Compaq Essay, Research Paper

Locational Implications of a Take-Over

-Compaq Computer Corporation will lead in today’s economic geography conference. At Compaq we recognize the need to become a global leader in enterprise computing solutions. The acquisition of Digital Equipment Corporation, an American US-based designer and manufacturer of mini-computers will greatly strengthen value proposition to customers. We are committed to supporting these key customer relationships by investing in Digital’s strategic assets, particularly its worldwide service organization, as well as it’s 64-bit leadership with Alpha microprocessors, OpenVMS, Digital UNIX and Windows NT enterprise systems, open storage and software products. With the acquisition of Digital, we have transformed into a leader in key markets that will define computing in the next century.

To further extend our service to our valued customers, we have restructured and resized the former Digital Equipment Canada Limited into a configuration center. This was apart of Compaq’s operation to consolidate manufacturing operation amongst its worldwide facilities.

The configuration center is necessary to integrate manufacturing operations into a single cohesive organization. The objective is to deliver 95 percent of all products anywhere in the world within five days or less.

The merge with Digital will create the largest network channel in the world delivering over 80 percent of its products and solutions to customers. Compaq’s field resource will continue to complement the strong reseller channel, focusing on building enduring customer relationships worldwide.

Needless to say, the acquisition of Digital Equipment Corporation will complement Compaq as a world leader in manufacturing microcomputers. Our customers will benefit from the complementary strength of both companies. For example, together we will offer customers of enterprise Windows NT products and lifecycle services available in the market today.

The restructuring and resizing of the Kanata plant site will serve our customers more efficient. A total of 800 employees at Digital ’s Kanata have been laid off. The layoff are the result of the merger and having excess capacity. We feel that the operation to convert Kanata plant site into a configuration center will benefit our company. Kanata has over 750 businesses with the advanced technology industry serving as the foundation. Configuration center will manufacture and ship personal computers directly to our customers. With the cluster of high technology businesses, we are able to complement our manufacturing operations in that kind of environment.

Ottawa is known as Silicon Valley North because of its emergence as a high-tech center. By locating in the Ottawa region, Compaq is able to feed of this high-tech sector. The success of the Ottawa area as a high-technology center may be attributed to several locational advantages. These advantages are accessibility to the federal government: a well-developed science and technology community in the NRC, two universities, some Crown corporations, and several federal government departments (e.g. National Defense, Communications, Energy, Mines and Resources); the large labs of Bell Northern Research LTD; and a life-style based on an attractive sociocultural and recreational environment appealing to the skilled scientists, engineers, and technical personnel attracted by growth of the complex. These advantages are enough incentive for us to locate there.

Although many firms found significant ties with federal institutions, many felt overshadowed by it. One of our main concerns is to compete in this area. Although we see many incentives, the cons should not be overlooked. One of our concerns is to compete with salaries and job security to attract the requisite labor force. Another concern is to compete with the other high-technology companies. With great determination, we believe this kind of competition will generate sales. This is because high-tech cluster will attract customers as a ‘one-stop’ shopping area. This will generate a considerable amount of traffic volume we could benefit from.

Besides the socioeconomic aspects of Ottawa, Compaq is able to benefit from this cluster of high-technology industry. Ottawa has shown a growth in advanced technology employment. In fact, from 1976 to 1997, there was an increase of 489 percent. This increase in advanced technology employment results from increase in advanced technology companies. From

1990 to 1997, there was an increase of 515 advanced technology companies. Among the advanced technology employment, 33.3 percent belong to the manufacturing electronic equipment and computer services. Not surprisingly, the increase in advance technology has contributed to the decline of unemployment level. Furthermore, Ottawa’s income per capita is relatively high amongst Canadian. The average income per capita in Ottawa is $21,800, +19.1% relative to Canadian average.

What does all these raw data translate into? Well, the increases in advanced technological activities generate a cluster of high-tech companies. These high-tech companies require a large market area to maintain their existence. This led us to our final point. Ottawa’s market area for computer is large enough for us to locate there. This evident because the Ottawa region generates the most computer sales. In Ottawa, 55.6 percent of household own a computer. This value is the highest among Canadian cities. The closest competition is Calgary, at 46.3 percent. With a high level of computer consumption, we find it appropriate to locate in the Ottawa region. The operation of the configuration site in Kanata enable us to better serve our customers. The efficiency of a configuration center will manufacture and directly ship personal computers. This way, we could maximize our coverage as well as increase in our level of customer service.