Reference no: EM133498206

Case: Computer printer manufacturers usually sell printers at a low margin over cost and generate much more income from subsequent sales of the high-margin ink cartridges required for each printer. One global printer manufacturer Hewlett Packard (HP) designs its printers so that they work only with ink cartridges made in the same region. Ink cartridges purchased in Canada will not work with the same printer model sold in Europe, for example. This "region coding" of ink cartridges does not improve performance. Rather, it prevents consumers and grey marketers from buying the product at a lower price in another region. The company says this policy allows it to maintain stable prices within a region rather than continually changing prices due to currency fluctuations.

Although the sense of freedom to purchase globally might be a good thing, there is a concern that companies are limited by currency fluctuations to such an extent that they cannot adapt quickly enough to price changes and shifting supplies with those currency fluctuations. For instance, a large buyer of HP printer ink in Europe might ship much of that ink to the United States if the Euro rises appreciatively against the U.S. dollar, thereby causing a shortage of printer ink in Europe.

However, this supply shift is a small portion of the supply of ink cartridges in most regions, so are HP's actions are unfair?

Due to these issues, HP recently introduced printers that issue failure warnings when non-branded ink cartridges are used, even though the non-HP products work on the printers. HP claims the required use of HP-branded ink (which costs more than luxury perfume per quart or per liter) is to protect its intellectual property in the printer. The rejection of the budget inks occurred after HP issued a firmware update, in some cases long after consumers had purchased the printer and had been using generic ink cartridges.

Question: Describing stakeholders' perceptions of HP's organizational behavior.