The Business of Hewlett-Packard - Research Paper Example

Case study for Strategic Management Table of Contents Memo 3 Introduction 4 HP Global Concentration 5 Product Line Enhancement 8 Acquisition Strategy10 Strategic Planning for HP 11 Conclusion 12 References 13 Memo The business of Hewlett-Packard is based upon its innovative products which have captured the market. The decision for acquiring other IT businesses is a move towards the basic thinking of HP and they want to be the complete IT solution provider in the industry. There are many issues like market conditions, international happenings, innovation, research and development that affect the industry. The competitors’ strategy and product development is also vital. HP needs to formulate enhanced strategic plan for the future market and IT solutions to grow. Introduction The study is about Hewlett Packard Corporation (HP). The business that HP has generated in the highly competitive market of information technology is remarkable. There are many competitors globally but HP has performed better in 2006. HP is known for its innovative products. As a global company, HP evolved with their innovative product development. HP has its own organizational structure based upon the business segment. There has been a continuous growth of sales, EPS (earning per share) and net revenue. The channel of distribution emphasizes upon the collaboration of various business partners. The objective of sales and marketing policies are through programs that perk up profit margins. In the segment of technology, there is a huge competition as there are many competitors. Dell Inc, Mac, IBM, Canon, and many other players are present to compete in the global market. HP and many other corporations were competing in the market; and among all DELL was the strong competitor. The information technology industry is highly competitive and the changing technical environment demands more expectation from bigger corporations globally. HP Global Concentration HP has been successful in generating a market which has benefited the company in terms of revenue. HP should focus globally and develop strategy for the expansion of the market. China has shown the largest consumption pattern in the computer segment. The focus should be towards the Chinese market. Toshiba has been able to create a market in China. HP should also compete with Toshiba in the computer section. The technology merchandise PLC (product life cycle) are of shorter span of time. Consumers expect more out of technology and unique products with different features. There are brands that provide the new concept of technical merchandises. But HP has been successful in providing unique products that have been developed through their efforts in R&D and innovative thinking. The market for the technical devices is not restricted to single or several segment of market. This enters at all the segments and with better policy, the higher market share can be obtained. In technological market, there are many choices of products in different segment operating nationally or internationally. The product features and the brand create the difference and there lies the opportunity. HP is directing the way in increasing policies, products, systems and services to secure privacy and keep individual data protected. HP Labs smartly design consumer products. HP is serving consumers securely understanding the full benefits of the information explosion (Hewlett-Packard Development Company, “Changing the equation”). HP operates in information technology product recycling and provides its services in 56 countries or territories. HP is the world’s chief merchant of personal computer, distributing more than 50 million devices annually. HP is the worldwide leader in inkjet and laser printing and delivers consumers products that are productive and saves money. In IT service segment HP holds a large market and HP helps business enterprises in various ways (Hewlett-Packard Development Company, HP Profile”). (Hingley, “HP Delivers Record $31 Billion Revenues, But EMEA Is Weak”). In the market segment with regards to region, HP has generated more business from the European market. HP should strengthen this market to generate more revenue. For other markets, the marketing strategy must be revised and altered to acquire more market share. HP should expand its operations in other regions to capture the opportunities in those regions. (Hingley, “HP Delivers Record $31 Billion Revenues, But EMEA Is Weak”). HP powered with EDS technology has been able to increase the revenue but in 2009 as per the graph they have experienced a decline. HP needs to focus upon the market segment and develop individual strategy to achieve increased revenue. Product Line Enhancement HP deals with computers, printing and imaging products, software, accessories and networking and IT related services (Hewlett-Packard Development Company, “Products & Services”). During the operation of past few years; notebooks, desktops and printing supplies, each accounted for more than 10% of HP’s consolidated net revenue (Hewlett-Packard Development Company, “HP Annual Report 2008”). TSG HP Consolidated ESS HPS HP Software Total PSG IPG HPFS Net Revenue (in $ M) 118364 19400 22397 3029 44826 42295 29385 2698 Revenue % increase 13.50% 4.10% 35.20% 19.75 18.80% 16.20% 3.20% 15.50% Earnings from operations (in $ M) 10473 25577 2491 461 5529 2375 4590 192 Earnings from operations as a % of net revenue 8.80% 13.30% 11.10% 15.20% 12.30% 5.60% 