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A CASE STUDY
In
Venture Capital
Hewlett-Packard Company
Submitted by:
Jacinto, Jenina B.
Ostonal, Jexanne Angelie R.
CASE STUDY
Hewlett-Packard Company
INTRODUCTION
In January 1939, in a garage in Palo Alto, California, to graduates from nearby Stanford
University, William Hewlett and David Packard, set up a company the Hewlett-Packard (HP) company
with an initial capital of $538. They marketed their first product (invented by Bill), a resistance-capacity
audio oscillator. HPs initial emphasis was on instrumentation. It was not until 1972 that the company
finally acknowledged that it was in the computer field, with the introduction of its first business computer,
the HP 3000.
In 1995, HP was sprawling corporate giant with annual sales in excess of $25 billion and about
90,000 employees worldwide. It was involved principally in the manufacture, supply, marketing, and
distribution of computer-based products, test and measurement products, medical and analytical
products, electronic components and Information Technology related service and support. HP was ranked
in 1985 by a Fortune magazine survey as one of the two most admired companies in America. In 1995,
the bulk of the companys business, a good 76.6% of the net revenue, came from computational products
and services.
In September 1995, John Peter, a Marketing Manager of Hewlett-Packard Asia Pacific (HPAP)
was evaluating its long-term strategic investment options for doing business in Vietnam, its headquarters
was located in Singapore. Vietnam was recently adopted an open door policy after the United States lifted
its embargo on the country in February 1994. The country had a population 0f over 70 million with a
literacy rate of over 90%. Foreign investment in the country had climbed steadily and had reached almost
12 billion by the end of 1994. An environmental and market analysis revealed that the Information
Technology (IT) market in Vietnam had potential.
TIME FRAME
September 1995; when HPAP was evaluating its long-term strategic investment of doing business
in Vietnam.
POINT OF VEW
PROBLEM
OBJECTIVES
Long-range Objectives
Short-range Objectives
AREAS OF CONSIDERATION
1. Uncertain market growth
Pros
Cons
Investors can participate in the growth of other countries, hedge their consumption basket
against exchange rate risk investors can participate in the growth of other countries,
hedge their consumption basket against exchange rate risk.
Cons
These constraints, while being reduced by technology and policy, support the case for
internationally segmented securities markets.
Cons
Depreciations were associated with an increase in the net import competition faced by
the countrys producers.
ACTION PLANS
Areas of Concern
Strategy and
Implementation
Time
Person
Responsible
Success
Indicator
Make Vietnam a
major market for
HP
Secure an
assurance to the
government
authorities
Continue
spreading world
class products
worldwide
HP should have a
continuous
development of
products to
provide innovative
products to
customers
Before or on
September 1995
Top Management
Established office
in Vietnam with
Vietnamese Staffs
Top Management
As frequent as
they can
Top Management
Customers
continuous use
and patronage of
product
Continuous
patronage of
different variety of
products offered
by HP and
continuous
demand for
innovation
Continuous
distribution of
computer-based
products
Produce quality
and innovative
products
CONCLUSIONS/RECOMMENDATIONS
Hewlett-Packard (HP) Company should consider entering the market of Vietnam using the Direct
Presence which HP can have this by setting up a subsidiary or representative office to provide marketing,
sales, support, and management services. This strategy required the largest investment and commitment
of resources. It also offered maximum control and flexibility and the best payoff. HPs direct presence in
the market would allow it to keep in touch with the customers, this will prove how sincere they are in
engaging business in the country through this HP would gain invaluable access to markets and
customers. They can start doing business in Vietnam with few numbers of staff and increase the staffing
as time goes by or by the demand increases in which will open the door of job opportunities to the
Vietnamese considering that education there has a high number of percentages.
Under the new foreign law that allows foreigners to own up to 100% of venture against a previous
maximum of 49%.The duration of Venture with foreign capital generally might not exceed 20years, but it
could be extended in special cases. Aside from being approved by law, Vietnam had propelled them into
the twenty-first century through a billion-dollar program called IT-2000. It educate over 5000 Vietnamese
in the use of computer technology and which was designated as a national initiative,
An analysis of Vietnams IT-end user market showed the government, together with its related
agencies and institutions, made up 35% of the market. Statements above are proofs that IT industry is
well-known in the country and that putting up business with regards to this kind of industry is a best shot.