Approaches the HP Company Should Have Taken - Case Study Example

A business strategy can be described as a means by which companies set out to achieve the desired objectives. A business strategy is also known as long-term business planning. A business strategy usually lasts for three to five years and can sometimes even take longer. A business strategy is mainly concerned with resource issues. This includes raising enough finances that will help in achieving the company’s objective. A business strategy also has to decide which products will receive significant funding. A business strategy also has to look at what the business is all about and where they manufacture.

Business strategies can be divided into two – competitive strategies and generic (general) strategies. Competitive strategies are critical in a company. This type of strategy focuses on being better than the competition. A company should not imitate its rivals; it should try to find better ways in which to compete with their competitors. A company can beat their competition by selling their goods and services at a lower price. This can only be possible if the company is leading in the market and it gains from the economies of scale. Another way a company can beat its competitors is by differentiating their products from those of their competitors. This can be done through their customer care, packaging, labeling and any other supplementary features. By differentiating a product, a company can be able to charge higher prices if they want to (Harvard Business Review, 2011).

Generic strategies are also imperative to a company. They consist of growth, which includes acquiring new products and growing the company so that it can be able to procure new assets. Another generic strategy a company can take is globalization or internationalization. This is the ability to move their operations to various countries. The other strategy involves retrenchment. This is usually concentrating on what the company does best and includes cutting back (Harvard Business Review, 2011).

The mistakes HP made that led to its near collapse

The HP Way is a company that was founded by Bill Hewlett and Dave Packard in a garage. Their well-known management style is usually the subject of a case of studies especially by Wall Street and Ivory Tower professionals in a similar way. Their management philosophy was legendary as it laid emphasis on integrity, teamwork, modernization and they valued their workers, customers, and the community as well. Even after the founders' demise, the HP Way remained as their lasting legacy.

One mistake that led to the apparent end of the HP Way was the amalgamation between Compaq and the Hewlett-Packard Company. People argue that what was once known as the distinctive culture of HP was then renounced. The new practices that were introduced by the merger crushed what the HP Way had always emphasized on.

There was also the proxy fight that disappointed the supporters of the initial HP Way. The fall of the HP Way was blamed on the chairperson and CEO of HP, Carly Fiorina, who turned the battle into her political campaign instead of letting it remain a business proposition. She had been employed by an exterior company and because of this; she had not encountered the HP Way. She ran the company very differently from how the founders did. People have pointed fingers at her because she created what was known as the "cult of personality," mismanaged layoffs and placed more importance on making profits rather than focusing on her employees. She neglected the core values that had been practiced by the company.

Another reason that led to the near fall of HP was the employees' reluctance in problem-solving strategies. They were incapable of making rapid decisions. An employee stated that they tried to make what they thought was the right decision and therefore this led them to overanalyze stuff. Under the leadership of Fiorina, the employees were trying to cultivate worthy problem-solving strategies by substituting ideas. The market opportunity would already have changed before they finished analyzing things. Because of this, the revenue of HP took a downward position.

Fiorina also led the company downhill by turning away the HP trend. This was by firing employees in huge numbers and making demeaning comments about their competitors. She even had the audacity to request her employees to extend their vacation period and voluntarily agree to a pay cut so that the HP Company could accumulate some money. This was very contrary to what the founders did. They reassigned their employees instead of firing them, reduced their work weeks and had long-term contracts to avoid laying off employees. After that, Fiorina declared that she would fire 6,000 people.

Another mistake that Fiorina did was that she did not value any of her employees. She encouraged distrust among her workforce and used a cold method to lay off some employees. She did not value the input her employees brought in, and no one felt secure in whatever position that they held. She led the employees to fear her, rather than to build a relationship with them.

Fiorina also separated business units within the company. She held each unit accountable for their profits and losses. She threatened the employees in units that were unprofitable with probable dismissal. When Hewlett and Packard were there, the profitable units in the company usually helped the unprofitable ones as they were one company.

Approaches the HP Company should have taken to maintain and preserve their position in the marketplace

The probability of attaining profitable growth in a company is amplified when it has a lucid growth strategy and a robust execution infrastructure. These two go hand in hand, and a company cannot be successful if one is not present (Harvard Business Review, 2011).

Growth targets in profits and revenue are failed by many companies when a company's organizational structure cannot be executed successfully and when there are insufficient opportunities that are within the core business. In the HP Company, Fiorina should have fabricated a systematic framework that would have increased success probability. This would have been done by amplifying the execution infrastructure through a “safe bets” investing. This requires the elimination of department silo; making use of leading indicators that support the strategy as well as performance drivers and; nurturing leaders in each and every level, whether managerial or not (Harvard Business Review, 2011).

Another approach that the HP Company should have used is by cutting the costs of the company without laying off employees. This was one major problem in the HP Company. Letting employees go is letting useful skills and knowledge out of a company (Harvard Business Review, 2011). Fiorina could have cut the company’s costs by:

1) Renegotiating HP’s plans – this would have been done by analyzing their business plans and renegotiating them so that they could get better deals or discounts on the plans.

2) The HP Company would have done away with the finance charges – unnecessary expenses in the company should have been avoided. This would have been made possible by staying on top of the company’s bills and making sure that they are paid in time. By doing so, the company would have saved a lot of money and get a high quality credit rating.

3) Making use of all the available time – as they say in the business world, time is money. Time management can go a long way in keeping levels of production high (Harvard Business Review, 2011). The employees of the HP Company, together with their CEO, should have learned efficient time management practices.

4) Reducing office paper - 40% of office paper is usually thrown away within 24 hours after printing. This is not only harmful to the environment, but it is also an expense that can be cut down (Harvard Business Review, 2011). The HP Company should have used the Cloud technology to store all their records and data online.

5) Using appliances that are energy efficient – energy prices usually increase, and this can take a toll on a company financially (Harvard Business Review, 2011). The HP Company would have reduced their utility bills by using appliances that are energy efficient.

Another approach that the HP Company’s CEO, Fiorina should have used is the “Performance Management system and Scorecard”. This is a fundamental element in a company for successful infrastructure execution. This procedure provides answers to the "what should be measured and why" question. This detects the performance of both the employees and the departments. By using scorecards, the company should have been able to have a balanced perspective. This would have been based on employee development and on the value that was provided to the Customers (Harvard Business Review, 2011).

The final approach the HP Company should have used is by finding a leader who knew the core values of HP and who had experienced the HP Way. A leader is a crucial person in a company as he or she influences the actions and the attitudes of the employees. Leaders reflect the core of the organization (Harvard Business Review, 2011). Having an exemplary leader would have been beneficial to the HP Company as the employees would have been mentored and encouraged, therefore helping the company attain profitable growth and maintain its position in the market.

Reference

HBR's 10 must reads on strategy. (2011). Boston, Mass: Harvard Business Review Press