student presentation hp

8/12/2019 Student Presentation HP

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Group members

Afor Okala

Oluchi Iwuh

Anthony MomohOmamoke Om'iniabohs

Asatur Tumanyan

HEWLETT PACKARD (HP)STRATEGIC GROUP ANALYSIS


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Hewlett Packard

TABLE OF CONTENTS

1 Phase 1: Strategic Position Analysis

2 Phase 2: Formulation of Strategy

3

Phase 3: Conclusion and Recommendation


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Organisational Background

Hewlett-Packard was founded in 1939,Palo Alto, California.

Today HP is one of the world's largestcomputer peripheral companies and the

foremost producer of test and measurementinstruments.

The company mainly produces computers

and its related gadgets.

It was founded byBill Hewlett and Dave Packard.
http://www.google.co.uk/imgres?imgurl=http://www.tech-news.com/imagesap/packard_hewlett.jpg&imgrefurl=http://www.tech-news.com/another/ap200609.html&usg=__RB5Y_Ti9YMg7DiR8dta9zJ8Av_A=&h=364&w=335&sz=28&hl=en&start=22&zoom=1&um=1&itbs=1&tbnid=hyhxe2HDm3QN5M:&tbnh=121&tbnw=111&prev=/images%3Fq%3Ddave%2Bpackard%2Band%2Bbill%2Bhewlett%26start%3D20%26um%3D1%26hl%3Den%26sa%3DN%26ndsp%3D20%26tbs%3Disch:1


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PEST Analysis

Russia


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PEST Analysis

RussiaPolitical FactorsPopulation 142 mln. People

Area 17,075,200 sq km

Income tax 13 %

Corporate tax 24 %

Economic FactorGDP PPP (Purchasing Power Parity): 8th

Position

$2.11 trillion (2009 est.)



GDP PPP (per capita) estimated: 72nd

position

Socio-cultural factors Gini index is 42

EU31

USA46

Lifestyle, attitude to work and leisure

changes with increase in income.

Welfare is mostly created by privatebusinesses.

State organisations still suffer from low

wages.

Technological factors

Huge potential and qualified workforceGovernment encourages investments in

hi-tech research and development.

Internet eases access of Russian

products to the International Market


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PEST AnalysisPolitical factorsGovernment Stability

Taxation, employment and safety lawSocial welfare policies

Foreign trade regulations

'Green' issues that affect the environment

Economic factorsTotal GDP and GDP per head growth rates

(trends)Inflation

Consumer expenditure and disposable

income

Interest rates

Currency fluctuations and exchange rates

Investment, by the state, private enterprise

and foreign companiesBusiness cycles

Unemployment

Socio-cultural factorsShifts in values and culture

Change in lifestyle

Consumerism

Attitudes to work and leisure

Green environmental issues

Education and health

Social mobility

Technological factorsGovernment investment policy on research


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Hewlett PackardX - Average ranks of PEST analysis

Y - Rank

Y

X

(5-Most favourable, 4-Favourable, 3-Neutral, 2-Unfavourable, 1- Most unfavourable)


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Hewlett Packard

Major competitors


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Strategic Group Analysis

Intra group competition

Competitors Price

(Ranking)

Quality

(Ranking)

HP 7 6

Dell 6 6

Lenovo 7 5

Sony 7 6

Toshiba 5 5

Acer 4 6

Samsung 5 5Asus 6 6

X

Y

X - Price

Y - Quality

(1-Very Low, 2-Low, 3-Low to Moderate, 4-Moderate, 5-Moderate to High, 6-High,

7-Very High)


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Industry Life cycle

PC Industry Sales in Russia

Year Total industry Sales

($ US mln)

2004 1,775.2

2005 2,436.2

2006 3,504.2

2007 4,943.8

2008 5,315.3

2009 3,639.8

X

Y

X - Year

YTotal Industry Sales

The Russian Personal computer industry shows a steepincrease in sales over a 4 years (2004 - 2008) and a

sharp decline in 2009 which was a result of the

economic down turn. All sales figures are in Million

Dollars.


