Hewlett Packard Company | Analysis

Hewlett-Packard Company (HP) is one of the world’s largest information and technology (IT) companies. It was founded by Bill Hewlett and Dave Packard in 1939. Both of them established Hewlett-Packard (HP) in Packard’s garage which located in Palo Alto, California, USA.

First and the foremost, HP is a worlds’ leading PC manufacturer. The creation of these new technologies had brings us a more meaningful impact for the community. This company had offered many products, technologies, software, solution and service for customers, small and medium size of businesses (SMBs) and large enterprises which encompass those customers in the education, government and health sectors. Besides, HP also famous in manufacturing and developing computers, data storage, networking hardware and designing software and sending service. The major product line for the company include those personal computing devices, related storage devices, enterprise servers and also a number of printers and other imaging which was related to the products and services. Moreover, the company also makes their profits by markets their products via online distribution, consumer-electronics and office-supply retailers to the household, small to medium size business and enterprise.

Planning process is very important step for HP Company in order to achieve their goal. They had clarified their strength, weakness, opportunities and threat to reinforce their company as well. One of the strategies that used by the company is growth strategy. They expand their markets served and products offered by absorbed other’s company technologies to enhance their own products. For example, HP has added a Palm and a mobile operating which known as webOS to its electric device. These technologies had brought HP products become a much better and quality products. Therefore, HP had successfully build an extra value compare to others manufacturer because they had cooperated with the popular branded speakers company which are ALTEC LANSING and BEATS studio.

Furthermore, they also used some of the competitive strategy in their company to compete their business with other organization. For example, although HP Company has many competitors such as Acer, Dell, Asus and more, but they still can survive until nowadays. One of the factors is because they have their own competitive strategy among each of their organization. Hence, this reason which had made the HP Company becomes a worldwide information and technology company.

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Definition of SWOT ANALYSIS

SWOT analysis is a most useful of business analysis. SWOT analysis is an instrument for assessing an organization and its environment. SWOT analysis is a usually used technique through which managers produce a quick impression of an organization’s strategic situation. SWOT analysis is the first step of planning; it helps managers to focus on key issues. A SWOT surveys and measures the influences of internal and external on the success of the “subject” of analysis. SWOT stands for strengths (S), weaknesses (W), opportunities (O), and threats (T). In SWOT, strengths and weaknesses are internal factors, opportunities and threats are external factors. A good SWOT can maximize a firm’s strengths and opportunities; and also can minimize its weaknesses and threats.

SWOT Analysis of Hewlett-Packard Company

The HP or Hewlett-Packard Company is one of the biggest computer companies in the world. In 1939, it was established by William Hewlett and David Packard. Hewlett-Packard Company delivers hardware, software, solutions and services. Hewlett Packard also has a strong market position in the IT market.

The biggest competitor of Hewlett-Packard Company is Dell Company. Hewlett-Packard wrested market leadership from Dell Company in the global PC market in 2006 and managed to sustain it in 2007.Higher market position in different market sections increase the brand image of the company and also offers economies of scale in attaining. The company faces intense competition across all business segments in terms of price, brand, quality, character, technology, range and distribution of their products.

Strengths of HP Company

One of the strengths of HP is it has a strong market position. After HP and Compaq announced to merger On September 3, 2001, HP became the world’s most big computer hardware and peripheral company all around the world. There have many benefits to HP being a large company such as leading positions in market of IT services, management software, PCs, storage and printers. Especially printer market, 40% market share of HP proofed that its domination the global printer market. This merger also helps HP made a high profit $87 Billion of Global Technology Leader. The other strength is that it provides its products and service into more than 170 countries including the undeveloped and the developed nations. In 2008 HP is acquiring EDS Inc. The next strength of HP is always having excellent products portfolio diversification.

Furthermore, in this decade HP has been focused on the customer service market. HP Enterprise Customer Services provides efficient, effective services to customers all around the world. For instance HP Enterprise Customer Services having Consumer Direct Service, Customer Engagement Management Services- Contact Central, Customer Engagement Management Services- Transformation and Warranty Service. This might benefit to recruit, retain and reward customer. 

Moreover, HP in recently years is performed on Environmental Programs to reduce the environment impact of its technology products. The Environmental Programs have include SmartWay, HP’s Eco Highlights Labeling system, Design for Environment (DfE), HP’s Planet Partners Recycler Program, HP’s Hardware Return and Recycling Program, Change the World campaign, and Unlock your Energy. For instance, HP’s Planet Partners Recycling Program is used to recycle printing supplies, computer equipment, batteries, and other items. Due to the program above HP have provide HP’s computer take back service in some countries such as United State, Canada, Brazil, Australia, most of the Europe countries, some Asia Pacific and Latin America countries. In 2010, HP successfully manufactured over 310 million HP LaserJet and ink cartridges that contained content from their “closed-loop” recycling process.

