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Pitney Bowes Inc

Solution Id Length Case Author Case Publisher
2086 1109 Words (5 Pages) Clayton M. Christensen, Howard Yu Harvard Business School : 607034
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In Pitney Bowes's current business model, the business is involved in providing postage meters, which is its core business to its target customers. The company brings about continuous innovation that can help in expanding the opportunities available for the business and stay ahead of its competitors (Farshad & Kampas, 2002). Hence, Pitney Bowers is focused on expanding into opportunities that revolve around its core business or in the adjacent platforms, where it has developed its core competency (Prahalad & Hamel, 1990). As it can be seen that it rents the meters to small business and hence adopted various marketing strategies to push the meters into the market, it was able to generate an adequate amount of rental revenue.

Following questions are answered in this case study solution:

  1. Discuss ways in which the business model of Pitney Bowes supports or does not support Amita. You don’t have to draw a business model.

  2. Itemize 2-3 key management decisions that led to the problems faced with Amita’s success – why?

  3. If you were making key management decisions at Pitney Bowes, what are 2-3 decisions that you would have made differently – how and why?

Case Study Questions Answers

Talking about Amita, which is a Stamp's expression postage printer, it does not support the business model of Pitney Bowers as Amita was made for those customers that did not see the need for renting postage meters and relied on traditional stamps. The segment was untapped and was considered unworthy by the competitors (David, Tomlinson, & Larry Scott, 2003) (Clayton, Raynor, & Verlinden, 2001). Hence, its existing postage meters relied on a rental model while the Stamp Impressions would actually be sold to the customers, and the business would be required to comply with a certain number of regulations. 

Also, as Pitney Bowers was an expert in producing postage meters, posting Amita required it to revamp its technological infrastructure as Amita would require everything to be working on a real-time basis. Hence, the cost of building such an infrastructure would go quite up and would direct the business path towards a completely new dimension, which Pitney Bower's existing business model would not support. 

2. Itemize 2-3 key management decisions that led to the problems faced with Amita’s success – why?

The engineering management team of the company was quick to realize that it did not have the relevant infrastructure required to build the Stamp Impression. Hence it outsourced its development. There was no proper plan at hand and a timeline set, which caused the project scope to increase with the passage of time and the development timeline to be further extended. As the timeline extended, the device costs started rising, which was a huge problem as then small businesses would not be able to afford them, defeating the entire purpose of the new innovation. 

Apart from this, the Engineering team did not align the material used in Amita with that used in its current offering, which placed additional cost pressures on the business. As it already used proprietary cartridge ink for its postage meters, the engineering team started using thermal ink for the Stamp Impressions, hence increasing the number of technical challenges faced by the business.

Also, making use of colour printing capability would although improve the aesthetics of the posted stamp, but the business will still not be able to charge a premium as it is a disruptive technology (Bower & Christensen, 1995). Consumers might not be willing to adopt it at first. Hence price would have to be reasonable enough to attract the customers to buy it (Charitou & Constantinos, 2003).

Lastly, it can be seen that credit, engineering, marketing, and all other departments were given the liberty to bring about changes in the proposed design of the Stamps Impressions. There was no cap over the changes proposed, which caused it to grow bigger and its costs to balloon up. Hence, making the product unsuitable for the target market.

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