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Porters 5 forces

External AnalysisThreat of New EntryEconomies of scale

Differentiation

Brand loyalty

Access to supply and

distribution channels

Entry deterring price

Competitive rivalry

determinants

Market growth rates (life

cycle)

Fixed costs

Differentiation of the

products/services

Barriers to exit

Determinants of buyer

power

Buyer's purchasing power

Switching costs

Threat of backward

integration

Determinants of supplier

power

Switching costs

The threat of forward

integration by the supplier

Threat of Substitutes

Relative price /

performance of substitutes

Switching costs

Willingness of buyers to

substitute

Brand loyalty


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Porters 5 forces

External Analysis

X

YRanks

4 Low Threats, low bargaining power,

low competitive rivalry

3 Moderate Threats, low bargaining

power, low competitive rivalry

2 High Threats, low bargaining power,low competitive rivalry


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Internal AnalysisResource Audit

Human Resource Analysis Rank

Number of staff 304,000 Employees 5

Skills Good technical (Engineering & Solution providers),

sales, marketing and IT support teams

Executive staffs

5

Experience In-depth industry specific knowledge 4Training Involved with staff and distributors training 3

Motivation Discount rates on products purchased, salaries,

medical costs, long term return on plan assets.

5

Turnover High risk in employee mobility 1

Attitude and

cultural awareness

Multi cultural employee population and language

translations

3

Flexibility Flexibility work hours and reduced work pressure 3



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Physical Resource Analysis RankLocations In several countries in the 5 Continents 4

Expansion potential Availability of funds, asset and other

resources for moving into new markets and

develop new products.

4

R&D facilities Invest in R&D projects2.8 million in 2009 5

Quality Engages in extensive product quality

programmes and processes.

5


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Financial Resources Analysis RankBorrowing capacity In the acquisition of Compaq 2

Internal funds

generation

Shareholders participation 3

Global accounts Special requirements for customers paymentglobally

5

Control systems Improvements in corporate governance andinternal control procedures as a result of the

activities of the leak investigation

2

International

accounting systems

Compliance with IAS 5


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Intangible Resources Analysis RankTechnologyknow

how

Intangible assets acquired, includes in-process

research and development

5

Patents & Copyrights Rely on patent, copyright, trademark and trade

secret laws

Establish and maintain intellectual propertyrights in the technology and products they

produce and sell

3

Customer loyalty Customer loyalty rating is high among other

competitors

5

Brands

Two brands which are widely recognised are theHP and Compaq 4


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Value ChainPrimary activities

(5-Excellent, 4-Above average, 3-Average, 2-Below average, 1- Poor)

Activities Analysis Ranks

Inbound

logistics

Maximises the demand for its product based on capabilities and configuration, helping to

minimize inventory holding.

Reliant on sole vendors for the purchase of materials with short life span. E.g. Intel & AMD

for processors and Microsoft for various software products.

Efficient Distribution chain for products in order to reduce cost and energy use.

4

Operations Outsources manufacturing.

Finished products from components and sub assemblies are acquired from a wide range of

vendors.

Products that are purchased are resold under the HP brand

4

Outbound

logistics

PSG (Personal systems group) - SMB commercial resellers channel (retail and commercial

channels)

Volume direct organisation which manages the direct sales for volume products.

4

Marketing &

Sales

Products are made available to customers through direct and channel sales.

Competitors like Dell and IBM have strategically position themselves in the laptopindustry, focusing their business on PC and server hardware.

4

Customer

service

Extensive service and support - Total care provides after sales service, maintenance and

installation

Provides service for calls, emails and chats with an HP technician online and HP house call

for PCs.