Furthermore, the other strength of HP is their business culture. They highlight innovation (Silicon Valley’s innovation model- Top executives mingled with lower-level employees to discover fresh ideas) as a key element of its business culture and as a driver of its success. HP put more effort on research and development to design and developing products, solutions and services that foresee the market changing needs, desires, and emerging technological trends. HP Labs is one of their Corporate Investments segment. HP also spending a larger amount of financial plan on the research and development than others competitors. For instance, in fiscal 2011HP expenditures $3.3 billion for research and development.

Weaknesses of HP Company

One of the weaknesses of HP is high debt level. In this decade, HP has a high risk of debt level compare to the others competitive company like Dell. From the HP debt to equity ratio data shown that HP was reached the highest value 0.9292 in this July 31, 2012. Debt to equity ratio is a leverage ratio to indicate the comparative amount of shareholders’ equity and debt used to finance a company’s property. It shows how the company has financed its property. A high debt equity ratio express that the company has been aggressive in their financing growth with debt and it results in volatile earning.

HP made wrong decide on acquisition for the company. In the first decade of the millennium, HP had made some acquisitions like merger with Compaq, Mercury Interactive, Electronic Data Systems Corp and more recently, Autonomy, the enterprise software company. Since 2001 HP has been spent more than $67 billion on acquisitions, which data according to Jayson Noland, a Robert W. Baird and Company analyst. That was approximately double HP current market value of $38 billion. “They buy at least a company a month, and they have struggled to get this right,” Mr. Noland said. For example, in 2010 HP was purchased Palm with $1.2 billion. One year later, HP announced to close up its webOS device business which is Palm’s mobile operating system.

Opportunities of HP Company

Focusing on emerging technologies-In this modern world, Hewlett Packard Company has introduced new digital printing technologies on the part of its graphic arts offering. There is a full wireless HP Photosmart printer line-up. There are HP Indigo presses, HP Inkjet Web Press and HP Latex Inks. In 2010, Since Hewlett Packard launched this technology, theirs sales is rapidly increasing because the digital printing technologies are suitable for students or officers using. It also provides the consumer to print out the picture and information in the less time.

Developed imaging and printing solutions segments- Hewlett Packard has launched more 150 products and services in the IT market. After that, Hewlett also has created some strategic to purchase competitor and introduced new products in the imaging solutions segment. The imaging and printing solutions provides consumers to print out and personalize their picture. There are industrial applications, outdoor signage and graphic arts. Hewlett Packard also purchases Tabblo, Logoworks, MacDermid and ColorSpan as their acquisitions. After they purchased the competitor, they would improve theirs products and services from the benefits of the acquisitions. The imaging and printing solutions strategy enter to the commercial markets from print services solutions to new growth opportunities in commercial printing and focusing high-value pages in some regions.

Higher market position in the global-There are many competitor started to enter the IT market. In addition, Hewlett Packard started to expand theirs business to other countries, for examples, BRIC countries. They set up many contact centres in others countries because they can easy control their product lines and get closer to the consumer. In July 2008, Hewlett Packard, Intel Company and Yahoo produced a worldwide, multi-data centre, open source test bed on cloud computing study and training. Cloud computing is a new delivery model for IT services. The achievement of the projects is to remove the financial and logistical problem and build up the relationship of manufacturing, government and college. In this coming years, the growing demand for cloud computing is expected to build demand for HP’s solutions.

Threats of HP Company

Higher competitive in the market share-The biggest competitor of Hewlett Packard is Dell. In this few years, the sales of Hewlett Packard are more than Dell. However, Hewlett Packard also kept fully to expand theirs business. Hewlett also obtain the most up to date company information available. In addition, there are also some competitors for example Toshiba, Lenova Group and Aver. This all competitor in IT market competes in terms of quality, brand, price, technology, reputation, distribution and range of product. In addition, the competitors also face competition from local companies and from generically-branded or white box manufacturers.The printing and computing markets are hyper-competitive. Some nimble competitor will offer lower prices than Hewlett Packard; it will direct affect the sales products of Hewlett Packard.

Demands of Hewlett Packard decreases and Economic problem- Since many competitors enter to IT market, the sales of Hewlett Packard Company started to decrease. Shortage of the product sales will cause Hewlett Packard get low profitability. Some forecasters also predict there have a decrease in the worldwide demand for some IT products offered by Hewlett Packard Company. In addition, there are many market segments has affected by the economic recession. It also affected the information technology. Not only in the U.S has been affected, Hewlett Packard also has experienced this decline in its global markets. In 2009, worldwide spending of IT market also decreased by 4% and above.

Threats of cloud computing-Cybercriminals always are the first to capture the latest internet innovation. Cloud computing also becomes their main target. The threat lies in cybercriminal’s ability to penetrate cloud providers’ webs and run bot-nets that can inflict destruction within a cloud service. So that, shared technologies mean shared risk. The greatest case of shared technologies used in cloud computing is Virtualisation technologies. It provides multiple companies to shares assets and information across a piece of hardware, thereby decrease the costs. Unfortunately, it also become a way of data can get into the wrong hand.

