Strategic Management in Real Life - Essay Example

HP STRATEGIC MANAGEMENT REPORT PART A Hewlett- Packard (HP) is a company that offers a wide range of products relating to information technology. The corporation has its headquarters at Palo Alto, California in the United States of America. The breadth of products that the company supplies to the market includes software and technology solutions to the consumers. It is a leading manufacturer of the PC, networking products, storage devices and printers (Cliff & Aaron 2011). Strategic management is the strategy through which a business enterprise works towards achieving a competitive advantage by adding a unique value to the customers. Every successful business operates within a competitive environment. Hp is not an exception and from 1990s when it started to focus on information technology it has had stiff competition from other companies like Dell and Apple. Strategic management also encapsulates the desire by the management to come up with clear objectives that give the organization distinctiveness in the market (Helen 2010). The starting point for every business enterprise is to come up with a clear mission and vision that steer the company towards its objectives. Hp mission statement is change the market as an opportunity to grow, to use the profits and its ability to manufacture innovative services, products and solutions that will satisfy the customer needs. This is supplemented by its vision which is to provide products, services and solutions of the highest quality and deliver more value to the consumers. Both the mission and the vision statement capture the main objective of the company which is to serve the consumers to the fullest extent. In a world where tastes and preferences of the consumers keep on changing, HP seems too eager to embrace this change to ensure that they continue to maintain and get a greater consumer base. The current market is very fluid and success of any organization is never guaranteed. Thus companies need to come up with successful strategies that will propel the sales and profitability of the company. A successful strategy ensures that the company incorporates and analyse both the internal and external factors inorder to arrive at a winning strategy. Markides (2000) argues vehemently that the strategic management of any organization is encapsulated the moment the organization radically changes its approach of its activities, thus by being a set pacer rather than a follower of other organization vision and mission. Foresight and a visionary approach is what give the business organization the starting key geared towards success (Ross 2010). HP management having a clear mission and vision will need to harmonize its internal energies to realize optimum results. This is arrived at by a holistic analysis of the needs of the company. A careful evaluation of the strategic and management problem facing the business entity gives the premise upon which the firms direction and decision making process are founded. It is very important that the organization focuses its energy on marketing and also a SWOT analysis inorder to achieve success. Strategic management is twofold in nature, on one hand it may involve the management involvement in the planning of its future. To this extent the organization will direct its energies in getting enough information, this information is then carefully analysed by the senior executives of the organization and assists in forecasting and reflecting on the best approach that the organization should take at that particular time. The second approach involves the management response to the future without a careful analysis of any information. This approach opines that the future is very unpredictable, and hence inorder for the organization to keep afloat and well above board, it should essentially come up with views and measures that can address and shortcoming in the future. The second approach is very important in a very unstable environment while the first comes in handy in a stable environment (Clark 2011). SWOT ANALYSIS OF HP Strengths: one of the major strength of HP is its level of revenues. In 2011 the company recorded a US $127.24 billion record income. This level of revenue has enabled the company to have merger and acquisition that has ensured that the company remains competitive. In 2002 Hp merged with Compaq, in 2008 the Hp acquisition of EDS propelled its revenues and ranking in Fortune 500 to 9. Recently HP has acquired a buyout and shares in Palm and 3PAR which have all lead to greater sales and profitability. Strength is the company policy to invest $3.6 billion in research and development that makes its products very innovative in the market (Clark 2011). Weaknesses: the company has over the recent past been involved in scandals that have tarnished the name of the company. In 2006 the company was involved in pretexting spying technique to source for information, which painted a bad picture of the company (Sewell & Brown 2007). Opportunities: the company has worked so hard to improve its products and image. One of the approaches is through use of internet marketing strategies which have pushed the sales to a record high. Its involvement in the corporate social responsibility has also served the company’s objective of redeeming its image. By 2007, for example the company announced that it had recycled one billion pounds of electronics which portrayed a sense of environmental conservation. Hp has also seen increased involvement in sponsorship; it has sponsored Tottenham Hotspur FC, Renault F1 and North Melbourne Football Club in the recent past. The company has a great opportunity by the large professional outsourced clients like the UK banks and US defence forces. This serves to increase the confidence of new clientele (Barney 2002). Threats: one of the greatest threat is level of competition it receives from other competing companies especially Dell. An example is the September 2010 when Dell almost closed the deal ahead of Hp to buy the shares of $2.07 billion of 3PAR. This bidding wars continue to serve as the greatest threat to the company. Another threat is the multiple lawsuits that are filed against the company. In 2009, the company got numerous lawsuits because of its i7 processor computers, complainants complained of a lock up after 30minutes of turning on the computers. Recently the company