STRATEGIC ANALYSIS OF CASE STUDY (HP) “HEWLETT PACKARD CORPORATION”

Contents1. Introduction & history

Vision & mission

SWOT

2. Formulation (stage #1)

I. Input Stage

i. EFE

ii. IFE

iii. CPM

II. Matching Stage

i. SWOT

ii. IE MATRIX

iii. SPACE MATRIX

iv. BCG MATRIX

v. GRAND MATRIX

III. Decision Stage

i. QSPM

3. Implementation (stage # 2)

4. Evaluation stage (stage # 3)

Introduction

Strategic management is all about

Formulation

Implementation

& evaluation of strategies

So our project will revolve on these critical parameters.

Strategic Management

Strategy Formulation

– Input /action stage

– Matching stage

– Decision stage

Strategy Implementation

Strategy evaluation

History

Bill Hewlett & Dave Packard graduated in electrical engineering from STANFORD University in 1935.

The company originated in garage in nearby Palo Alto,California,USA during a fellowship in 1939 with initial capital investment of us $538

Hewlett Packard company commonly referred as ‘HP’

American multinational information technology corporation headquartered in Palo Alto , California , USA Nearly in each country

hp product lines include :

01) Personal computing devices

02) Enterprise servers

03) Related storage devices

04) Diverse range of printers & imaging products

Hp markets its products to household, small to medium size consumers and enterprise directly as well as via online distribution

In 2002 hp completes its merger with Compaq Computer Corporation .By the end of 2006 hp revenues was over $91.6 billion with 156000 Employees.

Vision & Mission of HP

• 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”

SWOT ANALYSIS

Strengths

Brand name

Low debt

Wide range of innovative products

Developing of own hardware and software

Web technology used for product awareness & sale

Weaknesses

Lack of in-house management consulting division

Intellectual capital is underestimated

No aggressive investment in R & D

No good people retention policy

Opportunities

Expansion of retailed stores for customer convenience

Participation in joint venture

Make easy to use product for upcoming retirees

Computer and cell phone software & hardware

Threats

Competitor’s technology & pricing

low compatibility with non- HP product

Availability of substitute

Less global coverage than competitor

Input Stage

IFE (INTERNAL FACTOR EVALUATION MATRIX)

Key Internal factorsKey Internal factors WeightWeight RatingRating Weighted ScoreWeighted Score

Strengths

Brand name

Low debt

Wide range of innovative products

Developing of own hardware and software

Web technology used for product awareness & sale

0.14

0.13

0.12

0.10

0.10

4

4

4

4

3

0.56

0.52

0.48

0.40

0.30

Weaknesses

Lack of in-house management consulting division

Intellectual capital is underestimated

No aggressive investment in R & D

No good people retention policy

0.10

0.08

0.11

0.10

1

2

2

2

0.10

0.16

0.22

0.20

Total 1.00 2.94*

Interpretation

EFE (EXTERNAL FACTOR EVALUATION MATRIX)

Key External factorsKey External factors WeightWeight RatingRating Weighted Weighted ScoreScore

Opportunity

Expansion of retailed stores for customer convenience

Participation in joint venture

Make easy to use product for upcoming retirees

Computer and cell phone software & hardware

0.11

0.18

0.09

0.12

3

3

2

4

0.33

0.54

0.18

0.48

Threat

Competitor’s technology & pricing

low compatibility with non- HP product

Availability of substitute

Less global coverage than competitor

0.12

0.13

0.10

0.11

4

3

4

2

0.48

0.39

0.40

0.22

Total 1.00 3.02*

Interpretation

Critical success factor

weight HP DELL CANON

Rating Score Rating Score Rating Score

Innovation 0.11 2 0.22 4 0.44 3 0.33

Management 0.08 3 0.24 3 0.24 3 0.16

Technology 0.12 4 0.48 2 0.24 3 0.36

Financial Position

0.10 4 0.40 3 0.30 2 0.20

Market share 0.09 3 0.27 4 0.36 2 0.18

Customer loyalty

0.10 3 0.30 3 0.30 3 0.30

Brand name 0.11 2 0.22 4 0.44 3 0.33

Pricing 0.11 4 0.44 2 0.22 2 0.22

Product Quality

0.09 4 0.18 3 0.27 2 0.18

Compatibility 0.10 2 0.20 3 0.30 4 0.40

Promotion 0.08 2 0.16 2 0.16 4 0.32

Total 1.00 3.11 3.28 2.98

CPM(COMPETITIVE PROFILE MATRIX)

Matching Stage

SWOT MATRIX

SWOT

MATRIX

Strengths - S1. Brand name 2. Low debt3. Wide range of

innovative products4. Developing of own

hardware and software

5. Web technology used for product awareness & sale

Weakness – W1. Lack of in-house

management consulting division

2. Intellectual capital is underestimated

3. No aggressive investment in R & D

4. No good people retention policy

Opportunities – O1. Expansion of retailed

stores for customer convenience

2. Participation in joint venture

3. Make easy to use product for upcoming retirees

4. Computer and cell phone software & hardware

SO - strategies (S1, S3,O1,)

