Hewlett Packard

Introduction

Hewlett Packard has the tradition to introduce the innovative products in IT and
technological solution to their customer. Hp headquarter is situated in Palo Alto,
California with large number of workforce of 156,000 employees. It is the one of the
world’s largest firm with great revenue of 91,658 million at the end of 2006 with increase
of 5.7 percent as compare to 2005.
Hp formed by the two people Bill Hewlett and Dave Packard in a garage with the
investment of 538$. They use participative decision making management system in their
organization, which gives them an edge in the industry. In 1957 the company went public
and went for the other markets of the world for the expansion. In 1960 they launch their
first computer HP2116A, at the end of 1990’s they spin off its some operations and they
try to reinvent the company by some acquisitions of some large companies the market.
In 2002 the Hp completes its merger with Compaq computers and provides the great
solutions of IT in the market and earns the revenue of 91.6 billion at the end of 2006.

Products and Services

HP is the one of the largest company which is providing products like different
technologies, software, solutions and different services to the consumers or to small and
medium size business.

Technology Solution Group (TSG)

This group provides the services of information technology to different enterprise and
mid market business customers, in this group Enterprise Storage and Server offer a
slandered server plate form for their customers. They are providing the products as
industry standard Server, Business Critical Systems, etc. HP services provide information
technology services to support to a more complex business environment, also providing
consulting and integration solutions for the large companies, and manage different
services for different countries. Hp is also providing the software solution to different
organization to maintain the different organizational and financial operations of the firm.

Personal System Group

This part of the company is providing commercial and personal PCs, notebooks,
workstations, handled computing devices, digital entertainment systems and different
software for the commercial and consumer market.

Imaging and printing Group

This group of the HP is providing the imaging and printing solutions to the consumers
like printers, printing media and scanning devices this segment is also providing the
printing solution for different advertisement purpose like they providing the devices to
print the large signage and graphic art business. They are also providing the laser jet
printers, ink jet printers and image products to the business and household consumers.
HP Financial Services
This segment is providing the wide rang of financial management services to their
customers, this segment is offering their customers alternative financing solutions to
improve their cash flow, technology and capacity needs.

Corporate Investment
This segment of HP is working under the office of strategy and technology and includes
in HP laboratories.

Finance
The financial position of the company is very strong and shows the continuous growth in
the sales, net earnings per shares.

Marketing
HP promotes their products direct to their end users businesses and also using different
business partners. The design their selling and marketing goals to get the high level of
profit margin through different methods. They are heavily investing in research and
development and in patent their products. They are efficiently managing their labor and
procurement channels.
They also are providing the solutions for the unwanted computers in order to minimize
the impact on the environment.

Competition
HP had a 28 percent increase in unit sale worldwide and 26 percent in U.S. whereas Dell
had 6.2 percent worldwide and 14 percent in U.S market.

Apple Computers
Sales of apple computer are increase in the first quarter of 2007. In U.S computer market
Apple is one of the fast growing name, and Microsoft Window Vista also help them to
improve the market share in the market. In laptop market Lenovo, Acer, Apple, HP and
Dell are actively searching the markets. Lenovo has 12% market share dell has 19% and
HP has 12% market share in the global corporate market. Other companies also market
their products like Panasonic corp. they are offering their high price Ultra rugged
computers in market.
In printing market they are facing competition with Eastman Kodak, Cannon, and other
generic brands. Substitutes products such as remanufacturing or refilled of inkjet is also
getting market share. To reduce this competition company is selling printers on low price
and selling the refilling components of high price.

International Operations
Now days china is one of the fastest computer markets. In recent years shipment of
computers for china has increased by 10 percent and in china it is 21%. Recently Dell
Inc. announce that they are offering a new computer with the price 335$, and they start it
selling from china and after they expand their business to India and Brazil. In China’s
market the market leader is Lenovo, then Founder Technology Group Corporation and
then Dell inc. so to cover the market of Asia HP is aggressively targeting these markets
for their products, they reported that they earn 60% of it profit outside of U.S. they are
also operating in the Europe but restructured their operations their twice they face failure
in Germany and they are struggling in France and U.K.

