Hp Case Study

T A B L E O F C O N T E N T S 1. INTRODUCTION4 Hewlett-Packard: The Company4 The HP Way4 2. Current Situation4 Current Performance4 Strategic Posture4 Mission Statement of Hewlett Packard4 Vision statement of Hewlett Packard5 Improved Mission statement5 Improved Vision statement5 Why? 5 Comparison of Mission statement to a leading competitor statement5 Objectives:5 Strategies:6 The Current Strategy6 Focus on Your Customer6 Create Measurable Goals6 Create Major Initiatives6 3. Strategic Managers7 Board of Directors7 Top Management7 4. External Environment(EFAS Table)7

MEGA Scanning(PEST analysis)7 Task Environment (Porter Five forces Model)7 5. Internal Environment (IFAS Table)8 Corporate Structure8 Corporate culture8 Corporate resources8 Marketing8 Finance8 R&D8 Operations9 Human Resources9 Information System9 Market Position9 6. Strategic Myopia (Filtration)10 7. Analysis of Strategic Factors10 Situational analysis (SWOT)10 TOWS Matrix13 SPACE Matrix15 INTERPRETATION16 Interpreting the SPACE Analysis Matrix Diagram17 ixixGrand Starategy matr18 QSPM18 8. Strategic Alternatives and Recommended Strategy20 Recommended Strategy20 9.

Implementation20 Expanding Geographically21 Reaching into new market segments21 10. Evaluation and control22 Appendix A23 Gross profit margin ratio23 Operating profit margin23 Net profit margin23 Current ratio23 Quick ratio23 Inventory turnover ratio23 Sales to receivables ratio24 Return on assets24 Debt to worth ratio24 1. INTRODUCTION Hewlett-Packard: The Company In 1938, two Stanford graduates in electrical engineering, William Hewlett and David Packard, started their own business in a garage behind Packard’s Palo Alto home. One year later, Hewlett and Packard formalized their usiness into a partnership called Hewlett-Packard. HP was incorporated in 1947 and began offering stock for public trading 10 years later. Annual net revenue for the company grew from $5. 5 million in 1951 to $3 billion in 1980. By 1997, annual net revenue exceeded $42 billion and HP had become the world’s second largest computer supplier. The company, which originally produced audio oscillators, introduced its first computer in 1966. In 1972, the company pioneered the era of personal computing by introducing the first scientific, hand-held calculator.

Hewlett-Packard introduced its first personal computer in 1980. Five years later, HP introduced the LaserJet printer, which would become the company’s most successful product ever. The HP Way In 1956, Bill Hewlett, Dave Packard, and a handful of other HP executives gathered at the Mission Inn in Sonoma, California, to create a set of values and principles to guide their company. The six objectives that this small group subsequently created not only helped shape “a new kind of company, but ultimately became the foundation for what came to be known as “the HP way. 2. Current Situation Current Performance See Appendix 1 Strategic Posture Mission Statement of Hewlett Packard “We are committed to developing a wide range of innovative products and multimedia services that challenge the way consumer’s access and enjoy digital entertainment. By ensuring synergy between businesses within the organization, we are also constantly striving to create exciting new worlds of entertainment that can be experienced on a variety of different products. ” Vision statement of Hewlett Packard We recognize and seize opportunities for growth that builds upon our strengths and competencies. ” Improved Mission statement To provide product, services and solution of highest quality and deliver more value to our customers that earn their respect and loyalty. Improved Vision statement To view change in market as an opportunity to grow, to use our profit and to ability to develop and produce innovative products, services and solutions that satisfy customers need. Why? They are brief and to the point. It is highlighting all the main points.

