The Billion Bytes Computer Company has grown from a start-up venture in the early 1980s to become a multimillion-dollar-sales computer company in the mid 1980s. But times are getting tougher for BBC, a > the industry shakeout threatens to extend the list of victims. BBC currently has several personal and business computers on the market, but they are not compatible with the industry-standard operating systems and have fallen behind the frontier of hardware tech¬ nology.

BBC is faced with a major strategic decision. Management feels that a cost-leadership strategy is out of the question, because of economies of plant size and pecuniary economies of its major competitors. A differentiation strategy seems to be indicated, but whether this should be focused or broad based is at issue. On the one hand, BBC could focus on developing special hardware and software for engineering and scientific applications, while on the other it could go into the general market and appeal to the users who value the light weight and easy portability of their machines. Other options exist, including adoption of MS-DOS, Microsoft’s Disk Oper¬ ating System, which is now the industry standard. BBC already utilizes microdisks and is work¬ ing on nanodisks (less than two inches in diameter) and miniaturized disk drives and printers that would be integrated into the same carrying case as the central processing unit.

(a) Consider the differentiation strategies that exist for BBC.

(b) Is the cost-focus strategy necessarily out of the question?

(c) What strategy do you think BBC should pursue?

(d) What product, price, and promotion decisions will be involved?