Hewlett Packard Company strategic analysis

HEWLETT PACKARD COMPANY STRATEGIC ANALYSIS
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(13 October, 2010)
Table of Contents
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Introduction  PAGEREF _Toc277085759 \h
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History of the organization  PAGEREF _Toc277085760 \h
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Organization’s Business Model  PAGEREF _Toc277085761 \h
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Mission & Vision Statements  PAGEREF _Toc277085762 \h
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Core Values, Operating Guidelines  PAGEREF _Toc277085763 \h
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Corporate Governance & Key players  PAGEREF _Toc277085764 \h
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HP Top Executive (CEO) History and Background  PAGEREF _Toc277085765 \h
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Major goals and objectives  PAGEREF _Toc277085766 \h
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Present strategy/strategies  PAGEREF _Toc277085767 \h
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Measurement & Control System  PAGEREF _Toc277085768 \h
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Macro-environmental Analysis  PAGEREF _Toc277085769 \h
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Hewlett Packard External Environment Analysis  PAGEREF _Toc277085770 \h
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External Environmental Analysis  PAGEREF _Toc277085771 \h
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Internal analysis  PAGEREF _Toc277085772 \h
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HP Financials  PAGEREF _Toc277085773 \h
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Financial Analysis  PAGEREF _Toc277085774 \h
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Positioning  PAGEREF _Toc277085775 \h
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SWOT Analysis  PAGEREF _Toc277085776 \h
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Strengths  PAGEREF _Toc277085777 \h
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Weakness  PAGEREF _Toc277085778 \h
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Opportunities  PAGEREF _Toc277085779 \h
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Threats  PAGEREF _Toc277085780 \h
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Alignment of both the internal and external key factors  PAGEREF _Toc277085781 \h
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Development of Strategic Alternatives  PAGEREF _Toc277085782 \h
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Implementation of Strategic Alternatives and Control Plans  PAGEREF _Toc277085783 \h
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Recommended Functional Action Strategies  PAGEREF _Toc277085784 \h
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Strategy Drives Structure  PAGEREF _Toc277085785 \h
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Evaluation of How HP culture fit with Action Strategy  PAGEREF _Toc277085786 \h
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Future Measurement and Control System  PAGEREF _Toc277085787 \h
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Future of Hewlett Packard  PAGEREF _Toc277085788 \h
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Growth  PAGEREF _Toc277085789 \h
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Stabilization  PAGEREF _Toc277085790 \h
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Retrenchment  PAGEREF _Toc277085791 \h
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Short and Long Term Profitability Measures  PAGEREF _Toc277085792 \h
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Conclusion  PAGEREF _Toc277085793 \h
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References  PAGEREF _Toc277085794 \h
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Introduction
Hewlett-Packard Company is a US- based company formed to endow with hi-tech solutions, software’s and services. Along side the technological products are the printing and imaging devices, the IT interactions solutions in line with the maintenance and support services. Due to the rising demand on the company’s clienteles, ranging from small individuals to large enterprises, to the industrial segment encompassing the public and educational sectors, the company has come up with new services including the outsourcing and consulting services just naming a few of them as noted by HP (1989).
History of the organization
Hewlett Packard Company was formed in 1939 by two electrical engineering graduates from Sanford University. Hewlett Packard is the second names of Bill Hewlett and Dave Packard the founders of the company. The Company was established at a garage belonging to Packard as the name was arrived at after a coin tossing between the two co founders of the corporation of which Packard won but they decided to name their electronics company Hewlett Packard Company. The company was an idea after a fellowship in Stanford alongside Pastor Fredrick Terman who they consider their mentor (Crawford, 2004). The Hewlett-Packard Company was incorporated in 1947 but the shares were offered to the public in 1957.
With the initial capital of US $ 538 they were able to produce their first ever financial successive product, precision audio oscillator HP200A product to the market which gained fiscal uplift unlike the other previous products. In this model they incorporated a small light tuber as a temperature resistor on the circuit. This project produced a number of the series to the market spanning a record breaking 33 years as the longest-selling basic electronic design of all time. The introduction of HP200AB, an improvement of the model HP200A shoved it from the market. The Walt Disney Company was the earliest customers of the Hewlett-Packard Company as they acquired eight units of the HP200B oscillators’ model for attesting the sound systems in the theatres for the Fantasound for the movie Fantasia as noted by Bellis (2001).
