Presentation on theme: "HEWLETT PACKARD (HP) STRATEGIC GROUP ANALYSIS"— Presentation transcript:
1 HEWLETT PACKARD (HP) STRATEGIC GROUP ANALYSIS Group members Afor Okala Oluchi Iwuh Anthony Momoh Omamoke Om'iniabohs Asatur TumanyanHEWLETT PACKARD (HP)STRATEGIC GROUP ANALYSIS
2 Hewlett Packard TABLE OF CONTENTS 1 Phase 1: Strategic Position Analysis2Phase 2: Formulation of Strategy3Phase 3: Conclusion and Recommendation
3 Organisational Background Hewlett-Packard was founded in 1939,Palo Alto, California.Today HP is one of the world's largest computer peripheral companies and the foremost producer of test and measurement instruments.The company mainly produces computersand its related gadgets.It was founded byBill Hewlett and Dave Packard.
5 PEST Analysis Russia Political Factors Population 142 mln. People Area ,075,200 sq kmIncome tax %Corporate tax 24 %Economic FactorGDP PPP (Purchasing Power Parity): 8th Position$2.11 trillion (2009 est.)$2.291 trillion (2008 est.)$2.17 trillion (2007 est.)GDP PPP (per capita) estimated: 72nd positionSocio-cultural factorsGini index is 42EU – 31USA – 46Lifestyle, attitude to work and leisure changes with increase in income.Welfare is mostly created by private businesses.State organisations still suffer from low wages.Technological factorsHuge potential and qualified workforceGovernment encourages investments in hi-tech research and development.Internet eases access of Russian products to the International Market
6 PEST Analysis Political factors Economic factors Government StabilityTaxation, employment and safety lawSocial welfare policiesForeign trade regulations'Green' issues that affect the environmentEconomic factorsTotal GDP and GDP per head growth rates (trends)InflationConsumer expenditure and disposable incomeInterest ratesCurrency fluctuations and exchange ratesInvestment, by the state, private enterprise and foreign companiesBusiness cyclesUnemploymentSocio-cultural factorsShifts in values and cultureChange in lifestyleConsumerismAttitudes to work and leisure‘Green’ environmental issuesEducation and healthSocial mobilityTechnological factorsGovernment investment policy on research
7 X - Average ranks of PEST analysis Y - Rank Hewlett PackardX - Average ranks of PEST analysisY - RankYX(5-Most favourable, 4-Favourable, 3-Neutral, 2-Unfavourable, 1- Most unfavourable)
9 Strategic Group Analysis Intra group competitionYCompetitorsPrice (Ranking)Quality (Ranking)HP76DellLenovo5SonyToshibaAcer4SamsungAsus(1-Very Low, 2-Low, 3-Low to Moderate, 4-Moderate, 5-Moderate to High, 6-High, 7-Very High)XX - PriceY - Quality
10 PC Industry Sales in Russia Industry Life cyclePC Industry Sales in RussiaYYearTotal industry Sales ($ US mln)20041,775.220052,436.220063,504.220074,943.820085,315.320093,639.8The Russian Personal computer industry shows a steep increase in sales over a 4 years ( ) and a sharp decline in 2009 which was a result of the economic down turn. All sales figures are in Million Dollars.XX - YearY – Total Industry Sales
11 Porter’s 5 forces External Analysis Threat of New Entry Economies of scaleDifferentiationBrand loyaltyAccess to supply and distribution channelsEntry deterring priceCompetitive rivalry determinantsMarket growth rates (life cycle)Fixed costsDifferentiation of the products/servicesBarriers to exitDeterminants of buyer powerBuyer's purchasing powerSwitching costsThreat of backward integrationDeterminants of supplier powerThe threat of forward integration by the supplierThreat of SubstitutesRelative price / performance of substitutesWillingness of buyers to substitute
13 Internal Analysis Resource Audit Human Resource Analysis Rank Number of staff304,000 Employees5SkillsGood technical (Engineering & Solution providers), sales, marketing and IT support teamsExecutive staffsExperienceIn-depth industry specific knowledge4TrainingInvolved with staff and distributors training3MotivationDiscount rates on products purchased, salaries, medical costs, long term return on plan assets.TurnoverHigh risk in employee mobility1Attitude and cultural awarenessMulti cultural employee population and language translationsFlexibilityFlexibility work hours and reduced work pressure(5-Most favourable, 4-Favourable, 3-Neutral, 2-Unfavourable, 1- Most unfavourable)