Vision Statement (proposed)

“Our vision is to become the most recognized and leading computer company in the
world.”

Mission Statement (proposed)

1. Customer
2. Products or services
3. Markets
4. Technology
5. Concern for survival, profitability, growth
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees

Hewlett-Packard mission is to being the best in technology, software and solutions

provider to consumers, small and medium businesses and public education sectors
globally by providing superior products and services for businesses and personal
consumers (1, 2, 8). We provide information technology systems to serve our customers
more efficiently (4). We are dedicated to quality domestically and globally and
consistency to maintain and gain customer loyalty (6, 3).We are dedicated to growth and
profitability (5) by treating employees (9) in ways that create value to them.

HP corporate Objective

Customer loyalty
We earn customer respect and loyalty by consistently providing the highest quality and
value.

Profit
We achieve sufficient profit to finance growth, create value for our shareholders and
achieve our corporate objectives.

Growth
We recognize and seize opportunities for growth that builds upon our strengths and
competencies.
Market leadership
We lead in the marketplace by developing and delivering useful and innovative products,
services and solutions.

Commitment to employees
We demonstrate our commitment to employees by promoting and rewarding based on
performance and by creating a work environment that reflects our values.

Leadership capability
We develop leaders at all levels who achieve business results, exemplify our values and
lead us to grow and win.

Global citizenship
We fulfill our responsibility to society by being an economic, intellectual and social asset
to each country and community where we do business.

HP Core Values

Passion for customers

We put our customers first in everything we do.

Trust and respect for individuals

We work together to create a culture of inclusion built on trust, respect and dignity for all.

Achievement and contribution

We strive for excellence in all we do; each person's contribution is critical to our success.

Results through teamwork

We effectively collaborate, always looking for more efficient ways to serve our
customers.

Speed and agility

We are resourceful and adaptable, and we achieve results faster than our competitors.

Meaningful innovation
We are the technology company that invents the useful and the significant.

Uncompromising integrity
We are open, honest and direct in our dealings
 PEST

Political
In case study there are no political issues available which affect the industry positively or
negatively.

Economic
Economic conditions of the country will defiantly threat for the industry like the lowering
power of dollar and the global recession also influence the buying power of consumer so
it will also affect the introduction and launching of new innovative products.

Social/Ecological
Recycling of unwanted computers and printing supplies are have the positive affect on
the industry because this act will reduce the wastage of raw material consumption and
have the positive impact on the Environment.
Donation of used computers to National Christiana Foundation by HP is also crating the
positive effect on the organization and this act shows that HP is also focusing on the
corporate social responsibility.
Financial services pays (FSP) companies for qualified computer equipment that no longer
is need or wanted is also affect the HP socially and have positive impact on the
organization.

Technology
Technology is the most dynamic thing in the today’s business Environment, these
products have very short life cycle and need continuous improvement so HP should have
intense research and development department to remain in the market and for the
improvement.
 Porter Five Forces Analysis

Threat of new Entrant

Determinants Defining Question Assess the power of Buyers
Circle one of the following.
1 = low, 5 = high, or N/A if it
doesn’t apply to your
industry.
Economies of Does successful entry require that 1 2 3 4 5
Scale and companies have significant N/A
experience economies of scale or experience

Brand Identity Do new companies need to spend 1 2 3 4 5

heavily on brand identification? N/A
Product Do new entrants need to differentiate 1 2 3 4 5
Differentiation by spending heavily on advertising, N/A
customer services or product
differences to over come existing
customer loyalty?
Switching Costs Does the buyer have to pay to switch 1 2 3 4 5
from one supplier product to N/A
another?