Organization’s Business Model
HP Company has successfully had a series of products including printers, scanners, digital cameras calculators’ servers, workstation computers and home and small business designed computers. After a big merger with Compaq Company in 2002, it gave a big birth of a variety of computer designs. Not only does it boast of a supply of hardware and software but also a variety range of products in devising, realizing and maintaining IT infrastructure.
Integration of the HP’s Imaging and Printing Group has med it the leader in the imaging and printing supplier worldwide providing solutions across customer segments from individual consumer to small and medium business to corporate entities. The products and expertise associated with the IPG include the printing and scanning devices ranging from Inkjet and LaserJet printers, office jet all-in-one multifunction printer/ scanner/ faxes, Large format printers, Indigo Digital Press, HP Web Jet administrator printer management software, HP Output Management suite software, HP Photo smart digital cameras and photo printers, HP SpaM, Light Scribe optical recording technology and SnapFish, a photo sharing and products technology as noted by HP (1989). With the expansion of the technology, the HP Company has not been left out in meeting the customer’s demands with even coming up with a new application software iPrint Photo used in the iPhone for easy printing of photos in the iPhone.
In conjunction with Compaq Company, the HP launched the Personal System Group (PSG) which is currently one of the leading merchants of the personal computers around the globe as per the volume of shipment and the growth of the annual revenue from the same. The products associated with the PSG include business PCs and accessories, consumer PCs and accessories, handheld computing and digital connected entertainment. In order to reach out to the wider customer base, the HP launched the HP Enterprise Business which features the methodological examination, venture service, HP software and solutions together with enterprise servers, storage and networking (Harrison & St. John, 2009).
HP Software and solutions is an enterprise software division in the company and it deals with new technological innovations and marketing of the enterprise management software. In order to achieve its goals, HP has acquired a number of about twelve software companies to augment its software technology for the ever growing customer base. Sequentially to reach its customers, the software and solutions division is further divided into four different categories namely the HP IT Management software. This includes; HP information management software business intelligence solutions and communication and media software and solutions (Andersson, 1997). The HP Enterprise business takes into the account the technical services, HP Software and solutions, Pro Curve for the family of network switches, wireless access point and routers. The business unit of Enterprise servers, storage and networking group (ESSN) is in charge of the overseeing the backend products akin to storage and servers.
Alongside the products and technology offered by the HP Company is the office of approach and technology which is mandated to carry out among others, the management of the company funds estimated at $3.6 billion in research and development investment (Bellis, 2001). Also, spearheading the company’s strategy and communal development efforts, nurturing the gradual expansion of the company’s comprehensive technological community and performing the universal corporate promotion behavior are the roles bestowed upon the strategy and technological division.
Founded in 1966 the HP lab as a research arm of HP it’s mandated with conveying innovative expertise spanning further than the existing strategies and generating new business opportunities in the wider global world. In conjunction with expertise feedback it also provides forum for customer and the development community’s reaction to the untimely improvement. On its wider varieties of services it’s the provision of the IT support solutions to other corporate establishment which include professional support and desktop support for Microsoft in the EMEA market place. This encompasses the support alongside the Microsoft operating systems in some office applications. It has also expanded its coverage with the outsourcing services to the US Defense forces and UK banks just to mention a few as noted by Chaitin (1986).
Mission & Vision Statements
HP Company has developed a unique management style best known as the HP Way; its origin can be traced as way back from the founders and friends, Bill and Dave down to the employees. This is a core philosophy take into account the three major concepts of respect, dedication and commitment (House & Price, 2009). Thus there was emphasis on the vigor esteem of the individual, devotion to reasonable quality and consistency, commitment to society conscientiousness together with the technical contributions for the progressive and interests of humanity is secured by the company.
Core Values, Operating Guidelines
The following are the doctrine of The HP Way:
There is belief and esteem for individuals.
The organization is of result oriented through soaring level of realization and contribution.
The Company’s core values are more than establishment and adhering to the processes but carry out the business with adamant veracity.
There is need of joint effort in order for the realization of the common objectives.
There is room for elasticity and advancement for the company to acquire new ideologies.
