Close this window to return to Business Writings

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

  • Atari is the fastest growing company in the history of the world.

  • Atari Corporation controls 75% of the video-game market in the United States.

  • By 1982, Atari had achieved sales of 20 million game machines and/or computers.

  • There are 20,000 retail outlets for video-game software and hardware.

  • 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.

  • ET the video game needs to ready by September 1st to meet the Christmas selling deadline.

  • 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.

  • Marketing is planning on initial sales of 50 units per location; 1 million units of the game.

  • 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.

  • 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.

  • 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.

  • The games will retail for $30.00 each and cost approximately $2.00 each to be manufactured, packaged, and shipped.


Your Decisions

  1. What time-line should you demand of Product Development?

  2. Would you change the number of games being manufactured? If so, how many would you have manufactured?

  3. When, and how many, units or each game would you ship to each retail location?

  4. How many units of each game would you keep in reserve?

  5. What are your reasons for making the decisions you made?

  6. What assumptions did you make?


What Actually Happened

Return to Top

Copyright 2007, Brad Fregger