Capital Required Does the new company need to 1 2 3 4 5

invest large financial resources? N/A
Access to Does the new comer have access to 1 2 3 4 5
Distribution distribution channel for product or N/A
services?
Cost advantage Established companies have cost 1 2 3 4 5
advantages over new rivals. N/A

Government Government policies can help to 1 2 3 4 5

policies preserve or limit competition. N/A

(Threat of new Entrant of High)

 Intensity of Rivalry
Determinants Defining Question Assess the power of
Buyers
Circle one of the
following.
1 = low, 5 = high, or N/A
if it doesn’t apply to your
industry.
Industry growth How slowly or quickly is the 1 2 3 4 5
industry growing? Intense fight N/A
among rivals for market share

Fixed Cost Does your business have a high 1 2 3 4 5

fixed cost? N/A
Product Is your product commodity? The 1 2 3 4 5
Differentiation closer the product is to being a N/A
commodity the higher intensity of
rivalry.

Switching Costs How costly is it for your buyer to 1 2 3 4 5

switch between providers? N/A

Intermittent How frequently is there a 1 2 3 4 5

Overcapacity problem of excess capacity in N/A
your industry? Is the period when
there is excess capacity?

Brand Identity Is branding critical for your 1 2 3 4 5

Rival’s success? Brand N/A
identification by buyer reduces
the threat of rivals.

Concentration and Are there a large number of firms 1 2 3 4 5

balance of equal size and power, all N/A
chasing after the same customer?

Diversity of Are there competitors with 1 2 3 4 5

competitors different strategies and frame of N/A
reference? When competitors are
diverse it is more difficult to
establish the rules of game
(Intensity of Rivalry is high)
 Bargaining power of Buyer

Determinants Defining Question Assess the power of Buyers

Circle one of the following.
1 = low, 5 = high, or N/A if
it doesn’t apply to your
industry.
Concentration Buyer is fragmented or concentrated. 1 2 3 4 5
If they are concentrated the N/A
bargaining power is high.

Product Cost Does your product buyer’s purchase 1 2 3 4 5

versus Total represent a significant fraction of the N/A
Purchases buyer’s cost? If so, buyer bargaining
power is typically high.

Product Product is standard and 1 2 3 4 5

Differentiation undifferentiated or differentiated N/A

Switching Costs Switching cost are high with related 1 2 3 4 5

to Brands or Low. N/A

Backward Can they make what you make 1 2 3 4 5

Integration themselves? N/A

Impact on Quality/ Is the product you offer important to 1 2 3 4 5

Performance the quality of the buyer’s product or N/A
services? If not buyer power is
typically high

Buyers Does the buyer have complete 1 2 3 4 5

Information information on the product he may N/A
purchase?

(Bargaining power of Buyer is Moderate)

 Bargaining power of Suppliers

Determinants Defining Question Assess the power of

Buyers
Circle one of the
following.
1 = low, 5 = high, or N/A
if it doesn’t apply to your
industry.
Concentration Are you supplier are fragmented 1 2 3 4 5
or highly concentrated? N/A

Presences of Are there any substitutes for your 1 2 3 4 5

Substitute inputs supplier products? Very few N/A

Product Product is standard and 1 2 3 4 5

Differentiation undifferentiated. N/A

Switching Costs How costly is it for you to switch 1 2 3 4 5

from suppliers product? N/A

Importance Is your industry an important 1 2 3 4 5

Relative to customer of the supplier group? If N/A
Customer. yes supplier are typically not
powerful.

Forward Can the supplier produce the 1 2 3 4 5

Integration product you make? N/A

Impact on Is your supplier product essential 1 2 3 4 5

Quality/ to the quality or performance of N/A
Performance your business?

