Atari - Maximizing Sales
Case Study:
You are the president of Atari Corporation, a wholly-owned subsidiary of the Warner Communications (ultimately, the Time-Warner Corporation). Your major responsibility is maximizing the sales of Atari’s products, 50 percent of which are in the sales of video games.
The Facts
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Atari is the fastest growing company in the history of the world.
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Atari Corporation controls 75% of the video-game market in the United States.
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By 1982, Atari had achieved sales of 20 million game machines and/or computers.
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There are 20,000 retail outlets for video-game software and hardware.
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Atari has just purchased the video game rights to one of the top movies of all time: ET, for 22 million dollars; now it’s your responsibility to take maximum advantage of this opportunity.
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ET the video game needs to ready by September 1st to meet the Christmas selling deadline.
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Atari’s domination gives them complete control of the market: Atari is able to, and will, specify how many units of the game retailers will purchase per retail location.
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Marketing is planning on initial sales of 50 units per location; 1 million units of the game.
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Marketing is requesting that 2 million units be manufactured; this means that there will be 1 million units in reserve to distribute immediately to retailers who quickly sell out of their initial product. Marketing will have the packaging designed and produced in 10 weeks.
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Manufacturing has stated that it will take 1 week for setup and verification after receiving the product from Product Development. As many as 2 million units of the game can be produced and shipped in the following 5 weeks. This number could be doubled if they worked around the clock.
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Product Development has just 5 weeks to create the game to make the September 1st deadline. This is unreasonable and will probably result in an inferior product. The major problem: Game development has taken, on average, 5 months (design, programming, and testing), with more complex games taking even longer. In addition, games are designed and developed by one person; additional programmers do not speed up the process.
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The games will retail for $30.00 each and cost approximately $2.00 each to be manufactured, packaged, and shipped.
Your Decisions
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What time-line should you demand of Product Development?
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Would you change the number of games being manufactured? If so, how many would you have manufactured?
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When, and how many, units or each game would you ship to each retail location?
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How many units of each game would you keep in reserve?
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What are your reasons for making the decisions you made?
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What assumptions did you make?
Copyright 2007, Brad Fregger |