Amstrad is one of the original media and information technology companies and was founded in its original form, in 1968. Alan Sugar founded the company and is still the managing director of the company, forty years on. Over the years, Amstrad has had to change its product mix but has retained a solid position in the market place, as a whole. The company employs just 85 people but produces revenue of £91 million, showing the degree of efficiency that this company enjoys.
Amstrad’s main internal strength is largely its ability to remain at the forefront of the electronics market. Back in the early 1970s, Alan Sugar started to develop one of the first ever home personal computers. This was revolutionary and, although other companies soon entered the market, Amstrad had gained the reputation as being at the forefront of new developments; a reputation that has offered significant market strength, over the years.
Another considerable strength for the company has been the consistency of the leadership in the form of Sir Alan Sugar. Known for his often direct management style, he has led the company for the entire duration and this degree of consistency allows the company to maximise market opportunities, as soon as they appear.
Despite the current position of strength that Amstrad holds within the electronics market, it has some inherent weaknesses. As the electronics sector is moving very quickly, it is equally easy for the offerings to become outdated, quickly. Any perception of being outdated is incredibly damaging to a company such as Amstrad, as was experienced during the 1990s when its personal computer range was rapidly overtaken in terms of performance by competitors.
Opportunities are forever being developed in the electronics market. Currently, the opportunity in the market is in portable media and this has been exploited fully by the takeover of Amstrad by BSkyB. It has also led to the stepping down of Sir Alan Sugar as Chairman, although he still remains involved in the company. Customers are keen to purchase one-stop media products and the alliance with BSkyB is a clear attempt to exploit this type of customer trend. By entering into this merger, Amstrad has ensured that it retains a strong market position, while also mitigating its somewhat outmoded reputation by partnering with a company at the cutting edge of technology.
A merger of this type, however, is also a potentially threatening time for the company. Different cultures in terms of staff and also management teams will undoubtedly cause a degree of friction. There will also be a pressing need to manage costs in such as way that ensures the merged company is able to remain competitive. Customers are becoming increasingly cost conscious and this will be a vital area of focus for the newly merged company. Similarly, the company is under constant threat from lower cost competitors who may have fewer overheads to contend with.
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