has had legal wars with Oracle over a breach of itanium microprocessor agreement (Clark 2011). PART B The first strategic option should be the functional one of marketing the products. A large corporation like HP has enough resources to market the products. Bearing in mind that most of the sales are concentrated in America a wider marketing strategy will be very imperative in the company organization. HP currently runs successful lines of a wide range of products including calculators, PDAs, workstation, scanners, computers and scanners. Some of the modes that the company may embrace include integrated marketing communication (IMC) and internet marketing (Camp 2001). An integrated marketing strategy involves a multi channel approach of communication of the company’s products. Due to the broad based range of products, it is imperative that the company sustain a distribution channel to ensure that the products get accepted in the market. The marketing vehicles within the IMC will include the use of print media, billboards, tradeshows, TV and radio advertisement and online display advertising. As far as the Website is concerned, the company has a modern interactive platform through which their products are marketed to the customers (Pine & Gilmore 2001). Strategic management will ensure that the company comes up with a greater budget to address the issue of marketing. It is important that the management have checks and balances as relates its expenditure. An over emphasis on one kind of strategy may lead other strategies to be deficient, and this has the overall effect of affecting the whole corporations mission and vision. The mission and vision of HP are customer based, thus in adopting the best marketing strategy this will be boosting the level of profitability and client base for the company. Inorder for the management to optimumly utilize the internet marketing it is important to analyse and evaluate the target audience, the current demographic and geographical segmentation of the market, the level of the competition in the market, the marketing mix, the current branding structure and the current communication vehicles that the company is utilizing (Hamel & Prahalad 2004). The Hp valuable brand is highly rated, currently rated at 11th in the world. The current simplicity of the logo too makes the brand recognizable and endearing to most customers. The second strategic option includes more investment in research and development (R&D). This is not to mean that the company has not invested enough, it only means that more resources need to be ploughed back to make the products sales increase. The HP Company has a big department of Strategy and development. This ought to be given more investment. Though a budget of $3.6 billion has been invested by the company, more resources ought to be invested. The main function of the company department includes steering a more budgetary allocation, fostering the technicality of the company globally, giving the company a strategy and corporate innovation and finally giving a global marketing strategy (Camp 2001). In an information technology world, the trends keep on changing; therefore R&D becomes the heart of every successful corporation. Hp ought to source for more skillful human resource, supplement this with new technologies to enhance and maintain a high level of innovation. An example of the effectiveness of investment in R&D is the innovation of a memory spot chip that is at the core of a successful information technology of HP today (Sewell & Brown 2007). Innovation comes with a lot of challenges. The market has many competitors especially Apple. The introduction of an idea lab which is a forum of the new products of HP has been a great success. Moreover, the provision of IT professional services has been important in the management of the company products. The company has also partnered with Microsoft operating systems to ensure the company remains afloat. In responding to the threats posed by the company through laws suits and competition. The company has made great strides through its use of mergers and acquisition as a platform for increasing the market share and profitability. HP as a result of the growing legal disputes ought to establish a bigger legal department to address the legal questions. Due to its global presence partnership with successful legal law firms is important to ensure that the legal disputes are sharply dealt with. However the mission of the company is to satisfy the customers, better product would not result in suits. Therefore, there is a greater need to ensure that the quality of the products is better (Barney 2002). As regards the response to the opportunities, the company has carefully invested in the sponsorship. Its withdrawal from most of the prior sponsorship has been very alarming. To protect its image the company ought to engage in corporate partnership and endorsements. Endorsements are especially important because the company has made exit in the tablet and Smartphone manufacturing. The company has currently embarked in a more strategic issue of cloud and software solutions. This novel area may require a lot of marketing to ensure that they get a lion share in the market. HP is essentially assisted and backed by the amount of resources that the company has. With the recent acquisition by Dell of Perot systems which boosts its consulting business enterprise it shows that the rivalry is not about to go, HP ought to come up with better strategic ideas to ensure that the company makes great strides in the information technology. PART C The scholars identify three evaluation criteria of the strategic options that have been adopted by any organization enterprise. These are (Mintzberg 2001): a. Acceptability- which interrogates whether the option of the company will work. b. Feasibility- this is essentially a mode of ensuring that the option analysed by the corporation entity are made to move from being ideas into reality. c. Suitability- the management considers if the option adopted would work. As regards the strategic option of increasing the amount of money for Research and Development (R&D), the three criteria formula would be used in the following way. Firstly the suitability of the whole strategic idea. The key consideration by HP before rolling out a scheme to increase the amount of R&D would be addressed by the management addressing