Hewlett-Packard is one of the few technological companies that share an interesting storyline of commencing from limited fortunes. The HP Company is a US multinational technological entity that specializes in a range of products such as laptops, tablets desktops, printers, monitors, and All-in-One PCs. In overall sense, the company provides technologies, products, software, services, and solutions to consumers. Consumers are individual product buyers, large enterprises, SME’s, and the government. In the current technological trend, HP has manifested an interest towards mobile handsets. This occurs in the case of Android phones that involve advanced software and exquisite exteriors. In spite of the idea that the HP Company spreads around the world, the corporation’s headquarters occur in Palo Alto, California, US.
Bill Hewlett and Dave Packard founded the HP Company in 1939. The Stanford University classmates founded the company in a car garage and developed their first product for Walt Disney Company. The company has shared a history of growth from modest beginnings in the Great Depression. With a primary investment of US $538, the company began as a partnership. In the August of 1947, the company became incorporated, and went public ten years later. It is crucial to highlight that one of its first products was a precision audio oscillator. This was the beginning of innovations that cut down on the prices of sound technology products at that time. The Walt Disney productions was one of the first initial companies that set the reputation of HP company by buying their audio oscillator at a price that was less than the market figure.
It is crucial to highlight the beginnings of the company into projecting the future capability of the company. This is because the business gradually grew through challenges and alterations that made it appeal to the given market. Given the uncertain and ever-changing nature of the technology industry, the company had to adapt ad risk different trials into gaining the market. As the markets evolved in their needs, the company had to reestablish their nature of products in meeting given demand. However, the company did not thrive on following trends. The company instigated trends that the other companies had to follow. For instance, Hewlett and Packard made their first audio oscillator from simple elements such as the small incandescent light bulb. By utilizing cheap products the company was able to produce quality products at low costs. In this sense, the company could allow cheap prices for customers who would then purchase the products in large numbers.
The company’s current scenario is critical in projecting a future for both the industry and the company. It is notable that the company carries out its activities through seven distinct segments. This includes the Personal Systems Group (PSG), Enterprise Servers, Storage and Networking (ESSN), HP financial services (HPFS), HP software, Corporate Investments, Imaging and Printing Group, and Services. This is an easier way of approaching a complex market. The HP Company realized that it was facing a market that possessed segments of distinct needs. In this perspective, it had to articulate its services according to the requirements of each segment. For instance, it is notable that the individual consumer market values trends and superficial features over functionality of computers. On the other hand, businesses highly value functionality over the features of computers. In businesses, it is viewable that they may prefer highly functional desktops computers over laptops which merely possess attractive features. This is because the most crucial thing in business regards according customers convenient, quick, and efficient services. In turn, enduring desktop computers would be preferable to exquisite laptops that present a high probability of attaining damage. This is a tricky concept that businesses can rarely integrate in providing unified services to all segments of clients.
The company has a wide array of offerings that seek to exhaust every type of consumer. This includes multi-vendor services, personal computing, business process outsourcing, technology support and maintenance, infrastructure technology, imaging and printing products, and consulting services. Besides, it provides networking products and solutions, enterprise server and storage technology, security risk solutions, and information technology management software.
By 2012, the company had succeeded into integrating its IPG and PSG services. This integration is an element that has continued in areas such as the transfer of business intelligence services unit to Application and Business Services segment (Dubrin, 2011). In 2012, there was the transfer of Scitex and Indigo units to TS business that occurs in the IPG segment. The company has been participating in realignments that help in harmonizing their products and services towards smooth management and operations. It is notable that some of the initial hardware businesses had a considerable part of their operations in software segments. In ensuring quality production, the units have to move into software segments.
The seven segments further divide into distinct units and product lines that differentiate along brand lines and names. In the Personal Systems Group, there is the provision of workstations, personal computers, services and software for consumer and commercial markets, calculators, and other accessories. The commercial clients’ group includes commercial desktops, commercial notebooks, and workstations (Oliver, 2012). On the other hand, the consumer clients’ products include consumer notebooks and consumer desktops. The commercial personal computers comprise the HP EliteBook notebooks’ line, HP ProBook, Compaq elite, Compaq pro, HP Elite and, HP Pro lines of business. Besides, the business unit entails the Omni and TouchSmart PCs, HP Thin Clients, and HP Tablet PCs. Consumer personal computers entail the Compaq and HP series that further comprises notebooks, desktops, and the TouchSmart line of products.