15.60% 7.10% Net earnings (in $ M) 8329 Net earnings per share Basic 3.35 Diluted 3.25 (Hewlett-Packard Development Company, “HP Annual Report 2008”). The business segment revenues of HP are provided for the year of 2008. HP has been successful in capturing the market of printers and imaging products and generated huge revenue from this technology. The main point that HP should focus upon is towards innovative product development in this category to develop further and capture others market share. HP is stronger in this technology segment and should think of more innovative ways in delivering more enhanced products to the market and take advantage of the market. The other product lines also have been able to generate revenue to the company but also there are numerous problems related to the market, distributions, products and services. The major focus should be the printers and imaging products along with the services of IT which can be enhanced in future to generate revenue and loyal consumers. This will increase competition and raise the standard of the market. The competitors will have tough time and market share will be further competitive as HP in this segment holds greater market share. The other products in the computer category are developing and gaining more importance in the international market and focus should be also given to those categories. (MNM Media, LLC, “Apple drops to 5th in US computer sales”). There has been a growth of 2.3% in HP PC shipment. If this segment is developed properly through the marketing and strategic tools’ applications, there is potential for this segment to grow in the international market and help the company to generate revenue for long term. (MNM Media, LLC, “Apple drops to 5th in US computer sales”). In the recent past, Dell has experienced negative growth and HP has gained the market. There has been an increase in the market share of HP from 18.5% to 19.8%. HP needs to develop the market for this segment so that there is more opportunity to grow for the product as well as for the company. Acquisition Strategy HP has been acquiring many companies for the last few years. It has also been developing its market stability through the product development strategy in various markets. The potential acquisitions that will benefit from the acquisition data include Tabblo Inc, Bristol Tech and SPI Dynamics. SPI Dynamics deals with web application security assessment software and services. It’s a US based company which can be advantageous to HP. Bristol Tech leads in business transactions and is also a US based company. For business transactions solutions, it is the better option. Tabblo Inc is a web based software company of US. The recent acquisitions of HP are Fortify Software, (Computer Software) Arc Sight, (Corporate Computer Security management) 3PAR (Data Storage), Palm, Inc (Smartphone manufacturer) among others. The strategy of acquiring for the future prospect in the technology market will lead HP as the market leader with higher market share in different segments of technological market. Strategic Planning for HP HP should restructure their program regarding the Electronic Data System business group which will align the company’s combined overall structure and work efficiently and effectively that HP has successfully executed in the recent times. The procurement or acquisition strategy of HP requires to be evaluated only from those companies or market segments from where a better business can be generated. The market potential needs to be judged while acquiring. There has been growth in the percentage of sales of HP products in different segments. The focus should be in increasing the sales. The growth percentage can be achieved at a higher level if the focus upon the marketing and sales policy is being evaluated and enhanced program is being developed. HP and Microsoft declared a three-year agreement to invest $250 million to extensively make simpler technological environments for businesses of all sizes. The companies have designed to deliver new solutions that will: Be constructed on a next-generation infrastructure-to-application model Advance cloud computing by swiftness application completion Remove complexities of IT management and make routine existing manual processes to lower the overall costs. HP strategy should focus upon the above mentioned issues. Conclusion HP has been tremendously successful in providing better IT solutions but still there are quite a few aspects to develop and introduce enhanced technical devices and solutions for business houses and individuals. The product line requires to be enhanced with a better strategic planning. The acquisition plan for HP has been successful and they should follow such plan with better analysis of all factors before investing in the acquisition ventures. References Hewlett-Packard Development Company. “Changing the Equation”. November 4, 2010. Support & Drivers, 2010. Hewlett-Packard Development Company. “HP Profile”. November 4, 2010. Global Citizenship, 2010. Hingley, Martin. “HP Delivers Record $31 Billion Revenues, But EMEA Is Weak”. November 4, 2010. IT Candor, 2010. Hewlett-Packard Development Company. “Products & Services”. November 4, 2010. Support & Drivers, 2010. Hewlett-Packard Development Company. “HP Annual Report 2008”. November 4, 2010. CEO Letter, 2009. MNM Media, LLC. “Apple drops to 5th in US computer sales”. November 4, 2010. Electronista, 2009. < http://www.electronista.com/articles/09/07/15/idc.prelim.q2.2009/> Read More