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Comparison of Mission statement to a leading competitor statement IBM IBM, we strive to lead in the invention, development and manufacture of the industry most advanced information technologies, including computer systems, software, storage systems and microelectronics. We translate these advanced technologies into value for our customers through our professional solutions, services and consulting businesses worldwide. DELL Dell mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. Organization |Customers | |Opportunities: |Threats: | |Globally acceptable software used in the laptops which makes them easy to use and|Competitor’s technology & pricing. | |repair Political-Legal. |Less global coverage than competitor. | | |Low compatibility with non- HP product. |The prices are very affordable. |Booming of mobile technology such as IPAD and IPHONE. | |Potential of using technology is very high. |Due to tough competition bargaining power of customer is low. | |One of the top market leader with trusted Brand name. | | | | | |The HP is continuously keeps on updating their technology which keeps the | | |interest of the customers intact. | |High product differentiation (servers, Laptops, scanners Printers and others. | | |Expansion of retailed stores for customer convenience. | | |Participation in joint venture | | |Mass production leads to high bargaining supplier power. | |Key External factors |Weight |Rating |Weighted Score | |Opportunities | | | | |1. Globally acceptable software used in the laptops which makes them easy to use and repair |0. 02 |4 |0. 08 | |Political-Legal. | | | | |2. The prices are very affordable. 0. 1 |3 |0. 3 | |3. Potential of using technology is very high. |0. 05 |4 |0. 2 | |4. One of the top market leader with trusted Brand name. |0. 1 |4 |0. 4 | |5. The HP is continuously keeps on updating their technology which keeps the interest of the customers |0. 1 |4 |0. 4 | |intact. | | | | |6. High product differentiation (servers, Laptops, scanners Printers and others. |0. |3 |0. 3 | |7. Expansion of retailed stores for customer convenience. |0. 1 |3 |0. 3 | |8. Participation in joint venture |0. 05 |2 |0. 1 | |9. Mass production leads to high bargaining supplier power. |0. 01 |3 |0. 03 | |Threats | | | | |1.

Competitor’s technology & pricing. |0. 2 |3 |0. 6 | |2. Less global coverage than competitor. |0. 01 |3 |0. 03 | |3. Low compatibility with non- HP product. |0. 01 |2 |0. 02 | |4. Booming of mobile technology such as IPAD and IPHONE. |0. 1 |2 |0. 2 | |5. Due to tough competition bargaining power of customer is low. |0. 05 |3 |0. 5 | |Total Weighted Score | | |3. 11 | Current strategy can catch opportunity and avoid threats |Key Internal factors |Weight |Rating |Weighted Score | |Strengths | |Organized into 7 business sections with strong position in each |0. |4 |0. 4 | |The company competes both at local and international level. It has increased its competitiveness |0. 1 |4 |0. 4 | |through policies and strategies that supports free-market economies | | | | |Strong financial position |0. 1 |4 |0. | |Leading provider of personal computers and imaging and printing |0. 05 |4 |0. 2 | |Good Operational Efficiency |0. 05 |3 |0. 15 | |Multi-vendor customer services, including infrastructure technology and business process outsourcing,|0. 05 |3 |0. 5 | |technology support and maintenance, application development and support services and consulting and | | | | |integration services. | | | | |Highly talented workforce |0. 05 |4 |0. 2 | |Ability to provide end-to-end IT solution H/W, application development and support. |0. 15 |4 |0. 6 | |Hewlett-Packard is a global enterprise and especially after its merger with Compaq, the company |0. 5 |3 |0. 15 | |became world’s biggest computer hardware and peripherals consort in the world and has ranked 20th in | | | | |the Fortune 500 list. | | | | |Weaknesses | | | | |Financial condition leans very heavily on the state of economy not just in the US but worldwide |0. 5 |2 |0. 1 | |Struggling to Add Value and Remain Profitable in Low-Cost High-Volume PC Business |0. 01 |1 |0. 01 | |R&D department has significantly less investments compared to historical spending |0. 1 |1 |0. 1 | |Slow speed to market or responsiveness The past acquisition of Peregrine made the HP’s portfolio even|0. 5 |2 |0. 1 | |more diverse and complete but HP Open View’s lack of mainframe management capabilities created | | | | |several problems | | | | |Lack of in-house management consulting division |0. 1 |1 |0. 01 | |Dependency on third-party suppliers, and our revenue and gross margin could suffer if HP fails to |0. 01 |2 |0. 02 | |manage suppliers properly | | | | |Pay cuts has brought low morale to employees |0. 02 |1 0. 02 | |HP did not yet hit a CMDB product that includes discovery and mapping. This cause many customers to |0. 05 |1 |0. 05 | |switch the brand | | | | |Total Weighted Score |3. 6 | HP has strong internal position TOWS Matrix |IFE |Strengths: |Weaknesses: | | |Organized into 7 business sections with strong |Financial position leans very heavily on the | | |position in each. state of economy not just in the US but | | |The company competes both at local and international|worldwide. | | |level. It has increased its competitiveness through |Struggling to Add Value and Remain Profitable in | | |policies and strategies that supports free-market |Low-Cost High-Volume PC Business. | |economies. |R&D department has significantly less investments| | |Strong financial position. |compared to historical spending. | | |Leading provider of personal computers and imaging |Slow speed to market or responsiveness the past | | |and printing. acquisition of Peregrine made the | | |Good Operational Efficiency. |HP’s portfolio even more diverse and complete but| | |Multi-vendor customer services, including |HP Open View’s lack of mainframe management | | |infrastructure technology and business |capabilities created several problems. | |process outsourcing, technology support and |Lack of in-house management consulting division. | | |maintenance, application development and support |Dependency on third-party suppliers, and our | | |services and consulting and integration services. |revenue and gross margin could suffer if HP fails| | |Highly talented workforce. to manage suppliers properly. | | |Ability to provide end-to-end IT solution H/W, |Pay cuts has brought low morale to employees. | | |application development and support. |HP did not yet hit a CMDB product that includes | | |Hewlett-Packard is a global enterprise and |discovery and mapping.