Question

A. In May, 2002, Hewlett-Packard merger with Compaq Computer Corporation to increase their asset and then on May, 2008 HP take acquisition of EDS (Electronic Data System). This acquisition leads to HP having the combined revenues of 118.4 billion US dollars in 2008 and became rank 9 in Fortune 500 in 2009. At November 2009, HP announced that they had purchase 3Com Inc. This acquisition said to be large in term of takeovers and acquisitions of technology giants to help them become one-stop series shops. After that, in 2010, HP won in a bidding war for 3PAR Inc. which their competitor declined to match. 3PAR Inc. is a manufacturer of systems and software for data storage and information management. This manufacturer helps HP develop and modify their IT products. In the same year, HP announced the buyout of Palm Inc. The Palm Inc. originally was bidding by HTC, Dell, RIM and HP. Finally, HP won the bidding by using 1.2 billion in cash and debt. This addition of Palm brings HP library of valuable patents such as the webOS operating platform and it also. This operating platform has enable HP to develop tablet devices. HP TouchPad, HP first developed tablet had launched at 1 July 2011. This TouchPad is using the webOS as the operating platform and tablet had been said that “it works beautifully, and conveys far more information than the iPad 2,” in the magazine of The New York Times. This tablet had brought a new challenge to Apple’s product.

B. According to the annual financial reports of HP, their profit decline 31% in the second quarter of 2012. The decline of the profit is because of the growing of the tablet and smart phones or others mobile devices. HP has limited types or series of product and their product is less creativity due to their stability strategy. Their sales will continuous to drop if they still do not develop and launch some new products. Somehow, their main competitors – Samsung electronics will replace their places in the computer industry and Greenpeace’s Guide. This 2 list ranks the electronics manufacturers according to their policies on sustainability, energy and climate and green products. Samsung electronics grows rapidly and they develop their product in a very vigorous speed, for example their smart phones Galaxy S2 and SIII. Samsung has also established a prominent position in the tablet market, by release the Android-powered Samsung Galaxy Tab. Furthermore, nowadays, the material prices become unstable all the times, HP would face the problem that’s they need to purchase expensive material to manufacture their products. Once they using more expensive material to manufacture their product, they will be forced to mark up their products prices in order to cover back their cost as well. They would facing their market share would be decrease and their sales will be decreases also, they will not making many profit and at last they would face their company going bankrupt like Nokia now.

Findings

After HP merger with Compaq, HP became the world largest computer hardware and has a strong market position. This proves that the decision of merging is correct. The method HP used to make decision is known as Decision-Accelerator, which speeds up strategy implementation (i.e. execution) process. (M.Z. Deone, 2007). Decision-accelerator would emphasis on speed and efficiency. Minimizing waste and drive toward outcomes are always reviewed by the facilitators during meeting. The objective is union of ideas with least divergence instead of having deep and durable commitment. Therefore, it is suitable for those senior level or top-level manager when resolving differences and implementing large, complicated strategic initiatives. However, there are the bad side of Decision-Accelerator. It deals with hard-core decisions and involves limited creativity. Due to acquisitions with other company and improving operations in laptop PCs, Mark Hurd, the CEO of HP, need to cut down 10% of workforce. But at the end, HP did dominate the global printer market successfully.Top of ForBottom of Form

HP Company has its own unique culture which is known as HP way. It is a standard of manners that emphasized innovation and most of the engineers would like to work on it. This is because HP respect and trust each individual who are working within the organization. (D.E Kimberly, 2012)Furthermore, flat management hierarchy is used by the company. By using this hierarchy, layers of middle management that give slow productivity can be eliminated and speed up the work. Employees are also allowed to decide how to their own work based on their creativity. Therefore, this culture enables HP to compete with other competitor such as Dell.

In 2011, HP wiped off $3.3 billion to cover the closing up of the webOS business which is used on mobile operating system. This is because there is less customer and developer interest. WebOS was developed in about nine month and claimed that company took some shortcut from the concept to creation. According to Mr. Mercer who is recruited by Palm from Apple, fewer programmers are willing to understand webKit and most of the top talent are snatched up by Apple and Google. [1] (X.C Brian, 2012) Therefore, a detailed planning is very important for a business. A company should know the market trend and the real usage of the IT product before launching. WebOS is an operating system built on the same technology used by many web browsers. Instead of applying it on mobile, it is advised to be applied on forensic tools. Large amount of information can be extracted from the system partition of webOS devices. This information includes call logs, SMS, e-mail communications, and other Web browsing activities. Besides, deleted items could be recovered through this operating system. (C.Eoghan, 2011)

As recommendation, HP can increase their sales or profit by decreasing their advertising investments. As we known, advertising would increase their company expanses and hence they need to increase their cost for their product. When they increased their cost of the product, they need to mark up the market price to cover back the cost or they will have low profit. This is because large amounts of advertising investments will lead up with the drastic decrease in the size of the domestic market and it further increase the company dependency on the home market depend on the crisis. (Harrigan, 2001) HP would increase their risk when they mark up their marketing price because their competitor will sales out their product which having the same spec with HP’s product with lower price. Somehow, they will increase their competitor fame because of the low selling price of the product. Although HP decreases the advertising investments, it is not represent that their sales would drop. They could use some low cost advertising ways such like advertise through facebook or electronic devices. By this way, they could advertise their product and also won’t increase their product’s cost.