14 Internal Analysis Resource Audit Physical Resource Analysis Rank LocationsIn several countries in the 5 Continents4Expansion potentialAvailability of funds, asset and other resources for moving into new markets and develop new products.R&D facilitiesInvest in R&D projects – 2.8 million in 20095QualityEngages in extensive product quality programmes and processes.(5-Most favourable, 4-Favourable, 3-Neutral, 2-Unfavourable, 1- Most unfavourable)
15 Internal Analysis Resource Audit Financial Resources Analysis Rank Borrowing capacityIn the acquisition of Compaq2Internal funds generationShareholders participation3Global accountsSpecial requirements for customers payment globally5Control systemsImprovements in corporate governance and internal control procedures as a result of the activities of the leak investigationInternational accounting systemsCompliance with IAS(5-Most favourable, 4-Favourable, 3-Neutral, 2-Unfavourable, 1- Most unfavourable)
16 Internal Analysis Resource Audit Intangible Resources Analysis Rank Technology – ‘know how’Intangible assets acquired, includes in-process research and development5Patents & CopyrightsRely on patent, copyright, trademark and trade secret lawsEstablish and maintain intellectual property rights in the technology and products they produce and sell3Customer loyaltyCustomer loyalty rating is high among other competitorsBrandsTwo brands which are widely recognised are the HP and Compaq4(5-Most favourable, 4-Favourable, 3-Neutral, 2-Unfavourable, 1- Most unfavourable)
17 (5-Excellent, 4-Above average, 3-Average, 2-Below average, 1- Poor) Value ChainPrimary activities(5-Excellent, 4-Above average, 3-Average, 2-Below average, 1- Poor)ActivitiesAnalysisRanksInbound logisticsMaximises the demand for its product based on capabilities and configuration, helping to minimize inventory holding.Reliant on sole vendors for the purchase of materials with short life span. E.g. Intel & AMD for processors and Microsoft for various software products.Efficient Distribution chain for products in order to reduce cost and energy use.4OperationsOutsources manufacturing.Finished products from components and sub assemblies are acquired from a wide range of vendors.Products that are purchased are resold under the HP brandOutbound logisticsPSG (Personal systems group) - SMB commercial resellers channel (retail and commercial channels)Volume direct organisation which manages the direct sales for volume products.Marketing & SalesProducts are made available to customers through direct and channel sales.Competitors like Dell and IBM have strategically position themselves in the laptop industry, focusing their business on PC and server hardware.Customer serviceExtensive service and support - Total care provides after sales service, maintenance and installationProvides service for calls, s and chats with an HP technician online and HP house call for PCs.
18 (5-Excellent, 4-Above average, 3-Average, 2-Below average, 1- Poor) Value ChainSecondary activities(5-Excellent, 4-Above average, 3-Average, 2-Below average, 1- Poor)ActivitiesAnalysisRanksFirm infrastructureInfrastructure includes Information Management and Business Intelligence Solutions for Archiving, recording management products, data protection and enterprise data and leasing, financing, financial asset management services, etc.4Human resource management304,000 employees worldwide.Large levels of responsibility.Employees' welfare and safetyImpacts and ensuring employee satisfaction.5Technology developmentAdaptive Network Architecture (ANA)R&D - About $3.5bn was invested in 2008.Procurement/PurchasingAdvanced technology such as e-auctions, e-quoting, e-invoicing and e-payments to sustain its relationship with the supply base.Capabilities of supporting suppliers with technological activities and training.