(must open new retail stores throughout the world to take advantage of financial strength)

(S4, O3)

(develop easy pc and cell phone for old generation)

WO – strategies (W1,W5,O2)

(develop new HR policy in order to retain human capital by taking advantage or other firm management )

Threats - T1. Competitor’s

technology & pricing2. low compatibility

with non- HP product3. Availability of

substitute4. Less global coverage

than competitor

ST – strategies (S4, T1)

(developed low price and innovative pc & cell phone than competitors )

(S5,T2)

(developed such hardware and software for computer & cell phone which are compatible with other companies software and accessories)

WT – strategies (W1,T1)

(give attention to management consulting division to have more focus on technology improvements)

Interpretation

Managerial Decision:

“Market development and Horizontal Integration”.

SPACE (STRATEGIC POSITION & ACTION EVALUATION MATRIX)

Internal Strategic Position External Strategic position

Financial Strengths (FS) Environmental Stability (ES)

Return on Investment

leverage

Working Capital

Liquidity

Price earning ratio

Total

Average

+5

+3

+4

+5

+4

+21

+4.2

Technological changes

Rate of Inflation

Price range of Competing products

Competitive pressure

Barriers to entry into market

Demand variability

Total

Average

-3

-2

-3

-5

-4

-2

-19

-3.17

Competitive Advantage (CA) Industry Strength (IS)

Market Share

Product Quality

Customer Loyalty

Technological know-how

Control over suppliers and distributors

Total

Average

-2

-3

-2

-2

-4

-13

-2.6

Growth Potential

Profit Potential

Financial Stability

Labor cost

Technological know-how

Total

Average

+5

+5

+4

+3

+4

+21

+4.2

INTERPRETATION

According to the space matrix score HP falls in the “AGGRESSIVE quadrant”. Their strategies should be one of the following:

• Vertical and horizontal integration

• Market penetration

• Market development

• Product development

• Diversification

BCG(BOSTON CONSULTANTING GROUP MATRIX)

Table for BCG Matrix HP division

ID SEGMENTS REVENUE % PROFIT % GROWTH RATE %

MARKET SHRE %

A ESS 19 2 11 0.8

B HPS 17 20 8 0.1

C SOFTWARE 1.4 5 14 0.6

D IPG 29.2 30 8 0.8

E PSG 32 42 -10 0.7

F HPHS 2.2 2 -14 0.2

IE (INTERNAL-EXTERNAL MATRIX)

INTERPRETATION

HP falls in first region of IE matrix and there main focus will be on “GROW AND BUILD” and they will mainly focus on strategies which are:

• Market development

• Horizontal integration

DECISION STAGE

QSPM

(QUANTITATIVE STRATEGIC PLANNING MATRIX)

Key Internal Factors HORIZONTAL INTEGRATION

MARKET DEVELOPEMNT

Strengths Weight AS TAS AS TAS

Brand name 0.14 3 0.42 4 0.56

Low debt 0.13 3 0.39 2 0.26

Wide range of innovative products

0.13 4 0.52 3 0.39

Developing of own hardware and software

0.11 4 0.44 3 0.33

Web technology used for product awareness and sale

0.10 2 0.20 3 0.30

Weaknesses

Lack of in-house management consulting division

0.10 2 0.20 3 0.30

Intellectual capital is underestimated

0.08 -- -- -- --

No aggressive investment in R & D

0.11 3 0.33 2 0.22

No good people retention policy

0.10 3 0.30 2 0.20

Total weight 1.00

Key External Factors HORIZONTAL INTEGRATION

(Strategy - 1)

MARKET DEVELOMENT

(Strategy - 2)

Opportunities weight AS TAS AS TAS

Expansion of retailed store for customer convenience

0.11 3 0.33 4 0.44

Participation in joint venture 0.20 4 0.80 2 0.40

Make easy to use product for upcoming retirees

0.09 3 0.27 2 0.18

Computer and cell phone software and hardware

0.12 3 0.36 2 0.24

Threats

Competitors technology and pricing

0.14 4 0.56 3 0.42

Low compatibility with non-HP product

0.13 3 0.39 2 0.26

Availability of substitutes 0.10 4 0.40 3 0.30

Less global coverage than competitors

0.11 3 0.33 2 0.22

Total weight 1.00

Total Attractive Score 6.24 5.02

INTERPRETATION

According to the total attractive score of QSPM HP should go for

“HORIZONTAL INTEGRATION”

Note: Jis matrix ke interpretation nae he wo please lekh dena. Shahbaz