This cause many customers | | |especially after its merger with Compaq, the company|to switch the brand. | | |became world’s biggest computer hardware and | | | |peripherals consort in the world and has ranked 20th| | | |in the Fortune 500 list. | |Opportunities: |SO: |WO: | |Globally acceptable software used in the laptops |S1, S2, S3, S7, O3 to develop new products |W5, O8 to develop new HR policy in order to | |which makes them easy to use and repair |(Intensive strategies). |retain the human capital. | |Political-Legal. |S2, S3, S5, O9 (backward integration – Integrative |W6,

O9 (backward integration – Integrative | | |strategies). |strategies). | |The prices are very affordable. | | | |Potential of using technology is very high. | | | |One of the top market leader with trusted Brand | | | |name. | | | | | | |The HP is continuously keeps on updating their | | | |technology which keeps the interest of the | | | |customers intact. | | |High product differentiation (servers, Laptops, | | | |scanners Printers and others. | | | |Expansion of retailed stores for customer | | | |convenience. | | |Participation in joint venture | | | |Mass production leads to high bargaining supplier| | | |power. | | | |Threats: |ST: |WT: |Competitor’s technology & pricing. |S2, S9, T1 to offer products standardizing with |W1,W8, T1 to develop new products (Intensive | |Less global coverage than competitor. |lowest cost for broad range of customers |strategies) and to drop the non-profitable | |Low compatibility with non- HP product. |(competitive strategy). |products. | |Booming of mobile technology such as IPAD and |S2, S3, S5, T4 to develop new products (Intensive | | |IPHONE. strategies). | | |Due to tough competition bargaining power of |S2, S3, S5, T2 to open retail stores worldwide | | |customer is low. |(Forward integration -integrative strategies). | | | | | | SPACE Matrix Internal Strategic Position |External Strategic position | |Competitive Position (CP) |Industry Position (IP) | |Market Share |-2 |Growth Potential |5 | |Product Quality |-1 |Profit Potential |5 | |Customer Loyalty |-2 |Financial Stability |5 | |Technological know-how |-2 |Labor cost |2 | |Control over suppliers and |-4 |Technological know-how |5 | |distributors | | | | |Total |-11 |Total |22 | |Average |-2. 2 |Average |3. 7 | |Financial Position (FP) | Stability Position(SP) | |Return on Investment |5 |Technological changes |-4 | |leverage |6 |Rate of Inflation |-2 | |Working Capital |5 |Price range of Competing products |-3 | |Liquidity |5 |Competitive pressure |-4 | |Price earnings ratio |4 |Barriers to entry into market |-2 | |  |  |Demand variability |-3 | |Total |25 |Total |-18 | |Average |5 |Average |-3 | |  |X Value = 3. 67 – 2. 2 = 1. 47 |  |Y value = 5- 3 = 2 | [pic] INTERPRETATION Assessing the SPACE Analysis Scores Each factor in the Strategic Position and Action Evaluation matrix can be quickly judged but there are benefits for exploring each in detail.

