STRATEGIC ANALYSIS

Of

Hewlett-Packard
INTRODUCTION
Hewlett-Packard Company commonly referred to as HP, is an information
technology corporation headquartered in Palo Alto, California, USA. As one of the
world's largest information technology companies, it operates almost in every
country. Its specialty lies in developing and manufacturing computers, data
storage, networking hardware, designing software and delivering services. The
Major products include personal computer devices, enterprise servers, storage
devices, and a diverse range of printers and imaging products
HISTORY
Bill Hewlett and David Packard founded HP in a garage in Palo Alto with only
US$538 in 1939, after graduating in electrical engineering from Stanford
University. Incorporated in 1947 it went public in 1957. And since then it has grown
and grown to now become a huge multinational company.
Bill Hewlett and David Packard founded HP in a garage in Palo Alto with only
US$538 in 1939, after graduating in electrical engineering from Stanford
University. Incorporated in 1947 it went public in 1957. And since then it has grown
and grown to now become a huge multinational company.

HP has an approximate of 324,600 employees.

Revenue of $126.6 billion USD
Ranks: 7th as World most innovative Company
1st in Greenest Big Companies and Corporate responsibility Officers.
Declared as one of the most sustainable corporations among the global 100
companies

Vision statement
To view change in market as an opportunity to grow, to use our profit and our
ability to develop & produce innovative products, services and solutions that
satisfy emerging customers need

Mission Statement
To provide product, services and solution of highest quality and deliver more
value to our customers that earn their respect and loyalty

PESTEL Analysis
Political: The political analysis of HP pertaining to government controls and rules
in the effort of HP to keep up with the Environmental and CSR (Corporate Social
Responsibility) Codes and in terms of decency, quality and environmental
concerns.
Economical: HP mainly relies on revenue from its printing hardware, financial
investments, investments in small and medium enterprises and internet solutions
for its maintenance.
Social: HP has the local US consumer base well captured but it seems that there
is very little to be done here in terms of attracting the upcoming young generation
of IT zealot and unless there is a stress upon updating the models of its hardware
for printing and PCs to catch up with the hype created by HP and Intel who unveil
new models almost every other month.
Technological: HP went cyber almost a decade ago, which is fairly recent in
comparison to its 70 years long market presence (HP, 2009). In fact the turning
point of HPs luck came in 1998 when HPs corporate software and support division
and corporate systems division was amalgamated and Ann Livermore took over to
run this new Enterprise Computing Solutions Organisation (ECSO), with an
investment of $15 billion and an employee base of 44,000employee.
Environmental: HPs operations are subject to regulations under federal, state,
local and foreign laws concerning the environment, including laws addressing the
discharge of pollutants into the air and water, the management and disposal of
hazardous substances and wastes, and the cleanup of contaminated sites.
Legal: Patent Reform Legislation As one of the largest patent holders in U.S, HP
is on average granted four patents every day. HP is a constant target of frivolous
patent lawsuits. These lawsuits force HP to divert resources away from innovation
and product development, leading to reduced economic benefits from invention
(HP, 2009).
Porters Five Forces Analysis
Threat of Entry: Threats of entry in this case is moderate. There is low brand
loyalty of existing firms. Consumers usually compare the prices with different
brands when they decide to purchase PCs. They think that every PC has the same
price and has the same function no matter what brand it is, which means low
product differentiation. There is medium capital requirements, no government
regulations and low economies of scale in manufacturing. There is low investment
for independent stores. Decreasing profitability indicates that there is a threat of
new entrants
Threat of Substitutes: Threat of substitute products is low. HP believes in
standards-based technology, which represents the opportunity to decide in the
item of much preferance. HP tries to eliminate barriers by continuous updating
processes and presenting new products to remain in the top of the industry.
The Power of Buyers: Bargaining power of buyers is high. Consumers are very
price sensitive because they like to buy cheap and high quality products. If they
see a hardware or software or PC with similar functions but different brands and
price, they will tend to buy a cheaper one. The buyer power for HP can be low
since product demand is high, this means that the company has power to control
the amount of production and also its products price. On the other hand,

customers have lots of substitutes. Moreover there is not a huge difference

between products which are produced in the market.
The Power of Suppliers: HP bargaining power of suppliers is high. There are
large number of suppliers for every component parts of the PC, for example, one
can make a PC by using component parts from different suppliers, including hard
disk, DVD drive, monitor, etc. Microsoft and Intel have tremendous bargaining
power against the PC manufacturers. There are high switching costs.
Competitive Rivalry: Rivalry is high. For instance, price, when one company
acts to protect its position by lowering the price of PCs, it will affect other
companies. This means all other firms may want to lower their price in order to
attract the customers. There is also decreasing profitability. Since the firms sell
their PCs in a low price, they will make less profit.

