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BUSN 9232 STRATEGIC DECISION MAKING

Hewlett Packard

Week 1

1. Background of the Company
Hewlett-Packard was founded by William R. Hewlett and David Packard in 1939
and is headquartered in Palo Alto,California USA.

2. Diversity in Products and Services
Hewlett-Packard Co. provides products, technologies, software, solutions and
services to individual consumers, small- and medium-sized businesse and large
enterprises, including customers in the government, health and education
sectors.

It operates through seven business segments:
1. Personal Systems,
2. Printing,
3. Enterprise Group,
4. Enterprise Services,
5. Software,
6. HP Financial Services and
7. Corporate Investments.

The Personal Systems segment provides commercial personal computers (PCs),
consumer PCs, workstations, calculators and other related accessories, software
and services for the commercial and consumer markets.

The Printing segment provides consumer and commercial printer hardware,
supplies, media and scanning devices. Printing is also focused on imaging
solutions in the commercial markets.

The Enterprise Group segment provides servers, storage, networking, technology
services and, when combined with HP's Cloud Service Automation software
suite, the HP CloudSystem. The CloudSystem enables infrastructure, platform
and software-as-a-service in private, public or hybrid environments.

The Enterprise Services segment provides technology consulting, outsourcing
and support services across infrastructure, applications and business process
domains. This segment is divided into two units: Infrastructure Technology
Outsourcing and Application and Business Services. The Infrastructure
Technology Outsourcing unit delivers services that encompass the data center,
IT security, cloud-based computing, workplace technology, network, unified
communications, and enterprise service management. The Application and
Business Services unit helps clients develop, revitalize and manage their
applications and information assets. Its offerings include licenses, support,
professional services, and software-as-a-service in order to provide an end-to-
end solution to customers.

The Software segment provides enterprise information management and security
solutions for businesses and enterprises of all sizes.

The HP Financial Services segment provides a broad range of value-added
financial life cycle management services. This segment offers leasing, financing,
utility programs and asset recovery services, as well as financial asset
management services.

The Corporate Investments segment includes HP Labs, the webOS business and
certain business incubation projects.

3. Diversity in Markets and Regions
a. Headquarters of Geographic Operation
Americas
Houston, United States
Miami, United States
Mississauga, Canada

Europe, Middle East, Africa
Geneva, Switzerland

Asia Pacific
Singapore
Tokyo, Japan

b. Product Development, Services and Manufacturing
Americas:
CanadaMarkham, Mississauga
Puerto RicoAguadilla
United StatesAlpharetta, Andover, Auburn Hills, Austin, Blue Ash,
Boise, Charlotte, Colorado Springs, Corvallis, Des Moines, Fort Collins, Hockley,
Houston, Indianapolis, LaVergne, Palo Alto, Plano, Rancho Cordova, Roseville,
San Diego, Sandston, Suwanee, Tulsa

Asia Pacific
ChinaChongQing
IndiaBangalore, Udham Singh Nagar
JapanTokyo
New ZealandAuckland

Europe, Middle East, Africa
IrelandLeixlip
IsraelKiryat-Gat, Nes Ziona, Netanya
SpainSant Cugat del Valles
United KingdomBillingham, Erskine, Norwich, Sunderland

c. HP Labs
ChinaBeijing
IsraelHaifa
RussiaSt. Petersburg
United KingdomBristol
United StatesPalo Alto

4. Industry Characteristic

World PCs sales declined 6.9% in fourth quarter of 2013 (Gartner 2014),
while tablets sales continued to grow.
The competition among computer hardware companies is particularly
intense.
Constant downward price pressure (and narrowing profit margins)
Short product life cycles.

The competition among computer hardware companies is particularly intense. On
the one hand, in the traditional PC market, companies' products have largely
become commodified, with constant downward price pressure (and narrowing
profit margins) being the result. On the other hand, there are markets for
innovative new products, like tablet PCs and ultra-minimal desktops, that are not
yet fully commodified. Here, the race is on to develop products at breakneck
speed so you can be first to market. And if a company falters, it instantly
becomes a target for larger companies looking to acquire new businesses. No
doubt about it: Computer hardware is a cutthroat business.

There are definite geographic concentrations in the hardware industry despite its
worldwide reach. It's often noted that high-tech companies are usually located
near colleges and universities, and there's a good deal of truth to that, as many
companies come out of research done at such institutions. Silicon Valley is near
San Jose State, the University of California at Berkeley, and Stanford University.
Route 128 is near the educational mecca of Cambridge, Massachusetts.
Research Triangle in North Carolina and the area around Austin, Texas, are also
good examples. Still, there are other places within North America where you'll
find major hardware companies; for example, Gateway is in North Dakota.