There are a large number of factors that can be considered and each industry will have its own key features which should be included in the detailed SPACE evaluation. A few factors to be considered to give you a flavour of what to include in your SPACE analysis are listed below. SPACE Analysis Factors For Financial Strength • Return on Sales • Return on Assets • Cash Flow • Gearing • Working Capital Intensity SPACE Analysis Factors For Competitive Advantage • Market Share • Quality • Customer Loyalty • Cost Levels • Product Range SPACE Analysis Factors For Industry Attractiveness • Growth Potential • Life Cycle Stage • Entry Barriers • Customer Power • Substitutes SPACE Analysis Factors For Environmental Stability • Political Uncertainty • Interest Rates Technology • Cyclical • Environmental Issues Interpreting the SPACE Analysis Matrix Diagram The arrow indicating the strategic thrust can be drawn from the origin by calculating the net result on each axis and plotting this net position. The Aggressive posture in the SPACE Analysis Matrix occurs when all the dimensions are positive. The implicit strategy is to aggressively grow the business raising the stakes for all competitors. The main danger is complacency. ? According to the space matrix score HP falls in the “AGGRESSIVE quadrant” . Their strategies should be one of the following: Vertical and horizontal integration1 Market penetration2

Market development3 Product development4 Diversification5 ixixGrand Starategy matr |[pic] | | | |Horizontal diversification | |Concentric diversification | |Conglomerate diversification | |Divestiture | QSPM | |Key Factor |Weight |Horizontal |Market |Product |Horizontal | | | |Integration |Development |Development |Diversification | |  | | |Low Product Cost |This orientation is focused on developing the lowest cost or highest value product. This is typical of companies| | |with commodity type products, products reaching a mature phase in their life cycle, or where there is | | |consolidation or a shrinking market. This orientation typically will require additional time and development | | |cost to optimize product cost and the manufacturing process. | |Low Development Cost |This orientation focuses on minimizing development cost or developing products within a constrained budget. | |While this orientation is not as common as the other orientations, it occurs when companies are developing | | |products under contract for other parties, where a company has severely constrained financial resources, or | | |where a “stealth” development effort is being undertaken on a “shoestring”. This orientation is somewhat | | |compatible with time-to-market, but involves tradeoffs with product performance, innovation, cost and | | |reliability. |Product Performance, Technology & Innovation |This orientation focuses on having the highest level of product performance, the highest level of functionality | | |or functions and features, the latest technology or the highest level of product innovation. This orientation | | |can be pursued by companies in many industries or many products except commodity products. Pursuit of this | | |strategy involves higher risks with newer technologies and accepts a trade-off of time and cost to pursue these | | |objectives. | |Quality, Reliability, Robustness |This orientation focuses on assuring high levels of product quality, reliability and robustness.