the following questions (Noel 2005)? a. Whether the strategic option is economically viable? b. Whether the option would amount to greater economies of scale? c. Whether the strategic option is suitable in the sense of the company capabilities and in relation to the environment. As concerns the first question of economical viability. R&D though requiring a lot of resources at the beginning it relater becomes a platform for greater sales to the market. An example is the newly launched HP Pavilion and Compaq Presario, Procurve for networking and inkjet and LaserJet technology. The viability of investing more has seen a successful tread over the last couple of years, thus technology should be at the heart of R&D strategic option. The means of ensuring suitability is through use of the tools of decision trees and ranking of strategic options. R&D have been the major drivers of more economies of scale at HP, thus it is suitable that the company increase its budget on the same. Based on the company policy of green chemistry, adoption of more R&D resources may help the organization realise this goal (Derek 2006). The second criteria regarding acceptability, this is measured by the level of acceptance by the management, shareholders, employees and customers. The main consideration to determine in accountability relates to the strategic option stakeholders reactions, risk and returns. Every stakeholder in Hp would wish to know what they are bound to get from the whole R&D project. The stakeholders would wish that their investment and jobs are kept secure. Thus the management should strategically address the consequences of risk. The reactions of the stakeholders towards the project should be analysed to ensure that that value for money is taken into account (Markides 2000). The third criteria of ensuring the effectiveness of a strategic option are feasibility of the R & D project. The four elements of the feasibility study include time, people, information and funding. The project should in the first place have the right kind of resources and a good implementation strategy to ensure its success. The tools that will be used to measure the feasibility of the project; include resource analysis, break even analysis and forecasting. To achieve the success of the strategic option the HP success could be pegged on its success stories in mergers and acquisition, its level of capital expenditures and the level of strategic alliances. An organization like HP is made up of a bundle of resources, these fall into the categories of physical, financial, knowledge, organizational and human resources. An inventory of all these kind of resources is important to achieve the strategic management of HP. Financial resources relates to the capital that the organization is able to channel into the organization strategic option. Human resources on the other hand relates to the personnel that will be invaluable in realizing the success of the organization. Physical resources relates to the availability of the buildings, rawmaterials and equipment that the company has utelised to realise success of its strategies. The knowledge and organizational resources are what keep the firms name on the map. An example would be the brand name of the business entity. This too should be taken into account in strategic management (Pascale 2000). HP in the strategic management process will also have to interrogate the following ( Moncrieff 2004); a. A situation analysis: this involves a whole analysis of the company environment. The company has both the internal and external environment. Resources are very core in finding the situation of the company. a clear analysis of the current and emerging strategy is also important for the company. b. Giving direction. These is ensured by the company making sure they have a mission and a vision. HP has both these objectives in their strategy. The big challenge will be that every strategic option adopted by the company should be aimed at realizing the goals set by the company. the company should not also compromise the quality and standards that it has set the prospective and current consumers. c. Strategy formulation. d. Strategy implementation: this includes the process of managing the relationship and resources that exist in the corporation. This acts as an important way of giving competitive advantage in the market. The reasons that the HP strategic management and options may fail include (Andrew 2010); a. A complete failure to execute a plan to overcome the organizational hurdles. These hurdles are given four categories, which are political, resource, cognitive and motivational hurdles. b. Lack of consumer analysis. It is very important that the company should conduct a marketing research on the trends and preferences of the consumers. The stakeholders wouldn’t wish to engage in a non viable project. Similarly, to achieve this objective HP should partner with advertising agents to realise a wider customer base. c. Lack of prediction tools. Due to the competition in the marketing. Wisdom requires that the company organize its affairs in a predictable manner. Every strategic option should have an allowance for price wars and competitors intervention. d. Lack of senior executive commitment: the goodwill of the senior management to any strategic option is very vital. These is demonstrated when they are willing to surrender the finances, time and human resource in getting the objectives of the company. e. Critical path analysis- this essentially mean a good analysis of estimation that the company is likely to have in term of the resources towards attaining the company objectives. REFERENCES Barney, J. (2002) Firm Resources and Sustainable Competitive Advantage, Journal of Management, Vol 17, no 1, pp. 56-67 Camp, R.(2001) Benchmarking: The search for industry best practices that lead to superior performance, American Society for Quality Control, Quality Press. Clark, J. (2011), HP unleashes lawyers on Oracle over Itanium support, ZDNet UK, Jun 16, 2011. Cliff, E & Aaron R, (2011) HP's Plan to Make TouchPad a Hit, Businessweek, Jun 23, 2011 Derek, A. (2006), Strategic windows, Journal of Marketing, Vol 42, pp. 21–28. Hamel, G. & Prahalad, C.K. (2004) Competing for the Future, Harvard Business School Press, Boston. Helen, C (2010). "The 100 Best Corporate Citizens". Forbes.com. 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