As a strategy of dealing with possible future scenario, the company has recently emphasized on raw services. The services’ business deals with elements that do not concern with physical product offer. Services are tricky business operations that require dexterity and complex customer needs. In this view, the HP Company has engaged in outsourcing and technology services. Outsourcing, as a business activity, is an instrumental practice of fetching revenues over long distances without actual physical presence in given places. In the company’s scenario, it offers two approaches to outsourcing. To begin with, it involves its professionals in giving expertise to related companies towards making their products. In addition, it targets the informed consumer markets who share technological problems that relate to hardware and software products. The typical infrastructure technology outsourcing elements comprise the workplace and data center services (Egner, 2009). The workplace services involve compliance, security, network and communications, and business continuity services. These technology services avail in pre-packaged offerings, service contracts, and individual basis-provisions. It is crucial to highlight that the company has employed its brand and reputation into providing additional outsourcing services in unrelated sectors such as finances and administrative issues. Most emergent companies face problems, not in their industrial activities, but in propping services such as administration and finances. For instance, a large company presents additional challenges of strategizing on finances across operational branches and various departments.
Outsourcing is a critical strategy towards the technology industry that presents significant operation costs. In order to set up new companies in other countries, the company undergoes rigorous procedures and cost incurrence that involves taxes and plant set-ups (Dickie, 2006). In addition, there is the requirement for new employees who may not present additional profits that correspond to respective costs. In this regard, the company set up communication hardware and software that comprises contacts that stretch over long distances. Technological solutions that comprise consultancy are relevant in the outsourcing business since they do not depend on presentations of physical products.
The services segment extends across applications, business process domains, and infrastructure. These services prop on leveraging investments in global supply and delivery, support and consulting professionals, and standardized methodologies. In the applications’ services, there are offerings on maintenance and management, system integration, application development, and modernization.
The future is an element that presents notable challenges for the company and the HP Company. To begin with, it is crucial to realize that unrelated issues such as the employee management, corporate responsibilities, and customer care will serve towards a prominent future. When the Apple Company launched its sleek I-phone, there were no initial thoughts of competition from rival companies. As time progressed, it was evident that other companies were determined to produce alternative products. One of the initial alternative products to the Apple’s Smartphone was the Google-enabled Android phones. These Android phones availed prominent features at much lower costs to the lower-end customers. The HP Company has produced tablets and Android-phones in the new phenomenon of reacting to a possible monopoly by the Apple Company (Ulph, 2011).
In its propping structures, the company has employed a decentralized system that has served to keep its flexible in spite of the ever-burgeoning size. The company is an assortment of more than 50 operation divisions that share the global responsibility for particular product lines. The company established this system for notable reasons. To begin with, the strategy strives to reinforce and enhance creativity in the company. Technology companies operate in a tricky environment whereby products do not establish enduring brands. Creativity, in employees, accords the innovation that establishes new products in the strict consumer markets. In addition, the centralized system was instrumental for reduced bureaucracy. Reduced bureaucracy is critical for a large company in quick decision-making and reduced costs in procedures and protocols. Since technology companies apply to given markets, it is critical to enable quick decision-making in particular markets (Zell, 2007). Each market share specific challenges that require unique strategic decisions in realizing optimum revenues. Besides, the decentralization would help in problem solving at the lowest levels and departments. By encouraging decision-making at such levels, the upper managements do not face the constraints of many decisions that suffocate fast operations.
It is observable that the company possesses vertically-integrated divisions that own critical departments such as R&D, marketing, manufacturing, controllership, personnel, and quality assurance activities. It is notable that the company further keeps low number of employees in these divisions. With an employee base that does not stretch beyond the 1500, there are limited bureaucracies and quick decisions. In this perspective, the company also creates a division when particular product lines become sizeable to prop continued growth from its returns. Divisions that entail related products usually share a link in common strategies. These groups comprise respective field sales organizations that enable offerings on customers’ integrated solutions and consolidated marketing g efforts. This is because activities, such as marketing, involve expensive procedures such as advertising. Since advertising consumes significant finances, it is efficient to make adverts as packages that involve numerous products. Once the products are related, marketing becomes an efficient venture.