(Bargaining power of Suppliers is high)

 Threat of substitute
Determinants Defining Question Assess the power of
Buyers
Circle one of the
following.
1 = low, 5 = high, or N/A
if it doesn’t apply to your
industry.
Price performance Does the substitute offer a better 1 2 3 4 5
price performance? N/A
Switching Cost Is it costly for buyer to switch to 1 2 3 4 5
the substitute product? N/A
(Threat of substitute is moderate )

Porter Five Force Analysis

Threats of New Entrants:

(Entry barrier is high)In order to switch from one brand to another switching cost is high.
All the players are very big and have their own distribution channel it will be difficult for
a new entrant to come and create a new distribution channel. Product differentiation is
not much in this industry computer are almost with the same configuration but price very
brand to brand and it can be very high. Capital requirement are also high.

Intensity of Rivalry

(Rivalry is high) The rivalry among competing firms is very high HP, DELL
COMPAC IBM etc are some of the big names and because there are many other
companies exist as well in the industry that also have strong brand name and market
share so rivalry is high.

Bargaining power of buyer

(Bargaining power is moderate) Buyers are fragmented in this industry. Backward

integration is also a factor in the industry of the pc buyers bargaining power because
more and more people are building their own computers but consumers are also very
much conscious about the quality.
Bargaining power of supplier

(Bargaining power of supplier is high) In computer are industry supplier are dominant
and are few also supplier product have few substitute Intel’s microprocessor chips and
Microsoft operating system are used in 90% of personal computers.

Threat of new substitute:

Threats of substitute are also moderate in this industry Smart phone, Pal tops and PDA is
some substitutes but theses are not the major threat to computer industry.

SWOT Analysis:

Strengths:
• World’s largest technology vendor in term of sales

• Open door policy

• 21% market share in India personal computer market

• Strong Retail distribution

• Huge technology research lab in banglor.

• Innovative products

• Strong Marketing and Direct promotions

• Market share lead from 3.5%

• Complete technology solutions to consumers business and institute.

• Diversified product and services portfolio(TGS, PSG, IPG etc)

• Solid market position in key segments

• Recycle computer hardware and printers.

• Brand Recognition
 • Patent their new product.

• Employee compensation & benefit

• Stand alone product support to more complex business environment.

• Manage procurement and labor Expanses

• Used PC Donation

• 28% increase in unit sales world wide.

• Acquisition with many companies.

Weakness:
• Net Income decreased R&D expense.

• Lack of in-house management consulting division

• No web site selling.

• Inventory Turnover decrease from 12.61 to 11.83

Opportunities:
• Fastest growing geographical area Asian pacific region.

• up-selling & cross-selling

• Subsidiary

• Trade in

• World wide unit sales of PC rose to 10.9%

• Increasing demand of new and innovative features

• Consumer awareness

• Globalization
 • Return of Cash(HPFS pays companies for comp that no longer is needed)
Threats:
• Technology product have Short product life cycle

• Intense Competition( Canon, Dell, IBM etc)

• Increasing competition on imaging and printing

• Substitute product (Remanufacturing or refill ink cartridges).

• Private labeled (staples, offices depot, office max)

 IFE

Strength: Weight Rating Weight Comments

Score

1. World’s largest 0.05 4 0.20 HP is world’s largest

technology vendor in vendors in term of
term of sales sales in 2006 with
revenue $91.7 billion.

HP creates the open

2. Open door policy 0.05 3 0.15 door corporate culture.

3. 21% market share in Asian pacific region

0.05 4 0.20
India personal HP earn max revenue
computer market form here

0.06 4 0.24 HP focused on retail

4. Strong Retail distribution distribution rather than
online.

0.05 3 0.15 HP has huge research

5. Huge technology technology labs in
research lab in Bangalore.
banglor

0.05 4 0.20 It introduces

numerous innovative
6. Innovative products products

0.04 3 0.12 HP directly promoted

its products to
7. Strong Marketing and consumers and
Direct promotions business.

