International sales in the past two years have fallen much more quickly than have U.S. sales, indicating that Palm has lost its appeal abroad even more quickly than its appeal at home. There is no silver lining internationally for Palm. The company also measures at the group level by product. Its current products are relatively new, and not recorded in the 2009 Annual Report. Product-specific information is not available in the Hewlett Packard 2010 Annual Report, as Palm is essentially a minor subsidiary for HP.

Individual Level

At the individual level, there are key individuals whose jobs must be considered. The first is the Chief Technology Officer. This individual is charged with bringing new products to the market. This position should be measured in a number of different ways. These include time, budget and measures concerning product quality. By all accounts, the Pre and the Pixi are critical successes, which indicates that the Chief Technology Officer's team has achieved its objectives. In addition, some of the patents that Palm held for its technology were key to the HP deal that more or less saved the company, so again from a technological perspective Palm has been relatively successful.

The VP, Marketing is another key position. This role entails getting the product to the market. In this respect, there are a number of different measures than can be used. Sales is the most significant, but there are others as well. These include metrics relating to market penetration, consumer sentiment and future purchase intent. By these measures, the VP Marketing has failed. The company's distribution issues have led to its being heavily promoted only by Sprint Nextel, which has the weakest network of the national U.S. carriers. Palm's international presence is weak, and with respect to the rapid global growth of smart phones, Palm is a non-entity. The company's phones are strong, but the image of their phones is not, again pointing to issues in marketing.

The CFO is in charge of the firm's financing. This role includes such elements as maintaining the optimal capital structure, reducing the cost of capital and building the firm's equity. Given the highly challenging environment that Palm has faced in the past couple of years, it is hard to fault the CFO, even though the company's metrics have become terrible in that span. Heavy losses have made it virtually impossible to maintain an optimal capital structure or a good credit rating. The buyout by HP has negated the relevance of this particular position.

The CEO can be measured by the company's total performance. Revenue, profit, market share and cost measures all ultimately fall to the CEO. In addition, shareholder-based measures also fall on the CEO as well. These include share price, EPS and P/E ratio. The stock price for Palm fell substantially prior to the company's purchase, as did the EPS and P/E ratio, which became irrelevant when the company lost over six dollars per share in fiscal 2009. The buyout by HP is a sign that the CEO was forced by the other failures of the company to have a good option for maintaining the existence of Palm. The buyout may have been the best deal available for Palm at the time, but it is unreasonable to consider it a good deal for a company that just a few years ago dominated its space.

Congruence

I believe that the congruence between the different outputs at Palm is low. The company basically markets two similar products and a couple of types of complementary products. The entire operation is very simple, and when the different elements work together the results should be consistent. The lack of performance at Palm, however, tells a different story. There is a significant divergence between the quality of the product and the company's performance. Under normal circumstances, if a company sees lousy performance it probably has a lousy product. That is not the case with Palm. The company has a good product, and normally that would mean that the marketing can be effective and the company will be successful. Palm's situation is that it has a good product that is not supported with good decisions in marketing, and ultimately not supported by good strategy at the highest levels.

What this means is that the individuals are not working effectively towards the company's goals. While the individuals and groups in question may feel that they are working towards the company-wide objectives, they are not doing it well. The problem is partly at the conceptual level (distribution partnerships) and partly at the execution level (advertising). At all levels of the firm, people are working towards the common objectives. There is a high degree of alignment between individual activities, group activities and organizational… READ MORE

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Quoted Instructions for "Output Diagnosis Analysis of Palm, Inc" Assignment:

“

Case 4 of 5: Do an output analysis on Palm Co. = this is a follow on to order# A2022162 (which was perfect)

Re; Determine outputs and key performance measures at the different levels of Palm

This is a follow-up using the Nadler-Tushman Congruence Model.

Analyze how Palm, Inc., has been doing in terms of its performance and how it stacks up against its goals. Needs to be done at three levels: the overall org level, the groups level, and the individual level. The Congruence Model really explains this very well.

How congruent are the outputs are across the three levels? So given your analysis of performance at each of the three levels, are the interactions of these outputs congruent - highly, somewhat, or very little? Make this determination and support it with a good logical argument using the information that you obtain about Palm*****'s goals and performance.

Requirements/Expectations:

1. Start with the Org Level = Identify the Outputs - what does it produce and sell? What are its goals? How has it been performing?

2. Then go the group level = What are some groups that Palm identifies, and the goals and performance of these groups.

3. Next discuss the Individual level = Here you will find it difficult to get much detailed information, so identify five to seven key jobs and their outputs. How can the performance of these jobs be measured?

4. Lastly determine the congruence of the outputs and make a strong argument for your case.

/////Please use headers to separate the discussion points clearly/////

Expectations 1-4 Explained: First you need to identify the outputs of the organization at each of three levels. Also identify the goals that it has set and its current performance. Include the following:

*****¢ Outputs at the organizational level are the products and/or services that it provides to its customers. What are these and how does the company categorize them? How does it measure its organizational performance (e.g., sales, net profit, return on sales, return on assets, market share, customer satisfaction, etc.) Provide some specific performance data.

*****¢ What are some ways the company identifies groups? For example, are there geographic groups (or divisions), functional groups, etc. What are the outputs of these groups? How does it (or how might it) measure performance of these groups?

*****¢ What are some of the key individual functions, and what are their outputs? How do these outputs contribute to the group outputs? How do they measure individual performance?

*****¢ Evaluate how the outputs at the different levels interact with each other. Determine if you think the congruence of the outputs is high, medium, or low. Then Make a strong Case. It is very important that you support your position with evidence and information that you have discussed earlier in the report.

How to Reference "Output Diagnosis Analysis of Palm, Inc" Capstone Project in a Bibliography

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