19 SWOT Analysis Strength S1 Strong brand equity S2 Diversified product portfolio (offerings spans personal computing and other access devices; imaging and printing-related products and services; enterprise information technology infrastructure, multi-vendor customer services, consulting and integration and outsourcing services)S3 Solid market position in key segmentsS4 Strong financial conditionS5 Human Resources ManagementS6 Marketing and SalesWeaknessW1 Internal control issuesW2 Lack of in-house management consulting divisionW3 Unrest among internal employees due to pay cuts and lack of "people care"W4 Intellectual Capital is under-estimatedW5 No Good People retention policy or HR practices to ensure IC is protectedW6 Recall on productsOpportunitiesO1 Emerging markets, particularly BRIC countriesO2 e-Commerce expansionO3 Restructuring of internal IT structureO4 Imaging and printing businessesO5 Consumers expenditure and disposable incomeThreatsT1 Intense competition from other PC manufacturersT2 Increasing competition on imaging and printingT3 Slowdown in economic conditions in the worldT4 Supply chain disruptions
20 SWOT Analysis Strength + Opportunities Weakness + Opportunities S6+O5: The disposable income of Russians is high, meaning customers have the ability and are willing to purchase HP's quality products and services that have combined features over products of its competitors.W1+O3: Using the advantage of IT facilities to develop product and quality controlS3+T2: HP has a high market share in the key segments, it should maintain its leading position in the printing and imagining business by coming up with products with advanced features to have an edge over its competitors.Strength + ThreatsWeakness + Threats
21 Organisational purpose HP’s Vision“At HP, we believe diversity is a key driver of our success. Putting all our differences to work across the world is a continuous journey fuelled by personal leadership from everyone in our company. Our aspiration is that the behaviours and actions that support diversity and inclusion will come from the conviction of every HP employee - making diversity and inclusiona conscious part of how we run our business throughout the world. Diversity and inclusion are woven into the fabric of our company”.HP is a multinational company dealing with variety of IT equipmentsIt supports diversity in culture and decision-making.
22 Organisational purpose MissionCustomer loyalty: Earn respect and loyalty by providing highest quality and valueProfit: Attain sufficient profit for finance growth, value for shareholders investment and corporate objectives.Growth: To seize opportunities to growth and achieve, build on strengths and competencies.Market leadership: To lead in the marketplace by developing and delivering useful and innovative products, services and solutionsCommitment to employees: To demonstrate our commitment to employees by promoting and rewarding based on performance and by creating a work environment that reflects our values.Leadership capability: To develop leaders at all levels who achieve business results, exemplify our values and lead us to grow and win.Global citizenship: To fulfill our responsibility to society by being an economic, intellectual and social asset to each country and community where we do business.EvaluationHP’s mission statement recognises that its needs to earn the respect and loyalty of its customers; to be a market leader; to commit itself to the welfare of its employees and engage in corporate social responsibility.
23 Organisational purpose Objective EvaluationHP’s objectives are geared towards achieving its mission. This it does by providing its customers with high value and quality products; developing and delivering useful and innovative products, services and solutions; promoting and rewarding employees based on their performance and by creating a work environment that reflects its values and by being an economic, intellectual and social asset to each country and community where it does business.
24 Portfolio Analysis Products and services Computers Laptops Laser printersSuper computer (Servers)Software development
25 HP Products growth rate in Russia Portfolio AnalysisHP Products growth rate in RussiaLaser printersYearSales ($mln)Growth rate %2005366.4202006425.4162007491.4152008442.6-10ComputersYearSales ($mln)Growth rate %200568.237200698.1442007138.4412008148.88LaptopsYearSales ($mln)Growth rate %200583.9200698.1172007110.4122008131.119ServersYearSales ($mln)Growth rate %2006180.32007216.3202008288.433Software developmentYearSales ($bln)Growth rate %20051.220061.41720071.72120082.01820092.18
26 Relative Average Sales Share of the Business Portfolio AnalysisRelative Average Sales Share of the BusinessProductsSales for 2008Relative average salesPrinters442,624,0002.14Computers148,828,4000.72Laptops131,100,0000.63Supercomputers (server)288,480,0001.39Software20,000,0000.09Total company sales1,031,032,400
28 Business Unit Level Strategy CompetitorsPerceived QualityPrice321(3-High 2-Average, 1- low)(3-Low 2-Average, 1- high)
29 Quality price matrix 3 2 1 3 2 QUALITY 1 Best offer Good offer Best offerGood offerValue for moneyHPDellExcellencePremier QualityAsusAcerGood PriceNo wherePlay safeLenovoSamsungSonyToshibaToo expensiveNo value for moneyLow PriceNonsenseHighAverageLow321QUALITYLow Average HighPRICE
30 Market Penetration and Consolidation Development StrategyMarket Penetration and ConsolidationMarket PenetrationBusiness started January 19381938: Audio Oscillator (HP200A)High demand for HP electronicsAcquired Boonton Radio Corp.HP and Compaq mergerMarket Consolidation/ Withdraw or DownsizingSuspected withdrawal of earlier productsMaintain Market ShareStrategies to gain more market share where embarked upon.Acquired Heartstream Inc.2002-Acquired Indigo2005-Acquired Scitex Vision2006-Acquired Mercury Corp.
