Strategic Analysis of Case Study

STRATEGIC ANALYSIS OF CASE STUDY (HP) “HEWLETT PACKARD CORPORATION”

Contents 1. Introduction & history  Vision & mission  SWOT 2. Formulation (stage #1) I. Input Stage i.

EFE

ii.

IFE

iii.

CPM II. Matching Stage

i.

SWOT

ii.

IE MATRIX

iii.

SPACE MATRIX

iv.

BCG MATRIX

v.

GRAND MATRIX

III. Decision Stage i.

QSPM

3. Implementation (stage # 2) 4. Evaluation stage (stage # 3)

Introduction Strategic management is all about  Formulation  Implementation  & evaluation of strategies So our project will revolve on these critical parameters. Strategic Management  Strategy Formulation –

Input /action stage

–

Matching stage

–

Decision stage

 Strategy Implementation  Strategy evaluation History  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 its products to household, small to medium size consumers and enterprise directly as well as via online distribution  In 2002 hp completes its merger with Compaq Computer Corporation .By the end of 2006 hp revenues was over $91.6 billion with 156000 Employees. Vision & Mission of HP •

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 ANALYSIS Strengths  Brand name 

Low debt

 Wide range of innovative products  Developing of own hardware and software  Web technology used for product awareness & sale Weaknesses  Lack of in-house management consulting division  Intellectual capital is underestimated  No aggressive investment in R & D  No good people retention policy Opportunities  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 Threats  Competitor’s technology & pricing 

low compatibility with non- HP product

 Availability of substitute  Less global coverage than competitor Input Stage IFE (INTERNAL FACTOR EVALUATION MATRIX)

Key Internal factors Strengths Brand name Low debt Wide range of innovative products Developing of own hardware and software

Weight

Rating

Weighted Score

0.14 0.13 0.12 0.10 0.10

4 4 4 4 3

0.56 0.52 0.48 0.40 0.30

0.10 0.08 0.11 0.10

1 2 2 2

0.10 0.16 0.22 0.20

Web technology used for product awareness & sale Weaknesses Lack of in-house management consulting division Intellectual capital is underestimated No aggressive investment in R & D No good people retention policy Total

1.00 Interpretation

2.94*

EFE (EXTERNAL FACTOR EVALUATION MATRIX) Key External factors

Weight

Rating

Weighted Score

0.11 0.18 0.09 0.12

3 3 2 4

0.33 0.54 0.18 0.48

0.12 0.13 0.10 0.11

4 3 4 2

0.48 0.39 0.40 0.22

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 Threat Competitor’s technology & pricing low compatibility with non- HP product Availability of substitute Less global coverage than competitor Total

1.00 Interpretation

3.02*

CPM (COMPETITIVE PROFILE MATRIX)

Critical success factor

weight

HP Rating

DELL

Score

Rating

CANON

Score

Rating

Score

Innovation

0.11

2

0.22

4

0.44

3

0.33

Management

0.08

3

0.24

3

0.24

3

0.16

Technology

0.12

4

0.48

2

0.24

3

0.36

Financial Position

0.10

4

0.40

3

0.30

2

0.20

Market share

0.09

3

0.27

4

0.36

2

0.18

Customer loyalty

0.10

3

0.30

3

0.30

3

0.30

Brand name

0.11

2

0.22

4

0.44

3

0.33

Pricing

0.11

4

0.44

2

0.22

2

0.22

Product Quality

0.09

4

0.18

3

0.27

2

0.18

Compatibility

0.10

2

0.20

3

0.30

4

0.40

Promotion

0.08

2

0.16

2

0.16

4

0.32

Total

1.00

3.11

Matching Stage SWOT MATRIX

3.28

2.98

SWOT 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. Intellect ual capital is underestimated 3. No aggressive investment in R & D 4. No good people retention policy WO – strategies  (W1,W5,O2) (develop new HR policy in order to retain human capital by taking advantage or other firm management )

Opportunities – O 1. Expansio n of retailed stores for customer convenience 2. Participa tion in joint venture 3. Make easy to use product for upcoming retirees 4. Compute r 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)

Threats - T

WT – strategies ST – strategies  (W1,T1)  (S4, T1) (give attention to management (developed low price and consulting division to innovative pc & cell phone than have more focus on competitors ) technology  (S5,T2) improvements) (developed such hardware and software for computer & cell phone which are compatible with other companies software and accessories)

1. Competit or’s technology & pricing 2. low compatibility with non- HP product 3. Availabili ty of substitute 4. Less global coverage than competitor

Interpretation Managerial Decision: “Market development and Horizontal Integration”.

SPACE (STRATEGIC POSITION & ACTION EVALUATION MATRIX) Internal Strategic Position

External Strategic position

Financial Strengths (FS) Return on Investment leverage Working Capital Liquidity Price earning ratio Total Average

Environmental Stability (ES) +5 +3 +4 +5 +4 +21 +4.2

Competitive Advantage (CA) Market Share Product Quality Customer Loyalty Technological know-how Control over suppliers and distributors Total Average

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

Industry Strength (IS) -2 -3 -2 -2 -4 -13 -2.6

Growth Potential Profit Potential Financial Stability Labor cost Technological know-how Total Average

+5 +5 +4 +3 +4 +21 +4.2

INTERPRETATION  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

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

IE (INTERNAL-EXTERNAL MATRIX)

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

HORIZONTAL INTEGRATION

Key Internal Factors Strengths

Weight

MARKET DEVELOPEMNT

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

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

Weaknesses

DECISION STAGE

QSPM (QUANTITATIVE STRATEGIC PLANNING MATRIX)

HORIZONTAL INTEGRATION (Strategy - 1)

Key External Factors

Opportunities

weight

MARKET DEVELOMENT (Strategy - 2)

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

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

Threats

Total Attractive Score

6.24

5.02

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

“HORIZONTAL INTEGRATION”

Note: Jis matrix ke interpretation nae he wo please lekh dena. Shahbaz