4


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Value ChainSecondary activities

(5-Excellent, 4-Above average, 3-Average, 2-Below average, 1- Poor)

Activities Analysis Ranks

Firm infrastructure Infrastructure includes Information Management and

Business Intelligence Solutions for Archiving, recording

management products, data protection and enterprise

data and leasing, financing, financial asset management

services, etc.

4

Human resourcemanagement

304,000 employees worldwide.Large levels of responsibility.

Employees' welfare and safety

Impacts and ensuring employee satisfaction.

5

Technology development Adaptive Network Architecture (ANA)

R&D - About $3.5bn was invested in 2008.

4

Procurement/Purchasing Advanced technology such as e-auctions, e-quoting, e-invoicing and e-payments to sustain its relationship with

the supply base.

Capabilities of supporting suppliers with technological

activities and training.

4


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SWOT AnalysisStrength

S1 Strong brand equity

S2 Diversified product portfolio (offeringsspans personal computing and other access

devices; imaging and printing-related products

and services; enterprise information

technology infrastructure, multi-vendor

customer services, consulting and integration

and outsourcing services)

S3 Solid market position in key segmentsS4 Strong financial condition

S5 Human Resources Management

S6 Marketing and Sales

Weakness

W1 Internal control issues

W2 Lack of in-house managementconsulting division

W3 Unrest among internal employees due

to pay cuts and lack of "people care"

W4 Intellectual Capital is under-estimated

W5 No Good People retention policy or HR

practices to ensure IC is protected

W6 Recall on products

Opportunities

O1 Emerging markets, particularly BRIC

countriesO2 e-Commerce expansion

O3 Restructuring of internal IT structure

O4 Imaging and printing businesses

O5 Consumers expenditure and disposable

income

Threats

T1 Intense competition from other PC

manufacturersT2 Increasing competition on imaging and

printing

T3 Slowdown in economic conditions in

the world

T4 Supply chain disruptions


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SWOT Analysis

S6+O5: The disposable income of

Russians is high, meaning customers

have the ability and are willing to

purchase HP's quality products and

services that have combined featuresover products of its competitors.

W1+O3: Using the advantage of IT

facilities to develop product and

quality control

S3+T2: HP has a high market share in

the key segments, it should maintain

its leading position in the printing and

imagining business by coming up with

products with advanced features tohave an edge over its competitors.

Strength + Opportunities Weakness + Opportunities

Strength + Threats Weakness + Threats


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Organisational purpose

HPs VisionAt HP, we believe diversity is a key driver of our success. Putting

all our differences to work across the world is a continuous

journey fuelled by personal leadership from everyone in our

company. Our aspiration is that the behaviours and actions that

support diversity and inclusion will come from the conviction of

every HP employee - making diversity and inclusion

a conscious part of how we run our business throughout the

world. Diversity and inclusion are woven into the fabric of our

company.

HP is a multinational company dealing with variety of IT equipments

It supports diversity in culture and decision-making.


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Organisational purposeMission

Customer loyalty: Earn respect and loyalty by providing highest quality and value

Profit: Attain sufficient profit for finance growth, value for shareholders investment and

corporate objectives.

Growth: To seize opportunities to growth and achieve, build on strengths and competencies.

Market leadership: To lead in the marketplace by developing and delivering useful and

innovative products, services and solutions

Commitment to employees: To demonstrate our commitment to employees by promotingand rewarding based on performance and by creating a work environment that reflects our

values.

Leadership capability: To develop leaders at all levels who achieve business results, exemplify

our values and lead us to grow and win.

Global citizenship: To fulfill our responsibility to society by being an economic, intellectual

and social asset to each country and community where we do business.

Evaluation

HPs mission statement recognises that its needs to earn the respect and loyalty of its

customers; to be a market leader; to commit itself to the welfare of its employees and engage

in corporate social responsibility.