31 Development Strategy Product development Modified Product Development A frequency synthesizer1974-first minicomputer1982-HP9000; HP-75C1984–HP Thinkjet1991-Deskjet 500C1991-HP 3000 & HP 9000 systems1994-World's brightest LED1994-Colour laser jet printer1994-HP 200LX Palmtop PC1999-Jornada 4202005-HP Photosmart 8250 Photo2007-TouchSmart PC2007-Touch screen consumer tab2009-HP PhotoSmart premium witNew Product Development1951-HP 524AA Logic Analyser1979-Integrated microprocessor1988-HP digital multimeter1998-Jornada 820 PDA2000-High-end server lineComplimentary Product DevelopmentGrouping/ Bundling Strategy1994:printer-fax-copierCross Subsidisation StrategyNot applied
32 International Market Development Development StrategyMarket developmentNew Market Segments1960-Medical field1991: HP 95LX Palmtop PC1995: HP Pavilion PC2004: Digital Entertainment StrategyNew uses1960:Medical electronics & AnalysisNew geographical Markets1958-Acquires F.L Moseley1960-Plant in Colorado1973:Operations in Boise, IdahoInternational Market Development1959: Switzerland & Germany1963: AsiaSwitzerland1981: Beijing, China
33 Development Strategy Diversification Related diversificationRelated vertical backward integrationacquires F.L Moseleyacquires Apollo computercorroborates with IntelHPFS - financial servicesRelated vertical forward integrationPartakes in the distributionAfter sales serviceRelated lateral/concentric integration2006-diversification to gamesRelated horizontal integrationfirst computer1984-laser jet printersinkjet, toner, paper, scanner faxUnrelated diversification1943-microwave field1961-medical field1965-analytical instrumentation
34 Development Strategy Analysis ProductsExisting productsNew products1. Market Penetration / Consolidation1997 -Audio oscillator HP 200AHP equipments High DemandAcquire Boonton Radio Corp.Acquire Heart stream Inc.HP and Compaq merger2002-Acquire Indigo2005-Acquire Scitex Vision2006-Acquire Mercury Corp.2. Product DevelopmentA frequency synthesize1974-first minicomputer HP-85HP consumer products2004-Vivera Inks2005-HP Photo-smart 8250 Photo2007-TouchSmart PC2008-HP2133 Mini-Note PC2009-HP Photo-Smart premium3. Market Development1960 -Medical field1991:HP 95LX Palmtop PC1995:HP Pavilion PC2004:Digital Entertainment Strategy1960:Medical electronics & Ana1958-Acquires F.L Moseley1960-Plant in Colorado1973:Operations in Boise, Idaho1959: Switzerland & Germany1963: AsiaSwitzerland1981: Beijing, China4. Diversification1943- microwave field1961-medical field1965-analytical instrumentation1958-acquires F.L Moseley1989-acquires Apollo computer1994-corborates with IntelHPFS - Financial servicesAfter sales service2006-diversification to games1966-ist computerLaser jet printersinkjet, toner, paper, scanner faxExisting marketsMarketsNew markets
35 ConclusionIn conclusion, the external environment is beneficial to the company because the Political, Economical, Socio-cultural and Technological factors are favourable to the operations of the business. The company has been able to organise resource audit and value chain which has helped it to carry out its internal activities.The company places heavy emphasis on its employees, customers and stakeholders, bearing in mind that employees/human resources are the most important assets of an organisation, and customer and stakeholder expectations are very high. The company has come up with different products and services, which have helped to give it a competitive edge in the industry in which it operates.
36 HP (EDS) should move to game programming in Russia. RecommendationIn Russia, HP is in the leading position in supercomputers and printers market; the gap between them and their competitors is wide. They should focus on these sustainable products.The company should also downsize computer and laptop imports from the US and invest in local manufacturing facilities.HP (EDS) should move to game programming in Russia.
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