SWOT Analysis
Strengths
Prominent Brand Name Recognition: HP has launched a branding initiative
called, One Voice, in order to better intergrate its line of consumer electronics
and computer hardware products. The project resulted in hundreds of thousands of
dollars in cost savings by automating package design creation. In 2009 the
company moved up from the 12th to the 11th most recognisable brand
(Interbrand.com).
Strong presence in China. The economy of China has been growing at a steady
more than 8% rate every year. The growing economy accelerates corporate
spending and HP is well positioned to benefit from it. The company has increased
its INVESTMENTS in the market and expanded product and service offerings,
especially its enterprise business and services divisions. These divisions offer the
most profitable HPs products, including cloud computing services and enterprise
solutions. Strategic expansion into Chinese market may result in a strong
competitive advantage for the business in the near future.
Diversified product portfolio. Although slowly, HP has been diversifying its
product portfolio and moving from its main Personal Systems business to more
profitable and lucrative enterprise solutions and services business. The company
now offers thousands of different products and services. In addition, its product
portfolio is more diversified than competitors portfolios, which make HP less
susceptible to changes in the different industries and markets.
Successful Strategic Acquisitions: HPs major mergers and acquisitions in
recent past include Compaq Computer Corporation in 2002, Mercury Interactive in
2006 and Electronic Data Systems Corporation (EDS) in 2008. In Nov 2009, HP
announced that it had reached an agreement to acquire 3Com, a provider of
computer network equipment for $2.7 billion.
Strong Market Position: HP can boast of a 30% global server market. Its
domination of the global printer market is evidenced by its 40% market share. In
2008 HP took a major step in strengthening its position in the IT services market
by acquiring EDS.
Weaknesses

Weak Market Segment Integration: HPs portfolio of offerings lack significant

software product or manage consulting services when compared to major
competitors, for instance, IBM and Accenture are establishing management
consulting divisions so as to provide more comprehensive and intergrated range of
services.
29% of income comes from personal systems division. HP still heavily
depends on sales from PC, especially laptops. The market for PC has matured and
is expected to grow very slowly or even decline after a few years. Combining this
with ever decreasing margins on computer hardware products, HPs largest
Personal Systems division becomes a weakness for the company.
Poor presence in the tablet market. The tablet market has been growing and
is expected to grow in double digits over the next few years. Most of other
technology businesses have successfully introduced their products in the tablet
market and have enjoyed huge income and profit growth. Although HP had its
TouchPad tablet model and later introduced its Slate series tablets into the market,
the company has failed to offer an attractive product for consumers. As a result,
the business experiences losses and is unable to compete successfully in this
lucrative market with companies like Samsung and Apple.
Opportunities
Expanding presence in cloud computing market In July 2008, HP along with
Intel Corporation and Yahoo, created a global multi-data centre, open source test
bed for cloud computing research and education. The goal of the project was to
promote collaboration among industry, academy and governments by removing
the financial and logistical barriers. In 2009, HP announced HP Cloud Assure, a new
SaaS offering designed to assist businesses to safely and effectively adopt cloudbased services. The increasing demand for cloud computing is likely to create
demand for HPs solutions in coming years. The global spending on cloud
computing is forecast to cross a value of over $40 billion by 2012.
Expanding portfolio of imaging and printing solutions HP has made
several strategic acquisitions and introduced new products in the imaging
solutions segment in recent times. Its imaging solutions strategy entails the
commercial markets, from print services solutions to new growth opportunities in
commercial printing. HP has launched several retail photo printing solutions and
services that provide consumers the tools to personalise their photos and publish
customised creative output.
Threats
Projected decreases in the IT markets Forecasters predict a decrease in the
worldwide demand for various IT products offered by HP. The economic slowdown
has negatively affected many market segments, including information technology.
HP has experienced this decline not only in the U.S. but also in its global markets.
Hyper-competitive Environment Although HP recently overtook Dell in sales,
the latter remains a formidable competitor, as are other companies such as
Toshiba, Lenova Group and Aver. It competes in terms of price, quality, brand,
technology, reputation, distribution and range of products, among other factors. In
some regions, the company faces competition from local companies and from
generally-branded or white box manufacturers.

Direction strategy
(S1, S2,S5,O1,)
Must open new retail stores throughout the world to take advantage of
financial strength .
(Market development Horizontal Integration)(Short Term)

 (S3, O3)
Develop easy pc and cell phone for old generation.
(Product development Vertical Integration)(Intermediate Term)
(W1,W4,O2)
Develop new HR policy in order to retain human capital by making Joint
venture or acquisition other firm management.
(Joint venture or acquisition Horizontal Integration)(Short Term)
(W3,O2,O4)
Make a joint venture or acquisition a company to improve R&D in computer
& cell phone .
(Joint venture or acquisition Horizontal Integration) (Short Terms)

(S3, T1)

Developed low price and innovative for pc & cell phone than competitors.

(Product development Vertical Integration)(Short Term)

(S4,T2)
Developed such hardware and software for computer & cell phone which are
compatible with other companies software and accessories
(Product growth concentric diversification)(Long Term)
STRATEGIC RECOMMENDATIONS
HP faces three problems: upper-level management issues, which have
affected the coherence of firm strategy; intense competition in the Personal
Systems Group, which has seen declining margins and revenues in recent
quarters; and a set of six disjointed business units, which dont currently
work well together. All of HPs major challenges and issues can be
categorized under these three categories management, PSG
unprofitability, and a lack of synergy among the six business units. Our
solutions, as we discuss below, are threefold: first, pay Meg Whitman enough
to secure her role as CEO for at least five years; second, pare down the
number of products in the PSG by focusing on fewer models of higher
quality, including a tablet and a smartphone; third, 27 focus on synergy
between business units and sell the divisions that dont cohere with the
whole.