iTeam, Inc. is a high-tech company based in Walnut Creek, California (26 miles northeast of San Francisco), that produces, markets, and sells computer systems, computer peripherals, and other consumer electronic products to corporate customers and electronics retailers. iTeam, formed as an entrepreneurial start-up by CEO Andrew Taylor along with several of his classmates from business school, has had a charmed life so far. With aggressive pricing and a tremendous internal research and development group, iTeam has grown exponentially in its first five years of existence and has customers throughout the United States. However, a more challenging reality has begun to set in.

At first, iTeam sold its products only locally and on a relatively small scale. But now that it has expanded to selling globally, it is in direct competition with larger, global firms. Because of manufacturing and supply chain efficiencies, these competitors offer equal or lower prices than iTeam with greater product diversity and more value-added services. Although iTeam’s past success has been based on lower-than-market prices, it now finds that its costs have increased and that profit margins have shrunk to the point that it cannot price its products any lower.

In addition, sales have been difficult to predict because the high-tech market has fluctuated and corporate high-tech spending has been erratic. Although the high-tech economy has been forecast to increase in the coming two years, Andrew is skeptical.

iTeam has attempted to keep costs low by establishing call centers in India and Ireland and obtaining most of its supply components from China. Although this overseas outsourcing has reduced costs, unfortunately it has also reduced product quality. The firm has also come under fire in the media for laying off U.S. employees in favor of outsourcing the work to foreign workers, and iTeam’s board of directors is pressuring Andrew to be more socially responsible in this area.

To further complicate matters, it has come to Andrew’s attention that the Environmental Protection Agency has proposed regulations that will greatly restrict levels of lead and mercury levels in electronics products and that will impose disposal obligations on producers of electronic goods.

Andrew thinks the answer to iTeam’s growing pains is to expand sales by selling to customers in Europe and Asia. However, such an expansion will require an investment in an expanded supply chain, including new distribution channels and the development of relationships with new customers and suppliers. It will also require changes in iTeam’s manufacturing system in order to increase the firm’s production capacity.

Most important, iTeam’s sales force may need to be developed as well. iTeam grew so quickly that it never established a formal sales program. Consistent with Andrew’s personal philosophy of “Who says there is no ‘I’ in ‘team’?”, iTeam has been pretty informal in managing its sales force, deferring mostly to aggressive individual salesperson effort and commission-based pay. Also, because of iTeam’s former price advantage, the sales reps have never really had to develop relationships with customers or retail partners to generate sales—price seemed to be enough to keep customers satisfied.

Andrew Taylor and iTeam have much to consider as they determine how to move into the future.

Questions

1. What aspects of the external environment are most likely to affect iTeam, Inc.’s future planning, and what impact might each factor have?

2. What aspects of the internal (organizational) environment at iTeam are most likely to affect its future planning, and what impact might each factor have?

3. What advice can you give to Andrew Taylor with respect to iTeam’s future sales program? In your opinion, what steps should he take, given the external environment and the company’s current circumstances?