Most major corporations in computer hardware reach across national borders.
International sales normally account for a large percentage of most hardware
companies' bottom lines, and India, Japan, China, and other Asian locations are
hotbeds of hardware manufacture and design.

In the hardware world as elsewhere in business, an increasing number of
manufacturers are outsourcing product and component development and
manufacturing overseas. Some companies are only doing top-level design in the
United States, leaving production and more basic design tasks to cheaper labor
in the Philippines, China, and elsewhere. What this means is that product
managers and project heads may have to travel a lot more than in previous
generations; it also means that many North America-based jobs are being lost.
Increasingly, the task of American PC companies is to be expert in marketing and
distribution while simply outsourcing manufacturing and portions of the design
work. Still, observers point out that there should continue to be plenty of jobs in
this sector in the U.S. for techies with top-notch skills.

Related to outsourcing and commodification, consolidation of the industry makes
sense as computers become familiar products that require fewer very different
design and manufacturing approaches. Let a few giant companies manufacture
more units at lower cost while sharing marketing and distribution costs across a
larger organization. Hewlett-Packard came home with Compaq for billions, and
rumor has it that Gateway is a prime takeover target.

5. Company Strategy

-Vision and strategy
At HP, we believe diversity is a key driver of our success. Putting all our
differences to work across the world is a continuous journey fueled by personal
leadership from everyone in our company. Our aspiration is that the behaviors
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.

-Mission
-Strategy
Utilize a significant number of outsourced manufacturers (OMs) around the
world to manufacture HP-designed products to generate cost efficiencies and
reduce time to market for HP-designed products.

OPPORTUNITIES

1. Increasing demand of cloud based services. The cloud computing
market is expected to grow by an average of 22% each year from 2011 to
2020. By 2020, the market is expected to reach $240 billion value.
Currently, HP is offering many services related with cloud computing but
the name only heard in the enterprise users and hardly known by day to
day consumer.
2. Increasing demamd of portable 3D printers. 3D printing industry is
expected to grow at a robust pace of over 30% per year in the coming
years. Gartner projects that 3DP spending will grow by 62% in 2014,
reaching $669 million, with enterprise spending of $536 million and
consumer spending of $133 million. The main players in this industry are
3D Systems and Stratasys. HP will enter this market in October this year
targeting enterprise buyers. HP needs to ensure its product will fit
enterprise requirement (ease of use, intelectual property protection,
service centre and 'ink' supplies.
3. Tablet and ultra portable computing. In mature market consumer have
been settled with either apple ipad or samsung galaxy. Global tablet sales
is oredicted to slow down by IDC. HP's tablet is not gaining growth over
the year, not like the PDA era. HP should provide integrating software
solution for consumer who are using HP in the office but prefer iPad or
Galaxy on their palm. The competitors in this are Dell and Cisco.p
4. E-government trend in emerging economies.
5. Rising work from home culture.

THREAT

1. Major competitors who are providing similar range of computing solution
(pc, printers): Dell, Lenovo, IBM, Canon, Lexmark, Xerox, Brothers.
2. Outsourced manufacturer produce competitors' product (intelectual
property breach loop hole)
3. White-box manufacturers breach HP's copyright.
4. Major supplier stop/halt production : Intel and AMD
5. Currency risk
6. Outsourced manufacturer and subsidiary compliance to local laws and
regulations. Current investigation by local authorities in Poland and US
authorities in Poland, Russia, CISs, and Mexico.
7. Security breach in cloud and data centres.

Strengths of HP
Legacy/ brand reputation
The company has experienced in all aspects of electronic design and
construction since it was established in 1947. Its server sales is the
largest among competitors, while its PC sales is the second largest
after Lenovos sales. HP's PC sales particularly strong in the US (No.1
in 20xx)

Global Distribution and Services Network
The companys products and services are available worldwide. The
companys network encompasses more than 500 locations worldwide,
providing quick and easy access to the company's sales and support
representatives.

Diversified product portfolio
Hewlett-Packard has provided various technological products for
individual consumers to large enterprises, including customers in the
government, health and education sectors. The products are ranging
from personal computing and other access devices to IT management
software.

Innovative products
3D printing, cloud storage, Hybrid PC, etc.

Low manufacturing cost
Most of its products are outsourced to manufacturers around the world
to generate cost efficiency.

Quality product
HP's product is warranted to last for its intended manufacturing
retaining its resale value. Even their refurbished versions are in
demand.

Patent and license repository
One of HP's subsidiary is HP Labs who do constant research and
development.

Weaknesses of HP

Decreasing revenue
The companys revenue has decreased since 2011. Its sales in
America tend to decrease, while the opposite trend is happening in
EMEA and Asia Pacific regions. Fake products/ imitations also affect
the companys sales.
Due to mass production, it is unable to provide customize solutions to
the customers. Its aggresive policy to protect general consumers
(computer illiterate) HP is preventing itself from the small number of
growing computer literate communities.
Not much sales from budget consumers or general consumers in
developing/third world country
Weak on software sales as lack significant software products
compared to its competitors (IBM)

Organisationally weak
Ineffective leadership and hindering innovation and controll, as current
chairman is also the CEO.
Too big bureaucratic? Huge span of control?

