StrategicImplications for HP
Strategicimplication for HP
Hewlett-PackardCompany recently has tried to restructure itself from fiercecompetitionfrom its competitors’ globally. Some years back, the former ChiefExecutive Officer of HP: Mr Apotheker, came up with the idea ofselling PC division and not printer, in order to focus on highermarginalized software and services. His plan ended up in vain afterhe was sacked before validating the plan. It was followed byrepercussions of accounting regularities.
Mr.Apotheker’s idea was abandoned by his successor Meg Whitman. Heproposed single entity hence economies of scale due to its largesize. This will help in extracting better terms from suppliers andproducing huge outputs across the globe. In addition, he suggestedthereof, split up of the company since its statement of financialposition will be strong. This will make it possible to start up HP’soffspring and get nourished from the parent company beforeflourishing on their own.
HPCompany to be better placed, require either and mostly bothhorizontal and vertical integration. In 2000s, HP acquired Compaq tobolster a horizontally-integrated PC business. Though HP is known tobe leading in the selling of the PC desktop, it highly requirevertical integration which offers everything customers need fromhardware to specific applications. HP need to build out a deskoperating system, cloud services, productivity applications etcetera.
HPCompany has recently being haunt by problems leading to its declinein revenuesin most of its company’s segments. Recent statistics hasshown that, revenue at those company’s segments have shrunk by 4%in the past years.In remedying the situation, it seeks to improve inoutsourcing strategy. It announces the purchase of Autonomy for $10.2billion which if they focus in the right software, this move willhighly benefit HP’s outsourcing clients.
Notably,HP Company has being facing a lot of shackles in the globalenvironment. First, it’s faced with accelerated competition fromother companies, such as Lenovo, Oracle and others. HP’s productsnamely: servers, data storage, software and services which it sellsto businesses, faces fierce competition. Last year, Lenovo outshinesHP as the world’s leading PC seller. In addition, it bought alow-end server business from the IBM. Intuitively, Oracle Company hasbeing far beyond HP Company with respect to enterprise software.
Thesituation of the HP Company is thought to be in recession. Strategicmanagement insight has put across the SWOT analysis of HP to try andknow the root cause of the problem and how to overcome it. Last year,2013, HP analysis was done successfully giving strengths, weaknesses,opportunity and threats. This was a better move of the company whichgreatly assisted it in restructuring and will continue to be usefulin the future.
Thisyears, things has changed considerably. What ought to be the strengthin the SWOT analysis done last year, has somehow overshadowed by thisyear outcomes.For instance, HP Company was found to be the leading PCseller, which is not the case this year (Split today merge tomorrow,2014). Lenovo has taken the position and is continuing to overthrowit some mentioned areas. This fosters to the company to work steadilyon the strengths, be cautious on weaknesses and to take anyopportunities as swift as possible to be able to competesuccessfully.
Thereversal has being brought about by drawbacks in the company. Forexample, some of the HP’s contract manufacturers used to build itsequipment has pulled the company back since it has being offeringunbranded products directly to HP’s corporate customers. However,HP Company continue to build their enterprise capabilities in ITservice management. This move will help to highly brand it producthence competing to the global environment. Also, by doing so, theywill be in apposition to compete in the areas such as CRM andERP.Irrespective to the drawback brought by the manufacturers,franchising strategy in the HP Company reduces cost and improvesefficiency.
Porterfive forces analysis the level of competition within a given industry(HP industry) and the business strategy development. It measuresattractiveness of the market due to the industrial organizationeconomics hence showing the overall industry profitability. The fiveforces basically fosters the strengths of a given industries as wellas its weaknesses hence need for restructuring.
Tostart with, threat of the new entrants. The entrance in the marketresult if the market has being yielding high internal returns henceattracting more and more firms. HP Company has being facingcompetition to PC market. Although, it has being the leading PCseller from the past. This no longer holds, since, this year Lenovocompany has successfully overtaken HP and now is the leading in PCselling. PC has to restructure to regain the market share.
Theother force is threat of substitute products or services. HP’scompetitors such, Apple Inc., Cisco Systems Inc., Dell Inc., OracleCorporation among others has led to close substitutes of the product.Customers are faced with alternatives to choose from leading toshifting effect to more favorite brands.
Theother three forces, bargaining power of the customers, suppliers andintensity of competitive rivalry determine the competitiveness of theHP industry. Moreover, HP has being diversifying its productportfolio. It moves from personal system business to more lucrativeenterprises and services business. Ms. Whitman from his prior jobeBay, bought PayPal, Skype.
HP(2014). SplitToday, Merge Tomorrow.Retrieved from: http://www.economist.com/node/21623287/print