This | | |orientation is typical of industries requiring high quality because of the significant costs to correct a | | |problem (e. g. , recalls in the automotive or food processing industries), the need for high levels of reliability| | |(e. g. , aerospace products), or where there are significant safety issues (e. g. , medical devices, | | |pharmaceuticals, commercial aircraft, nuclear plants, etc. ). This orientation requires added time and cost for | | |planning, testing, analysis and regulatory approvals. |Service, Responsiveness & Flexibility |This orientation focuses on providing a high level of service, being very responsive to customer requirements as| | |part of development, and maintaining flexibility to respond to new customers, new markets and new opportunities. | | |This orientation requires additional resources (and their related costs) to provide this service and | | |responsiveness. | 10. Evaluation and control 1. Determine what to measure: Top managers and operational managers must specify implementation process and results to be monitored and evaluated.

The processes and results must be measurable in a reasonably objective and consistent manner. The focus should be on the most significant elements in a process – the ones that account for the highest proportion of exposure or the greatest no. of problems. 2. Establish standards of Performance: Standards used to measure performance are detailed expressions of strategic objectives. They are measures of acceptable performance results. Each standard can be usually includes a tolerance range, which defines any acceptable deviations. Standards can be set not only for final output, but also for intermediate stages of production output. 3. Measure actual performance.

Measurements must be made at predetermined times. 4. Compare actual performance with the standard – if the actual performance results are within the desired tolerance range, the measurement process stops here. 5. Take corrective action: If the actual results fall outside the desired tolerance range, action must be taken to correct the deviation. The action must not only correct the deviation but also prevent its recurrence. The following issues must be resolved: • Is the deviation only a chance fluctuation? • Are the processes being carried out in correctly? • Are the processes appropriate for achieving the desired standards? Objectives of Strategy Evaluation and Control Organizations are most vulnerable when they are at the peak of their success • Erroneous strategic decisions can inflict severe penalties and can be exceedingly difficult, if not impossible, to reverse. • Strategy evaluation is vital to an organization’s well-being; timely evaluations can alert management to problems or potential problems before a situation becomes critical. Appendix A Gross profit margin ratio The gross profit has increased from 23. 61% to 24. 53%. This means that profitability at the basic level has increased from previous year. This is a sign of good ratio. Operating profit margin Profitability before interest and tax has increased from 4. 00% to 7. 15%.

This means that efficiency of the business before taking any financing has increased from the previous year. This also is a sign of good ratio. Net profit margin This also has increased from 2. 7% to 6. 76%. This means that overall profitability has also increased. This is a sign of good ratio. Current ratio Current ratio has decreased from 1. 38 to 1. 35. This means that working capital to meet short term obligations has decreased, which shows a poor use of working capital. This is a sign of bad ratio. Quick ratio This ratio has also decreased from 1. 16 to 1. 13. So this shows that the ability to pay immediate financial obligations has also decreased. This quick ratio is acceptable but has decreased.

Inventory turnover ratio The ratio has decreased from 9. 63 to 8. 93, which means that more capital is tied up in inventory which is not a good sign. Sales to receivables ratio It also has decreased from 8. 75 to 8. 43. This means that the efficiency in collecting accounts receivables has deceased. Return on assets This ratio has increased from 6. 9% to 13. 0% . This is the sign of good ratio. Debt to worth ratio This ratio has decreased to 6. 52% from 9. 12%. This means that debt financing has decreased and hence the risk also has decreased. Working capital . Working capital has increased from $11,874 to $12,414.

This shows that the ability of a company to endure difficult financial periods has increased. |Gross profit margin |24. 53% |23. 61% | |Operating profit margin |7. 15% |4. 00% | |Net profit margin |6. 76% |2. 7% | |Current ratio |1. 35 |1. 38 | |Quick ratio |1. 13 |1. 6 | |Inventory turnover ratio |8. 93 |9. 63 | |Sales to receivables ratio |8. 43 |8. 75 | |Return on assets |13. 0% |6. 9% | |Debt to worth ratio |6. 52% |9. 12% | |Working capital |$12,414 |$11,874 | ———————– EFE

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