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
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
Key Internal factors WeightWeight RatingRating Weighted ScoreWeighted Score
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 0.12 0.10 0.10 4 4 4 4 3 0.56 0.52 0.48 0.40 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 2.94* Interpretation
EFE (EXTERNAL FACTOR EVALUATION MATRIX) Key External factors
Key External factors WeightWeight RatingRating Weighted Weighted Score Score
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 0.18 0.09 0.12 3 3 2 4 0.33 0.54 0.18 0.48 Threat
Competitor’s technology & pricing low compatibility with non- HP product Availability of substitute
Less global coverage than competitor
0.12 0.13 0.10 0.11 4 3 4 2 0.48 0.39 0.40 0.22 Total 1.00 3.02* Interpretation
CPM
(COMPETITIVE PROFILE MATRIX)
Matching Stage
SWOT MATRIX
Critical success factor
weight HP DELL CANON
Rating Score Rating 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 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 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)
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. Competit or’s technology & pricing 2. low compatibility with non- HP product 3. Availabili ty 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
Interpretation
Managerial Decision:
“Market development and 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 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 % SHRE % MARKET
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
DECISION 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
Key External Factors HORIZONTAL INTEGRATION
(Strategy - 1)
MARKET DEVELOMENT (Strategy - 2)
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
“HORIZONTAL INTEGRATION”