Corporate Governance & Key players
HP Company bases its governance on the prospects on each of its venture. In the long run it encompasses the inherent elements straddling across performance and objectives inclusion of the formulas for the management and relationship enrichment. Thus it covers a wider area ranging from the creating and holding on the processes and also setting up rules and regulation the management procedures (Packard, 2006).
The authority framework outlines the progress in dealing with the fundamental essentials of each of the corporate expectations and obligation. It entails written documents, processes and tools in addition to the overall contract as it conveys the approach to expectations and commitment of the involved parties.
From a number of sample studies undertaken concerning the outsourcing reveals that it’s bound to fail even as the parties involved adhere to its contractual requirement as noted by Malone (2007). Change is inevitable in any organizational setup in order to achieve the desired objectives hence need for partnership importance agreement. This is facilitated by good governance model of the parties involved in order to achieve the desired outsourcing arrangements.
HP Top Executive (CEO) History and Background
Mark Hurd Resigned as the company CEO on August 2010 and Cathie Lesjak took over as the acting CEO until September 2010. Léo Apotheker became the permanent CEO and will take over office on November 2010. Léo Apotheker born in 1953 Aachen, Germany is a graduate with BA in Economics and International Relations from Hebrew University. He is fluent in five different languages namely English, French, German, Dutch and Hebrew.
According to Jana (2009) Apotheker started his career at SAP in 1988 and was the founder of SAP France and SAP Belgium and was awarded the French Légion d’honneur in 2007 in recognition of his business leadership and contribution to the French economy. Under his tenure in SAP he oversaw the full sweep of the company’s operations. He piloted world wide sales, services and field operations for a period of five years which saw the customer base double up and spin round the SAP American operations including dozen acquisitions of business objects.
Apotheker has served as co-CEO and deputy CEO for a period of five years as president of Global Customer solutions and operations. He has been a president of SAP EMEA for a period of three years.
Apart from SAP company Apotheker has held leadership and management positions at ABP Partners, McCormack and Dodge Europe, S.W.I.F.T. and Altex GmbH. He also swanks as founding president and CEO of ECsoft BV and European venture capital. Léo Apotheker achieves his strengths from the global experience he has acquired over time and the customer support base. Alongside this the passion of technology and operational discipline makes him suitable for the top job as a CEO at HP (Robertson & Metz, 2010).
Major goals and objectives
By offering a wider range of software specialized services to the customers, HP is committed to the total customer satisfaction. According to HP (1989) recruitment of well trained technical staff ensures in-depth knowledge and real world know-how in execution and configuration management solutions of the software changes in multi-platform and multi-system venture IT environments.
The knowledge transfer from the HP technical staff to the customers and guaranteeing the customer satisfaction with a rational engagement length for customer self-sufficiency. The provision of HP Tech installation and startup service offers customers with complete realization and operational software startup service. Additionally HP global governance focuses on ensuring sustainable relationship and mutual benefit over a long period of time as exemplified by Burrows (2003).
Present strategy/strategies
HP merger with Compaq in itself contest brought about internal departmental problems due to multi platforms involved according to Barney Beal’s 2004 article. This resulted to lack of continuity among the marketing departments as each department had separate budget and resources resulting to loss of market focus by the company and the total amount spent on marketing.
This new strategy allowed the company to unify its marketing campaign as they gave room for the company to focus on result-based, data driven model (Anders, 2003)). Since the merger brought about its own problems, HP began using the Marketing Resource Management and Seibel CRM tools. This enabled the top executives and departmental managers to talk under the same script using numbers to measure the marketing success, accuracy of forecasting expenses and program effectiveness. This will enable good customer and the company relations
Measurement & Control System
By reprocessing one billion pounds of electronics, tonners and ink cartridges, the company declared that it has met its target set in 2004. To add on that it has set another goal of recycling further two billion pounds of hardware by 2010. The company has recovered 187 million pounds of electronics an increment of 73 percent from its competitors in 2006. To counter the global warming and being the environmental friendly, HP released its supply chain emission data. It was ranked the first due to its green house emission reduction programs in the major IT companies by environmentalleader.com and the Newsweek (HP, 1989).