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Organisational purpose

Objective Evaluation

HPs objectives are geared towards achieving its mission. This it does by providing

its customers with high value and quality products; developing and delivering

useful and innovative products, services and solutions; promoting and rewarding

employees based on their performance and by creating a work environment that

reflects its values and by being an economic, intellectual and social asset to each

country and community where it does business.


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Portfolio Analysis

Products and services

Computers

Laptops

Laser printers

Super computer (Servers)

Software development


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Portfolio AnalysisHP Products growth rate in Russia

Laser printers

Year Sales ($mln) Growth

rate %

2005 366.4 20

2006 425.4 16

2007 491.4 15

2008 442.6 -10

Laptops


rate %

2005 83.9

2006 98.1 17

2007 110.4 12

2008 131.1 19

Servers


rate %

2006 180.3

2007 216.3 20

2008 288.4 33

Software development

Year Sales ($bln) Growth

rate %

2005 1.2

2006 1.4 17

2007 1.7 21

2008 2.0 18

2009 2.18

Computers


rate %

2005 68.2 37

2006 98.1 44

2007 138.4 41

2008 148.8 8


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Portfolio Analysis

Relative Average Sales Share of the Business

Products Sales for 2008 Relative average sales

Printers 442,624,000 2.14

Computers 148,828,400 0.72

Laptops 131,100,000 0.63

Supercomputers (server) 288,480,000 1.39

Software 20,000,000 0.09

Total company sales 1,031,032,400


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Portfolio Analysis

Hewlett Packard's BCG MatrixHi

g

h

m

a

r

k

e

t

g

r

o

w

t

h

r

at

e

l

o

w

High Relative Market Share Low

BCG Matrix interpretation

STARS Supercomputers

QUESTIONMARKS

Laptops &software

CASH COWS Printers

DOGS Computers


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Business Unit Level StrategyCompetitors Perceived Quality Price

3 2

3 2

3 1

2 2

2 2

2 2

2 2

3 1

(3-High 2-Average, 1- low) (3-Low 2-Average, 1- high)


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Quality price matrix

Best offer Good offer

Value for money

HP

Dell

Excellence

Premier Quality

Asus

Acer

Good Price

Value for money

No where

Play safe

Lenovo

Samsung

Sony

Toshiba

Too expensive

No value for money

Low Price No value for money Nonsense

Hi

g

h

A

ve

r

a

g

e

L

o

w

Q

U

A

L

I

T

Y

3 2 1

3

2

1

Low Average High

PRICE


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Development Strategy

Market Penetration and Consolidation

Market Penetration

Business started January 1938

1938: Audio Oscillator (HP200A)

High demand for HP electronics

Acquired Boonton Radio Corp.

HP and Compaq merger

Market Consolidation/Withdraw or Downsizing

Suspected withdrawal of earlier products

Maintain Market ShareStrategies to gain more market share where embarked upon.

Acquired Heartstream Inc.

2002-Acquired Indigo

2005-Acquired Scitex Vision

2006-Acquired Mercury Corp.


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Development StrategyProduct development

Modified Product Development1963-5100A frequency synthesizer

1974-first minicomputer

1982-HP9000; HP-75C

1984HP Thinkjet

1991-Deskjet 500C1991-HP 3000 & HP 9000 systems

1994-World's brightest LED

1994-Colour laser jet printer

1994-HP 200LX Palmtop PC

1999-Jornada 4202005-HP Photosmart 8250 Photo

2007-TouchSmart PC

2007-Touch screen consumer tab

2009-HP PhotoSmart premium wit

Complimentary Product

Development

Grouping/ Bundling Strategy1994:printer-fax-copier

Cross Subsidisation StrategyNot applied

New Product Development1951-HP 524A

1973-5000A Logic Analyser

1979-Integrated microprocessor

1988-HP digital multimeter

1998-Jornada 820 PDA2000-High-end server line


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New Market Segments1960-Medical field