HP has 3.5 % market

0.06 4 0.24
8. Market share lead from share lead.
3.5%

0.05 3 0.15 It provides complete

technology solutions
9. Stand alone product
 support complete to consumer, business
technology solutions to and institutions
consumers business and
institute.
HP provides a
10. Diversified 0.05 4 0.20 diversified product
product and services portfolio with seven
portfolio(TGS, PSG, IPG different segments.
etc
It offers easy to
11. Recycle computer 0.03 3 0.09
recycle unwanted
hardware and printers.
computer hardware
and printers.

0.04 3 0.12 Exhibit 5 shows that

the good will of HP
12. Brand Recognition increase every year.

0.04 4 0.16 HP actively patents

13. Patent their new product. their products

0.04 3 0.12 Exhibit 5 shows that

the benefits are
14. Employee compensation increase every year.
& benefit.
HP actively manages
0.04 3 0.12 their procurement and
15. Manage procurement labor benefits
and labor Expanses

It helps to make easy

0.03 3 0.09 to donate the used
16. Used PC
P.C.
Donation( Partnership
with NCF)
Hp 28% increase
0.05 4 0.20
worldwide and 26%
gained in U.S
17. Hp 28% increase in unit
sales world wide. Exhibit 11 Shows
0.05 4 0.20 HP’s Recent
Acquisitions.
18. Acquisition with many
companies.
Weakness: Weight Rating Weight
Score
19.Net Income decreased 0.05 2 0.20 Net income reflects
 R&D expense. decrease expenses in
research and
development.

20. Lack of in-house

management consulting 0.04 2 0.08 HP not focused on in-
division
house management
consulting division.
0.05 1 0.05
21. No web site selling HP is not focusing on
online selling but its
competitors is doing
that
0.03 1 0.03
22. Inventory Turnover
decrease from 12.61 to
11.83 Inventory Turnover is
decreased form 2005
to 2006 0.78%
Total 1 3.21

The result of IFE matrix shows that the company Hewlett parker is good to handle its
internal situations. The total weighted score of HP is 3.21 which show that it’s good

EFE
External Factors Weight Rating Weighted Comments
Score
OPPORTUNITIES
1. Trade in 0.08 4 0.32 This Service
offers the
opportunity to
capture the fair
market of aging
technology.
2. Increasing 0.09 3 0.27 Consumers
demand of new and aggressively
innovative features shopping for
new products.
3. Fastest growing 0.05 3 0.15 16% increase
geographical area shows the
fastest growing
area.
3. up-selling & 0.09 4 0.36 ESS, HPS, and
cross-selling software are
Structured
through TSG.
5. Return of cash 0.08 4 0.32 HPFS pays
companies for
comp that no
longer is
needed.
6. Subsidiary 0.08 3 0.24 Continue its
expansion by
forming its
subsidies in
Asia.
7. Globalization 0.09 2 0.18

8. Consumer 0.06 4 0.24 Customers use

awareness internet
research before
purchasing.
9. World wide unit 0.05 3 0.15
sales of PC rose to
10.9%

THREATS
10. Technology 0.09 3 0.27 Technology has
product have Short short Life
product life cycle Cycle.
11. Intense 0.08 4 0.32 Diff companies
competition on compete on PC
personal computers Market.( IBM,
Dell Cannon
etc)
12.Private labeled 0.05 2 0.10 Private labels
The result of EFE matrix shows that the company Hewlett parker is good to handle its
internal situations. The total weighted score of HP is 3.19 which show that it’s good