HP has made significant effort in toxic substance removal from its products through the supply chain. In the corporate responsibility world, HP has not been left behind as it scooped the top spot in the 100 best corporate citizens. It achieved this through its leadership in seven categories including the milieu, climate changes and corporate benevolence as cited by PR Week in 2010. The preceding year it was ranked fifth thus citing the effort HP is contributing towards the society (Derynck & Hutchinson.1998).
Through its diverse resources and products it has win a number of accolades from the customers even being ranked among one of the most admired companies in the world and being placed at the top in the computer industry. Through its social responsibilities, long term investments, global competitiveness and use of corporate assets has also contributed to its accolades in the computer industry (Packard, 2006). The universal responsibilities does not end after the accolades obtained, HP has released its report indicating the accomplishments during 2009 where it’s total energy usage decreased by a resounding 9 percent compared to the previous years.
In the safety sector, HP has been ranked first for the fail safe products following the green chemistry principles by the San Francisco Chronicle article in April 2010. This recommendation came from the Environment California an environment advocacy group; praising selected companies for their efforts in keeping and maintaining the planet glean and green. In May 2010, HP was rewarded as the world most ethical company by the Ethisphere Institute. It was the only computer vendor which was recognized for its efforts in promoting ethical business standards and practices beyond legal minimums and pioneering ideas for the best interest of the public (Whitman, 2001).
Macro-environmental Analysis
Hewlett Packard External Environment Analysis
The constant sprouting business world indicates that companies need to fully embrace strategic management theory into the decision making process. HP brings together wider varieties of services, products and IT infrastructure which position it at a better place in market penetration. This can be achieved through the learner cost structure and accelerating market momentum giving confidence in analyzing of external business environment as noted by HP (1989). This is attributed to the internal environment knowledge forming its basis of mission, vision and identifying and realizing the actions which gives strategic competitiveness on all returns. The external environment exists in three different, the general environment, the industrial environment and the competitor environment.
External Environmental Analysis
This analysis aids the firm in correctly identifying potential opportunities and how they can absorb threats ahead of them. In the environmental analysis encompasses the external and internal operating environments and this is achieved through the SWOT scrutiny.
The strengths and weaknesses are internally accessed while the opportunities and threats are the external heavyweight in the organization.
HP Company through its market penetration has encountered a number of problems including political drift in a number of its key markets. The political trend depicts the way in which the political environment is determined by the politicians. Either they can take issues for the betterment of the market or worsen the market share like setting policies which is aimed at global warming reduction of which the company has not yet achieved jeopardizing its market as noted by (1989). HP Company is based in the US which boasts of a firm political stability government easing the company’ operation to meet the clients needs.
In conjunction with the political environment is the legal entity which is the regulation chamber for the politicians to make and amend the laws concerning the company operation and also the compensation package to the staff or workers.
The demographic environment is a crucial for any organization as will indicate how the consumer trend of a given location is being felt. Also for the company to realize its target it needs labor of which will be depicted when the demographic survey are carried out. HP Company being located in a well established country means technological enhancement is not a problem to them; this is as there are facilities and skilled manpower to undertake the task (Tuthill & Smallberg, 1997).
The Macro economic environment provides the platform of which the company will be able to analyze issues including the personal disposable income, the interest rates accrued, price increases in commodities and the unemployment levels in the specified region. This will enable the company to explore the possible level of illiteracy and technological knowhow of the market it serves (Sintzoff & Geurts, 1995). HP having a stable financial base ensures that the company can be able to reach its desired goals even though there are tough times like the recession and financial instabilities.
In order to reach the wider customer base, technological advancement of the products and software of the HP Company makes it the leader of innovation. According to Hurd and Nyberg (2004) but in other side the technological trend of the market depicts the novelty of the products and software. In addition the knowledge has resulted in other areas also experiencing the same hi-tech services thus resulting in the contraband goods being presented to the market bringing about tough competition and price reductions since they are cheaper to afford. HP Company has come up with a variety of products and software to cater for a wider range of customer base from small to large enterprises and also private and public sector providing customer satisfaction to both.
Cultural or social environment provides the platform for the company to identify the societal beliefs, behaviors values and norms. These on itself present different entity in the business operation strategy as all the surrounding society provides policy in which the Company processes are carried through to the product cycle without tampering with the societal norms and beliefs (Malone, 2007).