1991: HP 95LX Palmtop PC

1995: HP Pavilion PC

2004: Digital Entertainment Strategy

New uses1960:Medical electronics & Analysis

New geographical Markets

1958-Acquires F.L Moseley

1960-Plant in Colorado

1973:Operations in Boise, Idaho

International Market

Development

1959: Switzerland & Germany

1963: Asia

Switzerland

1981: Beijing, China

Market development


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Diversification

Related diversificationRelated vertical backward

integration

1958 - acquires F.L Moseley

1989 - acquires Apollo computer1994 - corroborates with Intel

HPFS - financial services

Related vertical forward

integrationPartakes in the distribution

After sales service

Related lateral/concentric

integration2006-diversification to games

Related horizontal integration1966 - first computer

1984-laser jet printers

inkjet, toner, paper, scanner fax

Unrelated diversification

1943-microwave field

1961-medical field

1965-analytical instrumentation


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Development Strategy Analysis

1. Market Penetration / Consolidation

1997 -Audio oscillator HP 200AHP equipments High Demand

Acquire Boonton Radio Corp.

Acquire Heart stream Inc.

HP and Compaq merger

2002-Acquire Indigo

2005-Acquire Scitex Vision

2006-Acquire Mercury Corp.

2. Product Development

1963-5100A frequency synthesize1974-first minicomputer 1980-HP-85

2003-100 HP consumer products

2004-Vivera Inks

2005-HP Photo-smart 8250 Photo

2007-TouchSmart PC

2008-HP2133 Mini-Note PC

2009-HP Photo-Smart premium

3. Market Development1960 -Medical field

1991:HP 95LX Palmtop PC

1995:HP Pavilion PC

2004:Digital Entertainment Strategy

1960:Medical electronics & Ana

1958-Acquires F.L Moseley1960-Plant in Colorado

1973:Operations in Boise, Idaho

1959: Switzerland & Germany

1963: Asia

Switzerland

1981: Beijing, China

4. Diversification1943- microwave field

1961-medical field

1965-analytical instrumentation

1958-acquires F.L Moseley

1989-acquires Apollo computer

1994-corborates with IntelHPFS - Financial services

After sales service

2006-diversification to games

1966-ist computer

1984 - Laser jet printers

inkjet, toner, paper, scanner fax

Existingmarkets

New

markets

Existing products

Markets

New productsProducts


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Conclusion

In conclusion, the external environment is beneficial to thecompany because the Political, Economical, Socio-cultural andTechnological factors are favourable to the operations of thebusiness. The company has been able to organise resourceaudit and value chain which has helped it to carry out its

internal activities.The company places heavy emphasis on its employees,

customers and stakeholders, bearing in mind thatemployees/human resources are the most important assets ofan organisation, and customer and stakeholder expectations

are very high. The company has come up with differentproducts and services, which have helped to give it acompetitive edge in the industry in which it operates.


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Recommendation

In Russia, HP is in the leading position in supercomputers

and printers market; the gap between them and their

competitors is wide. They should focus on these

sustainable products.The company should also downsize computer and laptop

imports from the US and invest in local manufacturing

facilities.

HP (EDS) should move to game programming in Russia.


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Recommendation

THANK YOU


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ReferencesAnnual Review (2010) Environmental Issues in Russia [online] available from

[25

September 2010]

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[28 September 2010]

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from [26 September 2010]

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[28 September 2010]

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[26 September 2010]

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[18 September 2010]


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Referenceshp (2010) Annual report & proxies - 2009 10-k [online] available from

[30 September 2010]

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[19 September 2010]

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September 2010]

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[17 September 2010]


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ReferencesLaptop Reviews Online (2010) HP Pavilion [online] available from

[17 September 2010]

Laptop Reviews Online (2010) Lenovo [online] available from [17September 2010]

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[17 September 2010]

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September 2010]

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[26 September 2010]

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ReferencesThe Inquirer (2010) Dell opens posh shop in Russia [online] available from

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