Ascom Hasler Mailing System

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CASE STUDIES
No. 25 October 1999

Ascom Hasler Mailing Systems, Inc.: Competing in the Shadow of a Giant

by

Michael A. Allocca President and CEO, Ascom Hasler, Inc. Doctoral Candidate in the DPS Program Lubin School of Business Pace University

ASCOM HASLER MAILING SYSTEMS INC.: COMPETING IN THE SHADOW OF A GIANT by Michael A. Allocca

Michael A. Allocca is President and CEO of Ascom Hasler, Inc. and doctoral candidate in the DPS Program, Lubin School of Business, Pace University, New York. This case was written by Michael A. Allocca under the supervision of Dr. Warren J. Keegan, Professor of Marketing and International Business and Director of the Institute for Global Business Strategy, Lubin School of Business, Pace University, New York. This case should be used as the basis for classroom discussion rather than to illustrate either effective or ineffective handling of the issues described in the case. Copyright © Institute for Global Business Strategy, Pace University

History and Evolution of the Industry

INTRODUCTION

On a beautiful fall day in New England at the end of the millennium, Michael Allocca, president of Ascom Hasler Mailing Systems, Inc. was struggling with the question of how to move his company beyond its position as one of the three dwarfs of the postage meter industry. Although his company had achieved the greatest share gain of any competitor in the U.S. between 1985 and 1997, he was not complacent. He was number three in the U.S. market, and number one still had more that 85 percent of the total market. Moreover, there were technological, market, and regulatory changes occurring that opened up entry possibilities for new entrants who had in effect been blocked from entry to the industry for the past half-century and longer. Globalization had come to the sleepy postage meter industry with a vengeance, and Mr. Allocca was worried. He knew that he needed a strategy to improve his position, and questioned in his own mind whether he had one. He remembered the famous Von Clauswitz maxim: “the best strategy is to be everywhere very strong: first generally and then at the decisive point.” Easy to say, he thought, but how could he be strong as a dwarf in the industry? And, furthermore, what was the decisive point?

HISTORY AND EVOLUTION OF THE U.S. POSTAGE METER INDUSTRY

In 1920, Arthur Pitney and Walter Bowes received approval from the United States Post Office to market a device they had invented which they called a postage meter. The postage meter was a complex mechanical device that provided the secure storing of fund information, the dispensing of postage, and the printing of indicia on envelopes or tape. It was a convenient replacement for the postage stamp in higher-volume mail applications. Pitney Bowes, Inc. was born, and a manufacturing and corporate facility was established in Stamford, Connecticut. At about the same time, similar companies were independently established in Europe. Today there are four major players globally. Pitney Bowes (PB), remaining the largest by far, has three European counterparts. Since its beginning, PB has aggressively defended its market share. Today, after the infiltration by three foreign competitors, it still retains about 85 percent of the U.S. market. It has very effectively used its portfolio of over 3000 patents as a weapon and barrier to the entry of other competitors. In 1959, the U.S. Justice Department challenged PB's monopoly. As part of the consent decree that resulted, PB was required to license its patents, royalty-free. This and other constraints were lifted late in the 1960s, however, it

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Ascom Hasler Mailing Systems Inc.

still offers its patents for a royalty fee to avoid further confrontation with the Justice Department and the U.S. Postal Service (USPS). While there has been substantial growth in electronic communications, facsimile, and other substitutes for the postal service, mail continues to grow and to be a...
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