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LINK TECHNOLOGIES Copyright Ananth Madhavan, 1994. This case was developed for teaching purposes at the School of Business Administration at the University of Southern California; please do not reproduce or use without permission. Link Technologies, a small firm located in San Jose, California, is currently engaged in the development, manufacture, and sale of high-speed fax modems for use in personal computers. The company was created in 1980 by Mr. James Lee, a researcher who was employed at IBM’s T.J. Watson research center, and two former graduate school classmates from Cornell University. At the time, the personal computer business was in its infancy, and the company sought to fill a niche by providing communication networks to link mainframe computers. Although the company grew rapidly, Mr. Lee felt that the real opportunities for growth lay in personal computers. In the mid-1980s, he decided to make a major switch to the production of high-speed modems. Link Technologies’ new products were extraordinarily well received in the marketplace. Many viewed the company’s culture as an essential element in its rapid growth. Mr. Lee emphasized the need for high quality and technological superiority. To ensure that his company was on the cutting edge, he provided strong financial incentives for production managers to develop new or more-efficient products. Further, he contained costs by decentralization, requiring that each branch of the firm operate as an independent profit center. As a result, Link Technologies was rated by a prominent business periodical as one of the 10 best-managed small firms in the United States. Mr. Lee and his team had developed a new method transmitting data reliably at high speed, and this technological breakthrough, together with the proprietary communications software that came bundled with the product, led to strong demand for the company’s main product, the PCI 2000 modem. Indeed, the company’s modems were recognized to be of the…

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