CASE STUDY (HP)STRATEGIC ANALYSIS OF

“HEWLETT PACKARD CORPORATION”

Contents • Introduction & history• Vision & mission• SWOT • Formulation (stage #1) Input EFE IFE CPM Matching SWOT IE MATRIX SPACE MATRIX BCG MATRIX GRAND MATRIX Decision QSPM • Implementation (stage # 2)• Evaluation stage (stage # 3)

Introduction

Strategic management is all about FormulationImplementation& evaluation of strategies So our project will revolve on these critical

parameters.

Strategic Management

Strategy Formulation– Input /action stage– Matching stage– Decision stage

Strategy ImplementationStrategy evaluation

STAGE # 1INTRODUCTION

Introduction of Hewlett Packard Corporation

Bill Hewlett & Dave Packard graduated in electrical engineering from STANFORD university in 1935.

The company originated in garage in nearby Palo Alto,California,USA during a fellowship in 1939 with initial capital investment of us $538

Hewlett Packard company commonly referred as ‘HP’ American multinational information technology corporation

headquartered in Palo Alto , California , USA Nearly in each country hp product lines include 01)personal computing devices 02)enterprise servers 03)related storage devices 04)diverse range of printers & imaging products Hp markets it’s products to household, small to medium size consumers

and enterprise directly as well as via online distribution

VISION & MISSION

• Vision statement “To view change in market as an opportunity to grow,

to use our profit and our ability to develop & produce innovative products , services and solutions that

satisfy emerging customers need”

• Mission Statement“To provide product, services and solution of highest

quality and deliver more value to our customers that earn their respect and loyalty ”

SWOT ANALYSISStrengths Weaknesses

Opportunities Threats

Brand name

Low debt

Wide range of innovative products

Developing of own hardware and software

Web technology used for product awareness & sale

Lack of in-house management consulting division

Intellectual capital is underestimated

No aggressive investment in R & D

No good people retention policy

Expansion of retailed stores for customer convenience

Participation in joint venture

Make easy to use product for upcoming retirees

Computer and cell phone software & hardware

Competitor’s technology & pricing

low compatibility with non- HP product

Availability of substitute

Less global coverage than competitor

STAGE # 2 INPUT STAGE

IFE (INTERNAL FACTOR EVALUATION

MATRIX)

Key Internal factorsKey Internal factors WeightWeight RatingRating Weighted Weighted ScoreScore

Strengths

Brand name

Low debt

Wide range of innovative products

Developing of own hardware and software

Web technology used for product awareness & sale

0.14

0.13

0.13

0.11

0.10

4

4

4

4

3

0.56

0.52

0.52

0.44

0.30

Weaknesses

Lack of in-house management consulting division

Intellectual capital is underestimated

No aggressive investment in R & D

No good people retention policy

0.10

0.08

0.11

0.10

1

2

2

2

0.10

0.16

0.22

0.20

Total 1.00 3.02

EFE (EXTERNAL FACTOR EVALUATION

MATRIX)

Key External factorsKey External factors WeightWeight RatingRating Weighted Weighted ScoreScore

Opportunity

Expansion of retailed stores for customer convenience

Participation in joint venture

Make easy to use product for upcoming retirees

Computer and cell phone software & hardware

0.11

0.20

0.09

0.12

3

3

2

4

0.33

0.60

0.18

0.48

Threat

Competitor’s technology & pricing

low compatibility with non- HP product

Availability of substitute

Less global coverage than competitor

0.14

0.13

0.10

0.11

4

3

4

2

0.56

0.39

0.40

0.22

Total 1.00 3.16

CPM(COMPETITIVE PROFILE MATRIX)

Critical success factorweight

HP DELL CANONRating Score Rating Score Rating Score

Innovation 0.11 2 0.22 4 0.44 3 0.33Management 0.08 3 0.24 4 0.32 2 0.16Technology 0.12 4 0.48 2 0.24 3 0.36Financial Position 0.10 4 0.40 3 0.30 2 0.20Market share 0.09 3 0.27 4 0.36 2 0.18Customer loyalty 0.10 4 0.40 3 0.30 2 0.20Brand name 0.11 2 0.22 4 0.44 3 0.33Pricing 0.11 4 0.44 3 0.33 2 0.22Product Quality 0.09 4 0.18 3 0.27 2 0.18Compatibility 0.10 2 0.20 3 0.30 4 0.40Promotion 0.08 3 0.24 2 0.16 4 0.32Total 1.00 3.29 3.46 2.88

STAGE # 3MATCHING STAGE

TOWS MATRIX

TOWS

MATRIX

Strengths - S

1. Brand name

2. Low debt

3. Wide range of innovative products

4. Developing of own hardware and software

5. Web technology used for product awareness & sale

Weakness – W

1. Lack of in-house management consulting division

2. Intellectual capital is underestimated

3. No aggressive investment in R & D

4. No good people retention policy

Opportunities – O

1. Expansion of retailed stores for customer convenience

2. Participation in joint venture

3. Make easy to use product for upcoming retirees

4. Computer and cell phone software & hardware

SO - strategies (S1, S3,O1,)

(must open new retail stores throughout the world to take advantage of financial strength) (S4, O3)

(develop easy pc and cell phone for old generation)

WO – strategies (W1,W5,O2)

(develop new HR policy in order to retain human capital by taking advantage or other firm management )

Threats - T

1. Competitor’s technology & pricing

2. low compatibility with non- HP product

3. Availability of substitute

4. Less global coverage than competitor

ST – strategies(S4, T1)

