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. legitimate Situation4 Current Performance4 Strategic Posture4 Mission Statement of Hewlett Packard4 fantasy statement of Hewlett Packard5 Improved Mission statement5 Improved Vision statement5 Why? 5 Comparison of Mission statement to a leading opponent statement5 Objectives5 Strategies6 The Current system6 Focus on Your Customer6 Create Measurable Goals6 Create Major Initiatives6 3. Strategic Managers7 Board of Directors7 Top Management7 4. External Environment(EFAS Table)7MEGA S brush offning(PEST abbreviation)7 Task Environment (Porter Five forces Model)7 5. immanent Environment (IFAS Table)8 Corporate Structure8 Corporate culture8 Corporate resources8 grocery storeing8 Finance8 R&D8 Operations9 Human Resources9 Information System9 Market Position9 6. Strategic Myopia (Filtration)10 7. abbreviation of Strategic Factors10 Situational analysis (SWOT)10 TOWS Matrix13 seat Matrix15 INTE RPRETATION16 reading the distance Analysis Matrix Diagram17 ixixGrand Starategy matr18 QSPM18 8. Strategic Alternatives and Recommended Strategy20 Recommended Strategy20 9.Implementation20 Expanding Geographically21 R severallying into new trade segments21 10. Evaluation and control22 Appendix A23 Gross profit margin ratio23 Operating profit margin23 sack up profit margin23 Current ratio23 Quick ratio23 Inventory turno(prenominal)er ratio23 Sales to receivables ratio24 progeny on assets24 Debt to worth ratio24 1. INTRODUCTION Hewlett-Packard The Company In 1938, two Stanford graduates in electric engineering, William Hewlett and David Packard, started their own business in a garage behind Packards Palo Alto home. peerless year later, Hewlett and Packard formalized their usiness into a partnership called Hewlett-Packard. HP was collective 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 worlds second largest calculator supplier. The company, which primitively 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 companys most successful harvest-tide ever. The HP Way In 1956, Bill Hewlett, Dave Packard, and a handful of other HP executives ga thered at the Mission Inn in Sonoma, California, to create a set of honors and principles to guide their company. The six object lenss that this piddling group subsequently created non 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 produceing a wide range of innovative products and multimedia services that challenge the way consumers access and enjoy digital entertainment. By ensuring synergy between businesses inwardly the organization, we are also constantly striving to create exciting new worlds of entertainment that corporation be experienced on a variety of opposite 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 time value to our clients that earn their respect and loyalty. Improved Vision statement To view change in market as an opportunity to grow, to white plague 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 highli ghting all the main points.Comparison of Mission statement to a leading competitor statement IBM IBM, we strive to lead in the invention, increase 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 widely distributed. DELL Dell mission is to be the most successful computer company in the world at delivering the outgo customer experience in markets we serve. Organization Customers Opportunities Threats Globally acceptable software used in the laptops which makes them soft to use and opponents technology & pricing. recreate policy-making-Legal. slight global coverage than competitor. Low compatibility with non- HP product. The prices are very affordable. Booming of mobile technology such as IPAD and IPHONE. authority of using technol ogy is very high. receivable 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 concern of the customers intact. High product differentiation (servers, Laptops, scanners Printers and others. Expansion of retailed stores for customer convenience. Participation in union venture Mass deed 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 engagement 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 issue leads to high bargaining supplier power. 0. 01 3 0. 03 Threats 1.Competitors 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 generate 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-ma rket economies Strong pecuniary position 0. 1 4 0. Leading provider of personal computers and imaging and printing 0. 05 4 0. 2 approximate Operational Efficiency 0. 05 3 0. 15 Multi-vendor customer services, including infrastructure technology and business processoutsourcing,0. 05 3 0. 5 technology support and maintenance, application development and support servicesand consulting and integration services. exceedingly 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 itsmergerwith Compaq, the company 0. 5 3 0. 15 became worlds biggestcomputer hardwareand peripherals consort in the world and has ranked 20th in the Fortune 500 list. Weaknesses fiscal condition leans very heavily on the state of economy not exclusively 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 contractificantly less investments compared to historical spending 0. 1 1 0. 1 Slow speed to market or responsiveness The past acquisition of Peregrine made the HPsportfolioeven0. 5 2 0. 1 more diverse and wind up but HP Open Views lack of central processing unit management capabilities created several problems Lack of in-house management consulting division 0. 1 1 0. 01 settlement 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 CMDBproductthat includes husking 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 internationalworldwide. 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 fiscal 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. HPsportfolioeven more diverse and complete but Multi-vendor customer services, including HP Open Views lack of mainframe management infrastructure technology and business capabilities created several problems. processoutsourcing, technology support and Lack of in-house management consulting division. maintenance, application development and support Dependency on third-party suppliers, and our servicesand 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 CMDBproductthat includes Hewlett-Packard is a global enterprise and discovery and mapping.This cause many customers especially after itsmergerwith Compaq, the companyto switch the brand. became worlds biggestcomputer hardwareand 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 str ategies). 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 Competitors 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 harvest-tide Quality -1 Profit Potential 5 Customer Loyalty -2 Financial Stability 5 scientific 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 slap-up 5 expense 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 t he 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 list 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. ? correspond to the space matrix score HP falls in the AGGRESSIVE quadrant . Their strategies should be one of the following Vertical and horizontal integration1 Market penetration2Market development3 Product development4 Diversification5 ixixGrand Starategy matr pic Horizontal diversification Concentric diversification Conglomerate diversification Divestiture QSPM Key Factor Weight Horizontal Market Product Horizontal Integration teaching Development Diversification Low Product Cost This orientation course is focused on exploitation the lowest cost or highest value product. This i s typical of companies with trade nifty 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 deep down 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 performanc e, 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 ensure 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 r egulatory 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. jog what to measure Top managers and operational managers moldiness 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 perf ormance 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 succes s Erroneous strategic decisions can inflict severe penalties and can be exceedingly difficult, if not impossible, to reverse. Strategy evaluation is vital to an organizations 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 heart 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 backing 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 difficu lt 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