The computer hardware manufacturing industry is a capital intensive industry, thus HP does not feel a lot of threat from new entrants. But the existing companies like Dell poses a threat due to their reduction of price on their commodities building a market share leadership. But due to the quality innovation superseding the quantity, customer shifted in favor of HP (HP, 1989). This has led the HP Company to use substantial amount of resources to research and development. This crafted a high entry and exit barriers.
To be the leader HP Company has in offer a greater number of features. This acts as the backbone of the company’s competitive advantage.
Existing external environment that can impact HP in India
There are existing external environment which when addressed well can increase demand of computers and printers in India. India poses as an international market with rapid growth and the need for IT development along major intervention in this region is large. Thus the demand of computers and printers in this region has grown high. Hp has also developed some strategies which would prove essential to India fast growing market with consultation services on how to manage investment. Most of the business in this region are now developing into the international market, thus there is need for them to get the value of their every cent that they invest. Thus this paves way for the intervention creation designed by HP both in the communication and investment as exemplified HP (1989).
The new Total Cost of Ownership (TCO) would generally contribute to estimating the financial expenditures incurred both in the direct and indirect total of investment expenses in the organizations. Usually this will apply in the IT department therefore all the associated cost may it be the software upgrade, maintenance, disposal fees, power and cooling and training expenses are computed. Because of the high rate of development the implementation in this region will safe guard the sales of computer and other soft wares in this market segment? Further more the estimation of the consumer market rating from the high population and demand of technology then HP has a high standard in dominating major market. This is because they have been in this market for a long time now and they are well established and known. Thus there will be less branding of the Brand name (HP) as it is well recognized and accepted. This will make the sales of the computers and the printers are easy to sell on this foreign market. With over 100 million people in the population of one of the most rapid developing nations in the world, then Hp has landed in a greener pastures which would improve their sales and elevate them from the financial turmoil that is rocking this giant corporation (Sintzoff & Geurts, 1995).
Internal analysis
HP Company has been at the fore front in the innovation since its inception in 1939. This transformation of the features into the market has created a wider range of market prospects making them the leader of the industry. In addition they channeled their ideas into making of customer friendly and user free software bringing with them the quality desired for the operation of these features (Robertson & Metz, 2010). It provided them an upper hand in market penetration unlike the other competitors who sought in manufacturing cheap and low quality products.
HP Company CEO brings with him vast experience in the business and corporate world which will enable under his leadership formulate strong policies aiming at increasing the market share on the industry. In addition the use of the Siebel CRM Human Resource Management tool has helped the top executives and departmental mangers to speak in one voice in to measure promotion triumph, the exactness of forecasted expenses and program effectiveness so as not to embezzle the resources (Schneeman, 1999).
HP Financials
Hewlett and Packard Company (HP) one of the global providers of IT products, software solutions, services and technologies to both commercial and individual consumers, small and medium sized businesses (SMBs). Hp offers wide variety of multi-vendor customer services which encompasses infrastructure technology, business process outsourcing, maintenance and technical support, support services and application development, integration and consulting services. Among other imaging and printing related products production this organization has acquired through acquisition, Palm Inc. and mergers Compaq and 3Com Corporation. However, the annual turn over for this organization after the last trading year 2009 was disappointing with a drop of 2% from the 2008 fiscal turn over. After this troubled economic times filled with threats of diversity and sexual harassment charges there was massive turn around of the beginning f the fiscal year 2010. The focus turned to HP operation which started to pay-off on the first quarter of fiscal year of 2010 recorded a drastic change on workforce and product line shaping. The result was documented to have the effect of strategic restructuring and the development gave birth to growth of 2% in PC prices, this was recorded due to the improvement gravitated toward HP brand development of PC’s. This also combined with high quality products effective supply chain and aggressive defense of offshore competition to maintain global growth. HP printers also recorded a growth rate of 5% increasing sales steadily in the international market. The PC’s and the Printers was the highest growth product registered to this organization to be get diverse inventory adjustment and the volume sales gained points in both local and the international market (Malone, 2007).
According to HP (1989) from the second quarter rating of the fiscal year 2010 reports which ended April 30, 2010, resulted to accumulation of net revenue of $30.8 billion, accounted as 13% increase from the previous rating of the past fiscal year. This quarter also on GAAP operating profit also shot up to $2.9 billion; this also documented a record of increme...