CPM

HP Dell IBM

Critical success Weight Rating Score Rating Score Rating Score

factors
Financial position 0.1 4 0.4 2 0.2 2 0.2

Distribution and 0.08 3 0.24 4 0.32 4 0.32

selling

Technological change 0.2 3 0.6 3 0.6 2 0.4

Global expansion 0.1 3 0.3 4 0.4 4 0.4

Good will 0.1 3 0.3 3 0.3 3 0.3

Market share 0.2 4 0.8 3 0.6 2 0.4

Advertisement 0.05 2 0.1 2 0.1 3 0.15

Innovation 0.07 4 0.28 3 0.21 3 0.21

Management 0.1 4 0.4 4 0.4 3 0.3

Total 1 3.42 3.13 2.78

After doing the critical success factor analysis we say that HP is better than its
competitors DELL and IBM to handle the critical factors of industry.
Tows
 Strengths. Weaknesses.
1. World’s largest 1. Net Income
technology vendor in decreased R&D
term of sales expense.
2. Open door policy 2. Lack of in-house
3. 21% market share in management
India personal consulting division
computer market 3. No web site selling.
4. Strong Retail 4. Inventory Turnover
distribution decrease from 12.61
5. Huge technology to 11.83
research lab in banglor
6. Innovative products
7. Strong Marketing and
Direct promotions
8. Market share lead from
3.5%
9. Complete technology
solutions to consumers
business and institute.
10. Diversified product and
services portfolio(TGS,
PSG, IPG etc)
11. Solid market position in
key segments
12. Recycle computer
hardware and printers.
13. Brand Recognition
14. Patent their new
product.
15. Employee compensation
& benefit
16. Stand alone product
support to more
complex business
environment.
17. Manage procurement
and labor Expanses
18. Used PC Donation
19. 28% increase in unit
sales world wide.
20. Acquisition with many
companies.

Opportunities. SO Strategies. WO Strategies.

1. Fastest growing
geographical (O8,S5,S6) (W1O9). HPFS cash comes for
area Asian By doing technology research selling of not needed
pacific region. they can add new values and computers can be used for
2. up-selling & features to their products and research and development.
cross-selling make them innovative
3. Subsidiary according to consumers (W3, O6).They can minimize
4. Trade in demand. the threat of online selling
5. World wide (O6,S7) through consumer awareness
unit sales of PC Educate consumer about the of their products.
 IE Matrix.
Strong Average Weak
(3.0-4.0) (2.0-2.99) (1.0-1.99)
High I II III
3.0-4.0
------------(HP)
3.0 EFE Score
Medium IV V VI
2.0-2.99

2.0
Low VII VIII IX
1.0-1.99
 The IFE Total Weighted Scores

4.0 3.0 2.0 1.0

1.0

• Growth and Build (I, II, IV )

• Hold and Maintain (III, V, VII )
• Harvest or Divest ( VI, VIII, IX )

IFE score 3.21 and EFE score is 3.31which means that the company comes in 1st quadrant
that is in (I, II, IV) so the company should go for the growth and build strategies..

Strategies that HP is using

HP is currently using horizontal integration, related diversification, and product

development strategies.

Horizontal integration.
In September 2007 HP is complete the acquisition of Opsware Inc. and Neoware Inc.
Exhibit 11 of the case study show how rapidly Hp is doing Acquisition with other
companies.

Related Diversification.

HP is also adopted related diversification strategy for targeted the three diversified groups
of people

• Technology solution group (TSG)

• Personal system group (PSG)

• Imaging and printing group (IPG)

The technology solution Group is developed to cater the need of the institutional
clients and HP up selling and cross selling, ESS, HPS and software are structured
through (TSG ).While to take care of the individuals, personal system group is
designed and the imaging and printing group is designed to fulfill the need of the
business customers. Through the related diversification of their products HP hold
major market share of the computer industry.

Product Development.

Hp is also using this strategy as technology related product have very short product
life cycle. HP is continues to develop new innovative products and continuously
increasing sales by improving product and services.

Suggested Strategies for HP:

• HP should focus on Market development strategy and cover other geographical

area as well

• HP should use Cost leadership strategy for Selling existing brands with decrease
price in Asia pacific region because Hp has major market share in this region 21
percent market share in India and in China which is the becoming the world
 fastest growing market with growth rate of 21% .So by this strategy HP can create
huge competition.

• HP should also use Forward integration by selling their product on web and
minimize distribution channel to save profit.

• Start production in Asia with innovation.