(developed low price and innovative pc & cell phone than competitors )(S5,T2)

(developed such hardware and software for computer & cell phone which are compatible with other companies software and accessories)

WT – strategies (W1,T1)

(give attention to management consulting division to have more focus on technology improvements)

Interpretation

Critical Region:“ST”

Managerial Decision:“Market development

Horizontal Integration”

SPACE (STRATEGIC POSITION & ACTION

EVALUATION MATRIX)

Internal Strategic Position External Strategic position

Financial Strengths (FS) Environmental Stability (ES)

Return on Investment

leverage

Working Capital

Liquidity

Price earning ratio

Total

Average

+5

+3

+4

+5

+4

+21

+4.2

Technological changes

Rate of Inflation

Price range of Competing products

Competitive pressure

Barriers to entry into market

Demand variability

Total

Average

-3

-2

-3

-5

-4

-2

-19

-3.17

Competitive Advantage (CA) Industry Strength (IS)

Market Share

Product Quality

Customer Loyalty

Technological know-how

Control over suppliers and distributors

Total

Average

-2

-3

-2

-2

-4

-13

-2.6

Growth Potential

Profit Potential

Financial Stability

Labor costTechnological know-how

Total

Average

+5

+5

+4

+3

+4

+21

+4.2

-6 -5 -4 -3 -2 -1 +1 +2 +3 +5 +6

+6

+5

+4

+3

+2

+1

-1

-2

-3

-4

-5

-6

AggressiveAggressiveConservativeConservative

CompetitiveCompetitiveDefensiveDefensive

ISISCACA

X-axis =CA + IS

= -2.6+(4.20)

= 1.60

Y-axis = FS + ES

= 4.2+(-3.17)

=1.03

FS

ES

According to the space matrix score HP falls in the “AGGRESSIVE quadrant” . Their strategies should be one of the following:

• Vertical and horizontal integration•Market penetration•Market development•Product development•Diversification

INTERPRETATION

BCG(BOSTON CONSULTANTING GROUP

MATRIX)

Table for BCG Matrix HP division

ID SEGMENTS REVENUE % PROFIT % GROWTH RATE %

MARKET SHRE %

A ESS 19 2 11 0.8

B HPS 17 20 8 0.1

C SOFTWARE 1.4 5 14 0.6

D IPG 29.2 30 8 0.8

E PSG 32 42 -10 0.7

F HPHS 2.2 2 -14 0.2

HP BCG Matrix

STARS C

A II D

Question Mark

I B

CASH COWS E

III

DOGS

IV F

Relative market share

Indu

stry

gro

wth

rate

High Medium Low 1.0 .50 0.0

High +20

Medium 0

Low - 20

IE (INTERNAL-EXTERNAL MATRIX)

i

HP

ii iii

iv v vi

vii viii ix

Strong 3.0 – 4.0 Average 2.0 – 2.99 Weak 1.0 – 1.992.03.04.0

IFE Total Weighted Score 3.02

1.0

2.0

3.0

Low

1.0 – 1.99

Medium

2.0 – 2.99

High

3.0 – 4.0

EFE

TOTA

L W

EIG

HTE

D S

CORE

3.1

6

INTERPRETATION

HP falls in first region of IE matrix and there main focus will be on “GROW AND BUILD” and they will mainly focus on strategies which are:

• Market development• Horizontal integration

GRAND STRATEGY MATRIX

Quadrant II Quadrant I

HP

Quadrant III

Quadrant IV

Slow market growth

Rapid market growth

Stro

ng c

ompe

titive

pos

ition

Wea

k co

mpe

titive

pos

ition

INTERPRETATION

HP has rapid market growth and strong competitive position so it falls in first quadrant and the most suitable strategies for HP are:

• Market development • Horizontal integration

STAGE # 4DECISION STAGE

QSPM(QUANTITATIVE STRATEGIC

PLANNING MATRIX)

Key Internal Factors HORIZONTAL INTEGRATION

MARKET DEVELOPEMNT

Strengths Weight AS TAS AS TAS

Brand name 0.14 3 0.42 4 0.56

Low debt 0.13 3 0.39 2 0.26

Wide range of innovative products 0.13 4 0.52 3 0.39

Developing of own hardware and software 0.11 4 0.44 3 0.33

Web technology used for product awareness and sale 0.10 2 0.20 3 0.30

Weaknesses

Lack of in-house management consulting division 0.10 2 0.20 3 0.30

Intellectual capital is underestimated 0.08 -- -- -- --

No aggressive investment in R & D 0.11 3 0.33 2 0.22

No good people retention policy 0.10 3 0.30 2 0.20

Total weight 1.00

Key External Factors HORIZONTAL INTEGRATION

MARKET DEVELOMENT

Opportunities weight AS TAS AS TAS

Expansion of retailed store for customer convenience 0.11 3 0.33 4 0.44

Participation in joint venture 0.20 4 0.80 2 0.40

Make easy to use product for upcoming retirees 0.09 3 0.27 2 0.18

Computer and cell phone software and hardware 0.12 3 0.36 2 0.24

Threats

Competitors technology and pricing 0.14 4 0.56 3 0.42

Low compatibility with non-HP product 0.13 3 0.39 2 0.26

Availability of substitutes 0.10 4 0.40 3 0.30

Less global coverage than competitors 0.11 3 0.33 2 0.22

Total weight 1.00

Total Attractive Score 6.24 5.02

INTERPRETATION

According to the total attractive score of QSPM HP should go for

“HORIZONTAL INTEGRATION”