Dependency to suppliers and outsource company in manufacturing
It could reduce manufacturing cost significantly, but it increases the
companys dependency to its suppliers.



























Business Level Strategy of HP

The HP applies both integrated cost leadership and differentiation
strategies for its business level strategy to target broad customers i.e.
individual consumers, small- and medium-sized businesses (SMBs), and
large enterprises, including customers in the government, health and
education sectors. The company uses two methods in fulfilling demand for its
products, which are building products to order and configuring products to
order. Building products to order method will maximize manufacturing and
logistic efficiencies by producing high volumes of basic product configuration
to achieve economies of scale (cost leadership strategy). Another method,
configuring products to order, allows configuration of units to a customers
particular hardware and software customization requirements (differentiation
strategy).
Other than that, to pursue cost leadership strategy, the company uses
a significant number of outsourced manufacturers (OMs) around the world to
manufacture HP-designed products to generate cost efficiencies and reduce
time to market. In addition, the company also purchases the suppliers
products and resells them under the HP brand.
In research and development efforts, the company focuses on
identifying the areas where it can make a unique contribution on its portfolio
products (differentiation strategy) and the areas where cooperating with other
leading technology companies will make its cost structure more efficient and
maximize its customers experiences. (cost leadership strategy)

Corporate Level Strategy
In corporate level strategy, the HP provides various products and
services related to information and technology, which are organized into
seven business segments: Personal Systems; Printing; Enterprise Group;
Enterprise Services; Software; HP Financial Services and Corporate
Investments. Each of these segments has independency to choose its own
strategy when entering the market (autonomy). In IT industry it is quite
common to give certain autonomy for each segment to grow and pursue their
own niche markets. Perhaps only Apple Inc. who integrates all of its products
centralised on user experience. The independency given by HP leadership
enable internal competition to bring values to the company. The result is
medium diversification level in the company, as none of HP's segments
contributed dominantly to the companys revenue. The highest earner in the
company is the printing segment with 38% of total revenue.
To strengthen each of its business segments, the company also
acquires companies related to its business portfolio from time to time. In 2011,
the HP acquired Hiflex Software GmbH, a web-to-print and management
information systems solutions company, and Printelligent, a closely held
provider of managed print services, to support the printing segment. It also
acquired Autonomy Corporation plc, a leader in fast-growing enterprise
information management and data market, for its software segment.
The company distributes its products and services worldwide. Though
America region (including the US) still constitutes the highest contribution of
revenue (about 45% of total revenue in Q3 2014), other regions such as
EMEA and Asia-Pacific is experiencing continuous trend of revenue growth.
This geographical region diversification would enable the company to achieve
economies of scale, provides revenue streams to offset geographic economic
trends and offers an opportunity to access new markets for maturing products.
For certain segment like printing and personal system, the company could
operate globally, while for Enterprise services, Software and Financial
Services, HP could tailor its strategy based on local custom.


Strategy and Structures
For international strategy, the company adopts global strategies. Most of its
products are generally standardized products such as printer and personal
computer.Thus, the company tends to pursue a low cost strategy by using
outsourced manufacturers around the world to manufacture it-designed
products. This strategy is also favorable as it can reduce time to market the
products.
In organizational structure, the company uses a worldwide product division
structure, where each business segments is directly responsible to the CEO.
However, these segments have autonomy to decide the execution of its own
go-to-market and distribution strategy. This structure allows positive
competition between these business segments.
Under Meg White leadership, HP restructure the organisation, downsizing
their workforce almost half. This 2012 plan has been carried out gradually.

Acquisitions and Restructuring strategies
Year Company Business Benefits
2014 Shunra Network
Virtualization
Business &
Technology
Supports innovation of HPs IT
solution through software testing,
avoiding product failure before
deployed to market
Increase diversification of HPs
business portfolio
2012 Hiflex Information
Management
Supports innovation across HPs
imaging and printing offerings
Expands cloud-based technologies
and solutions through cloud printing
technology
Increase diversification of HPs
business portfolio
2011 Autonomy Information
Management
Provides services that are
complementary across HPs
enterprise offerings
Increase diversification of HPs
business portfolio and broaden
customer base
2011 Pritelligent Managed Print
Service
Strengthen Imaging and Printing
Group of HP
Synergy between the parent and its
subsidiary will deliver an unparalleled
solution to help customers better
manage their print environments
Increase diversification of HPs
business portfolio
2014 Autonomy Cloud Computing
Service