The current HP’s success is attributable to the corporate culture that it invented long ago. The initial managers developed a management philosophy and relationship systems that defined the American way of running businesses. This system passes on through subsequent managers and employees through an acculturation process that gradually convinces participants of its benefits. These relations’ philosophy comprises virtues such as respect and trust for all individuals.
The US-located company has principal features that may contribute towards its future success or failure. To begin with, it is notable that the company operates in two technological industries. Unlike the oil industry, it is counterproductive to view the whole technological industry as a single entity because it involves various activities. This suggests that the company lies in the two technological industries of IT services and consulting and computer software and hardware. HP’s main competitors include Apple Inc., Lenovo Group Limited, Dell Inc., Microsoft Corporation, Samsung Electronics, and many others.
The company has presented an inconsistent and shoddy growth pattern in the recent past. Over the past few years, the company has struggled against fruitless acquisitions, such as Palm’s purchase at a cost of $ 1.2 billion, and continual ineffective strategies. HP has faced reductions in its PC market share. In close relation to the same, the company has faced a new competition from smart phones and tablet computer which are the current preferable mode of computing. These new elements are quickly replacing laptop computers and desktop computers as computing platforms. Due to a slump in PC sales, the company’s stock has considerably fallen. It is notable that the entity has faced an ever-shifting management that fails to align the company’s strategy towards the markets’ demands.
In 2011, the company stated that it would exit the tablet computer and smartphone business. Thereafter, the company would strategize on cloud computing, software and solutions, which emphasize on enterprise, and government and commercial markets. This is a decision that sprung from HPs TouchPad tablet’s failure in competing with the Apple’s iPad. As the company cut back on research and development and large acquisitions, the net income dropped to $200 million. This was a 91 percent drop that disappointed shareholders by cutting back on share values from $ 1.10 a share to 12 cents a share.
In presenting the possible future of the company, it is crucial to highlight the strength, opportunities, weaknesses, and threats that face the company. The opportunities and threats avail through the industry while the weaknesses and strengths describe the internal state of the company. In term of strengths, it is notable that the company shares a robust presence in China. China is a new advanced economy that presents benefits from two fronts. To begin with, the Chinese market provides a strong market for HP products. This is due to considerable income that increasingly becomes available to the consumers. As income of individuals increase, their proportionate spending on basic foods recedes while their expenditure on luxuries surge.
The current China’s economic growth pegs at a value that ranges around 8 percent. The company has established its investments in the market and expanded its service and product offerings, especially, its service and enterprise divisions. It is notable that these segments provide the most profitable HP’s products in terms of enterprise solutions and cloud computing. As the company strategically expands into the Chinese market, it contributes into a robust competitive edge for the entity in the near future. Besides, China offers cheap raw products and labor that serves as a strategy of expanding profits. By establishing its operation in China, the HP Company will take advantage of the easily available and cheap raw products.
The HP Company is the world’s foremost PC vendor with more than 16 percent market share. Besides, the company is one the principal service network products. The company thrives on its huge presence all over the world thereby according the entity a robust brand reputation. This is a system that HP has created by offering products at different price levels for consumers. In the personal computers’ market, HP has become associable with quality products that last. According to Intraband, the entity was in the top 15 most valuable brands, in the year 2012, in the world.
It is notable that the company thrives on a diverse product portfolio. By encouraging a diverse product portfolio, the company caters for the unique needs of consumers. In this sense, the company captures all types of consumers. By respecting the state of the current technological industry, the company has shifted from its core Personal Systems business to more lucrative and profitable services business and enterprise solutions. Besides, the company has offered more concentration on the handset market that demands multiple applications and user-graphics. The mobile-handset market is a critical future outlook in a market whereby consumers are expressing more preference towards products that present less bulk. Furthermore, the handset market creates additional market on applications and related solutions’ business. The company has employed a strategy of creating numerous product and service lines. In this perspective, as some businesses face out, the relevant ones remain lucrative. The HP current’s diversification surpasses that of rival companies, and this makes the entity less susceptible to shifts in the different markets and industries.
The company presents notable weaknesses against its future survival. To begin with, the company has expressed incompetence in its acquisitions. Acquisitions are critical towards tackling the future’s uncertainty in terms of product lines and revenue. By merging, companies avoid the competition that dictates the amount of revenues that technological products harness. In the last 10 years, Hewlett-Packard has acquired over 50 technology companies. While some acquisitions added new products and skills and enhanced revenues, the rest of the businesses either added no value or were detrimental to the company.
