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HP Operational Strategy

(2005-2010)

A preview and analysis


Era of Mark Hurd
At NCR Corp

Known for excellent operational skills as the COO


Credited with having increased the revenues by 36%
Achieved by scrapping its unprofitable business units and implementing cost
control measures

At HP

On March 29, 2005, named Hurd as its new CEO.


Hurd was almost the polar opposite of Fiorina (Marketing/Sales skills) Mark
(Execution skills)
Strategy obtain operational excellence
Era of Mark Hurd
Actions
In 2005 announced that he would lay off 14 500 workers (10% of HP's workforce)

Implement Cost cutting measures, remove employee benefits like the worker-pension plan
and the medical programmes.

Close around 80 HP data centres (information storehouses) across the world to achieve cost
savings of $1 billion.

Expanding the current ones in US to manage all the company's information

Changed the company's internal technology to bring about cost savings and achieve
efficiencies.

Involved in every aspect of the business, often personally reaching down multiple layers of
management for tense meetings known as "Hurd reviews."
Era of Mark Hurd
Actions
Restructuring HP,
Making workforce more Product specific

De-merging the business units (Imaging & printing)

Hired 'outsiders' for key posts in a company that had traditionally promoted from
within to fill senior positions.

Closed symbolic projects like HP's reseller deal for Apple iPods.

Reorganized into three main business divisions

Personal systems group


Technology solutions group
Imaging and printing group
Era of Mark Hurd
Actions
Disliked the matrixed way Carly of sales

Earlier - 2 Sales Divisions B2B and B2C

Linked salesforce into 3 Divisions for more accountability, faster decision making, fewer
conflicts

Removed organizational layers.

Focussed on selling a complete suite of HP products to customers, rather than the


fragmented approach they used earlier.

Identified the most profitable combination of products to sell.


Era of Mark Hurd
Results & Output
Qualitative
Became the benchmark for efficiency in an industry and operational excellence.
Became Forbes #30 Most Admired Technology company 2009

Quantitative

Managed to improve the financial performance of HP within a year of his


appointment.
2008 revenues of $118 billion surpassed IBM's $104 billion
Operating margins increased from 4% in 2005 to 8.8%
NYSE Performance
$20 when Hurd got the job to a high of more than $52 in late 2007 and ultimately to almost
$53 by mid 2010.
(Fell To 39.93 after announcement of resignation)
Era of Mark Hurd
Results & Output

first in the sale ofdesktop computerssince 2007, andlaptopcomputers since 2006


In 2008, it also increased its market share ininkjetandlaserprinters to 46% and
50.5%
The company met Wall Street expectations in 21 out of 22 quarters
Increased profits for 22 straight quarters
Era of Mark Hurd
Critics & Cons

Hurd reduced investment in R&D the computing industry was highly


competitive and companies needed to constantly innovate in order to survive
in this market.

Did not make any strategic changes at HP.

HP's strategy, which was to offer high technology and low-cost products to a
wide range of customers, had already proven to be unreliable.

Hurd was also criticized for not concentrating enough on ways to create new
sources of revenue for the company.
References
Forbes -
http://archive.fortune.com/2009/02/27/news/companies/lashinsky_hurd.for
tune/index.htm
Bloomberg

https://www.bloomberg.com/news/articles/2013-01-10/can-meg-whitman-rever
se-hewlett-packards-free-fall#p3
The Wallstreet Journal
http://www.wsj.com/articles/SB1000142405297020475540457810194342
9107284
AOL Finance
http://www.aol.com/article/2010/08/08/was-mark-hurd-really-that-good-for-
hewlett-packard/19585504/