Market Development - a Growth Strategy for Hewlett Packardto Sell Its Products in New Markets - Example

Name: Professor: Institution: Course: 1.0 Introduction------------------------------------------------------------------------------------------ 3 2.0 Company background Information---------------------------------------------------------------- 3 3.0 HP Evolution---------------------------------------------------------------------------------------- 3 4.0 Internal Analysis of HP-----------------------------------------------------------------------------4 4.1 Strengths--------------------------------------------------------------------------------------------- 4 4.2 Weaknesses----------------------------------------------------------------------------------------- 5 4.3 Opportunities---------------------------------------------------------------------------------------- 5 4.4 Threats------------------------------------------------------------------------------------------------ 6 5.0 Strategic key issues --------------------------------------------------------------------------------- 7 6.0 Development strategy------------------------------------------------------------------------------ 7 6.1 Market penetration---------------------------------------------------------------------------------- 8 6.2 Product development------------------------------------------------------------------------------- 8 6.3 Market development------------------------------------------------------------------------------- 9 References --------------------------------------------------------------------------------------------------- 10 1.0 Introduction 2.0 Company background Information HP is an abbreviation commonly used to refer to Hewlett-Packard a firm that is spread all over the world and its headquarters are at Palo Alto, California in the United States of America. It mainly concentrates on selling products such as Computers, printers and imaging digital devices. It is generally known as one of the best and largest selling Company of Personal Computers globally. They also offer after sale service for their devices and also deal with the sale of Computer software. (David Packard et al., 2009). 3.0 HP Evolution Bill Hewlett is known as the founder of the Company jointly with Dave Packard. In 1934 Bill and Dave both went to college at Stanford University and graduated as a test manufacturer and instrument measurement. The foundation can be traced back in 1939 when they both manufactured a precision audio oscillator which was designed and referred to as model 200A. They later manufactured a second model 200B which was purchased by the world famous movie makers Walt Disney Productions for movies sound production. ( Charles H. House, 2009). They used a light bulb to act as a resistor in a certain sensitive part of a circuit with the aim of stabilizing temperature. Bill Hewlett and his partner gave the first computer a name that could not be confused by people for something else different because from the initial outlook it did not look like a Computer. They named it a desktop calculator. In 1968 the first personal Computer was launched to the amazement of people who had never come across such a device that was so sophisticated and made work easier. In 1972 the scientific electronic calculator came into existence followed by a programmable calculator in1974 then an alphanumeric, programmable and expandable calculator was produced in 1979 and later the first symbolic and graphing calculator. Both inkjet and laser printers which are used with a desktop computer were then manufactured in 1984 followed by scanners. With time other products have come up such as fax machines and photocopiers and have under gone innovation and the models get better and more advanced with each processing. (David Packard et al., 2009). 4.0 Internal Analysis of HP Majority of businesses or firms usually conduct a Strengths, Weaknesses, Opportunities and Threats Analysis (SWOT) so that they can carve a sustainable niche in the global market. In 1960s Albert S Humphrey was among the first people to introduce the SWOT analysis framework, SWOT Analysis is as useful now as it was then. In essence or simple terms a SWOT is used to help people initiate a strategy formulation tool in a more elaborate manner (Lawrence G. Fine, 2009). An internal analysis will help identify the existing threats and how to manage them, it also acts as a tool to help identify and exploit external opportunities. Through the analysis framework it’s easy to differentiate a Company from its competitors which is very essential in strategizing on how to capture on increase the already existing market share. The internal analysis basically involves the strengths and weaknesses while the external factors are the threats and opportunities (Simon Burtonshaw et al 2010). 4.1 Strengths The case study clearly conveys a message that HP can be identified with possession of great strengths in their Company. Hp has over the years been able to provide superior customer care of its products and excellent service while they devote extra time to their customers for continuity and hence they have benefitted from customer loyalty. They are also able to respond and act very quickly whether online or through their sales outlets to their customers who end up saving a lot of time and money. HP is known for its superior products globally and therefore their reputation cannot be easily tarnished. Since the manufacture of its first product, HP has been able to increase its market share through aggressive marketing. With time they have also been able to reduce their costs in manufacture of better quality and advanced unique products resulting to their overheads being minimal. The Company’s financial position is also very stable since they are able to purchase a Company that was on the verge of bankruptcy. HP has also invested wisely in terms of shares and warrants. 4.2 Weaknesses. HP has also been faced by weaknesses regardless of being the best performing software Company in the market. The economic world is becoming more advanced with time and the competition is getting stiffer and tougher with every innovation of a product. By Hp acquiring palm and yet they continued to register loses in each quarter the duration of achieving their objectives can only be felt long term as their resources will be diverted to a non- profit making venture. HP is also faced with the challenge of introducing a new product i.e. the phone to its customers and convincing them of the quality. A number of firms today have been innovating producing new better model phones into the market therefore HP will have to master mind a strategy to achieve their economies of scale. 