Besides, the company has manifested a dependence on PC sales which only contribute 29 percent of income. The market for personal computers has reached its peak. This means that it is high likely to either grow slowly or decline after a few years. Coupled with declining margins on computer hardware products, this division is a significant weakness for the company. In close relation to this concept, the company has manifested a mild presence in the tablet market. The tablet market is a growing filed that is high likely to present a double-digit growth in the next few years (Wildstrom, 2012). Most technology companies have established their businesses in the tablet market thereby attracting huge profit growth and income. Although the company launched its tablet model, it has failed in offering an attractive item for consumers. In turn, the company has experienced significant losses as it fails to compete with the likes of Apple and Samsung companies.
Apart from considerable bureaucracy, the company manifests a detrimental dependency on certain supply chains. The company relies on sole sources for short life cycle products, LaserJet supplies, and laser printer engines. The company uses Intel as the single provider of processors and the Microsoft Company as the sole source of software products. Certain hardware components are limited in supply and present volatile prices.
In order to ensure its future survival, there are numerous opportunities that the company can exploit. To begin with, the company can enhance its enterprise solutions and services’ division. The HP Company provides notable services, such as cloud computing, infrastructure and security. Enterprise solutions involve activities such as storage, networking, and servers. These are the most profitable units that the company can grow towards higher profit margins and better growth opportunities.
In the increased demand for efficiency and convenient services, the market presents a surging demand for cloud-based services. In cloud-based services, a variety of applications and systems link to accord a unified direction. From the year 2011 to 2020, market analysts project that the cloud computing market is high likely to grow by an average annual figure of 22 percent. By 2020, the market analysts project that the market will reach a $240 billion value (Blauvelt, 2012). HP is providing cloud-computing related services that may see it harnessing sales from the burgeoning market.
As research and development becomes expensive and unproductive, there needs to be a strategic shift. The immediate solution is to purchase patents for other companies in the given market. HP has considerable amounts of funds that it can utilize towards acquiring and holding the required technology patents. With a robust patent portfolio, HP can favorably compete with its rival companies such as Apple.
There are notable threats that the company faces. This regards future possibilities that may cut down on future profits. To begin with, the technology industry relies on trends that may face out HP’s brand and reputation in the market. The most disadvantageous element in brands regards the idea that they, sometimes, do not depend on corresponding quality. There are significant profit margins in the market of enterprise software solutions. This suggests that incumbent firms, such as IBM and Oracle, might retaliate and usurp the profits that HP is thriving in.
Moreover, there is the threat of slowing sales in personal computers. In the near future, markets might attain saturation. This is coupled with competition from companies such as Acers, Dell, Apple, Samsung, and Lenovo. These companies have enhanced their services in terms of quality, price, distribution channels, range of products, and brand. Moreover, customer needs are shifting whereby they are keener in purchasing smartphones and tablets rather than laptops. This suggests that it will become difficult to compete in the PCs market and harness reasonable profits.
More essentially, there is the threat of rapid technological change that the industry is facing. Technology products manifest uncertainty in their continuity as trends. In this sense, perennial innovation and inventions release products that instantly capture their markets. For instance, the rise of social networking sites is a trend that has dominated the current market. In these trends, it necessitates that companies align their products and services towards the same (Newman, 2001). Technology companies face the pressure of releasing new products. Companies that cannot keep with this pace falls by as other entities thrive in trends. This is a worrying scenario for the HP Company since it lags behind in technological advancement, quality, and price.
It is discernible that the company faces these challenges since it is a large company. As a company expands, there is unlimited capacity in opening up new operations and increasing its product portfolio. When the revenues expand, they reach a peak whereby a shrewd management has to take the company through technological uncertainties. As a 21st century company, HP should engage in support services that maintain the company’s revenues at profitable levels. For instance, the company can engage in sustainable supply chain management as a strategy of minimizing on costs and providing green products (Withey & Lancaster, 2013). In addition, the company should concentrate on customer service in terms of customized products. Besides, it is crucial to engage market analysts who project on trends. Anticipation of given trends helps the company prepare itself towards producing market-relevant products. Most essentially, the company ought to expand its enterprise solutions and services’ businesses.
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