4.3 Opportunities The opportunities that exist at HP include the expansion, with many future opportunities for success. Due to lack of resources the Competitors may slow down the innovation process and adapting to new technologies. The global network and reputation that Hp already possesses can help them to increase the market share and hence the mobile having a positive impact. Individual lifestyles have changed gradually and the new software or Smartphone may be regarded highly by customers who are willing to try new advanced software devices. Their experience over the years has led to increased customer loyalty and hence the development of the acquired software into tablet computers in itself is an achievement which other firms are not aware of how to manufacture as well as test the device. HP's strengths with regards to technology and market impact consolidation is an open opportunity to gain the economies of scale at a higher rate than their competitors. 4.4 Threats The economy is growing fast and to keep up with the current trends Hp requires being up to date with what its competitors have put into the market as new arrivals. Thus development may change faster than Hp can be able to keep up with the pace and adapt to the current situation. Hp is faced with the threat of other mobile manufactures such as Nokia Oyj, Apple and Research In Motion Ltd that have been in the market and whose market share and performance is quite remarkable. Any market position that Hp has been able to hold can be wiped out by focusing on a large competitor. The Government may change the policy’s regarding buying out another firm by imposition of a tax or matters relating to phone manufacturing. Changes in people’s lifestyles, population profile and social pattern also poses as a huge threat to Hp because tastes and preferences of individuals are changing every day. Hp may also face lack of developer support hence the development of the handsets and operating system would stall. 5.0 Strategic key Issues Carrying out a SWOT analysis makes a business particularly powerful in that, with a little thought, it can help a firm uncover opportunities as well as threats using the SWOT framework to start a craft strategy on how to compete successfully in the market. From the above SWOT analysis we can identify Competition and Innovation as the key strategic issues that HP has to contend with before acquiring palm. During the buyout we find that Hp already had ipaq handset which had not kept up with competition in the market. This culminated as a result of other players in the market introduced Smartphone and iPod which concentrated the market. Other marketers have been concentrating on innovation through production of smart phones which is the fastest growing area in the market while Hp had not yet ventured into production of smart phones. Thus we can in general conclude that Hp faces innovation as a strategic issue where they require re-doubling efforts by concentrating on development. While Hp is on the process of market penetration with smart phones, tastes and preferences of customers may change and smart decisions will be required through innovation for development of better advanced mobile options. Despite Hp option of introducing new products into the fast growing tumulus economy, competition from the key market leaders like Nokia Ovi who have already penetrated the market with quality phones might prove to be a hunt to the bitter end. 6.0 Development Strategy Igor Ansoff is the guru that initiated use of Ansoff Matrix, a tool that suggests the strategy to be used for the firms’ current potential products and market growth. The matrix attempts to specify that a business may grow through marketing new or existing products in new or existing markets. The output from the market matrix suggests on growth strategies which a firm may concentrate on as a business direction (Kazmi, 2008). Using the Hp case study and applying the ansoff matrix to identify the development strategic issue used during acquisition, we are able to clearly conclude that Hp used existing products for market penetration and new products for market development. 6.1 Market penetration Through selling of existing products into existing market is the name given to a growth strategy known as market penetration. Hp has acquired a new product which already exists in the market i.e. smart phones from palm Company. In general the Hp strategy of market penetration aims to achieve objectives such as drive out the competitors through their well managed concrete marketing strategies of pricing and promotional campaigns to attract more buyers. This will hence require a lot of investment in new market research of how to increase usage of the existing customers which they have already considered through introduction of a computer tablet. Hp has also been in a position to secure dominance of growth markets. Using SFA framework will promote positive change through tackling difficulties. This approach helps to move situations towards a resolution.  This skill when applied to Hp strategies helps focus on strengths and positives rather than weaknesses and negatives. 6.2 Product development Product development strategy is whereby a firm seeks to introduce new products into existing markets. Packard planned to use the software webos in other mobile devices including tablet computers and advance the existing operating system. Hp will then have to develop more modified products that are appealing to the customers by using this strategy of development to overcome the competitors. Innovation is the key success of most businesses for them to handle competition and keep abreast with the fast growing economy. Adoption of the above two strategic development approaches should not be assumed to eliminate the threats and weaknesses of Hp Company. The other market leaders will also be strategizing on ways to build customer loyalty of their products and hence the impact of product development would cease and not be felt by Hp. Market leaders are always seeking and searching ways to improve and expand their market share which should also be Hp’s priority. 6.3 Market Development An alternative option that Hp can adopt is market development. Market Development is a growth strategy that Hp can use to sell its existing products in new markets. This is not a risky venture because Hp already covers a large market and have experience that Apple and Google only dreams about. Hp also has stable financial resources to explore areas that have never ventured by introducing new distribution channels. They can also explore new geographical areas that palm may have dominated by packaging the products differently. Another approach that Hp can use to adapt to this strategy is through provision of a different pricing policy that will attract new customers because competition is very stiff. . REFERENCES Charles H. House, Lewis Price (2009); The Hp phenomenon innovation: Business and Information transformation. David Packard, David Kirby, Karen Lewis (2009 ) ; The HP way: How Bill Hewllet and I built our Company OpPapers. Retrieved on 5th May 2011 from http://www.oppapers.com Lawrence G. Fine, 2009: Using your strengths to overcome weaknesses RedOrbit 2009. Retrieved on 5th May 2009 from http://www.redorbit.com Kazmi,(2008); Strategic Management and Business and Business Policy. Simon Burtonshaw et al (2010): Essential tools for Operation Management Read More