1. HEWLETT PACKARD (HP) STRATEGIC GROUP ANALYSIS
Group members Afor Okala Oluchi Iwuh Anthony Momoh Omamoke Om'iniabohs Asatur Tumanyan
HEWLETT PACKARD (HP)
STRATEGIC GROUP ANALYSIS

2. Hewlett Packard TABLE OF CONTENTS 1
Phase 1: Strategic Position Analysis 2
Phase 2: Formulation of Strategy 3
Phase 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 computers
and its related gadgets.
It was founded by
Bill Hewlett and Dave Packard.

4. PEST Analysis
Russia

5. PEST Analysis Russia Political Factors Population 142 mln. People
Area ,075,200 sq km
Income tax %
Corporate tax 24 %
Economic Factor
GDP 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 position
Socio-cultural factors
Gini index is 42
EU – 31
USA – 46
Lifestyle, 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 factors
Huge potential and qualified workforce
Government 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 Stability
Taxation, employment and safety law
Social welfare policies
Foreign trade regulations
'Green' issues that affect the environment
Economic factors
Total GDP and GDP per head growth rates (trends)
Inflation
Consumer expenditure and disposable income
Interest rates
Currency fluctuations and exchange rates
Investment, by the state, private enterprise and foreign companies
Business cycles
Unemployment
Socio-cultural factors
Shifts in values and culture
Change in lifestyle
Consumerism
Attitudes to work and leisure
‘Green’ environmental issues
Education and health
Social mobility
Technological factors
Government investment policy on research

7. X - Average ranks of PEST analysis Y - Rank
Hewlett Packard
X - Average ranks of PEST analysis
Y - Rank Y X
(5-Most favourable, 4-Favourable, 3-Neutral, 2-Unfavourable, 1- Most unfavourable)

8. Hewlett Packard
Major competitors

9. Strategic Group Analysis
Intra group competition Y
Competitors
Price (Ranking)
Quality (Ranking) HP 7 6
Dell
Lenovo 5
Sony
Toshiba
Acer 4
Samsung
Asus
(1-Very Low, 2-Low, 3-Low to Moderate, 4-Moderate, 5-Moderate to High, 6-High, 7-Very High) X
X - Price
Y - Quality

10. PC Industry Sales in Russia
Industry Life cycle
PC Industry Sales in Russia Y
Year
Total industry Sales ($ US mln)
2004
1,775.2
2005
2,436.2
2006
3,504.2
2007
4,943.8
2008
5,315.3
2009
3,639.8
The 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. X
X - Year
Y – Total Industry Sales

11. Porter’s 5 forces External Analysis Threat of New Entry
Economies of scale
Differentiation
Brand loyalty
Access to supply and distribution channels
Entry deterring price
Competitive rivalry determinants
Market growth rates (life cycle)
Fixed costs
Differentiation of the products/services
Barriers to exit
Determinants of buyer power
Buyer's purchasing power
Switching costs
Threat of backward integration
Determinants of supplier power
The threat of forward integration by the supplier
Threat of Substitutes
Relative price / performance of substitutes
Willingness of buyers to substitute

12. Porter’s 5 forces External Analysis Y Ranks 4
Low Threats, low bargaining power, low competitive rivalry 3
Moderate Threats, low bargaining power, low competitive rivalry 2
High Threats, low bargaining power, low competitive rivalry X

13. Internal Analysis Resource Audit Human Resource Analysis Rank
Number of staff
304,000 Employees 5
Skills
Good technical (Engineering & Solution providers), sales, marketing and IT support teams
Executive staffs
Experience
In-depth industry specific knowledge 4
Training
Involved with staff and distributors training 3
Motivation
Discount rates on products purchased, salaries, medical costs, long term return on plan assets.
Turnover
High risk in employee mobility 1
Attitude and cultural awareness
Multi cultural employee population and language translations
Flexibility
Flexibility 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
Locations
In several countries in the 5 Continents 4
Expansion potential
Availability of funds, asset and other resources for moving into new markets and develop new products.
R&D facilities
Invest in R&D projects – 2.8 million in 2009 5
Quality
Engages 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 capacity
In the acquisition of Compaq 2
Internal funds generation
Shareholders participation 3
Global accounts
Special requirements for customers payment globally 5
Control systems
Improvements in corporate governance and internal control procedures as a result of the activities of the leak investigation
International accounting systems
Compliance 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 development 5
Patents & Copyrights
Rely on patent, copyright, trademark and trade secret laws
Establish and maintain intellectual property rights in the technology and products they produce and sell 3
Customer loyalty
Customer loyalty rating is high among other competitors
Brands
Two brands which are widely recognised are the HP and Compaq 4
(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 Chain
Primary activities
(5-Excellent, 4-Above average, 3-Average, 2-Below average, 1- Poor)
Activities
Analysis
Ranks
Inbound logistics
Maximises 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. 4
Operations
Outsources 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 brand
Outbound logistics
PSG (Personal systems group) - SMB commercial resellers channel (retail and commercial channels)
Volume direct organisation which manages the direct sales for volume products.
Marketing & Sales
Products 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 service
Extensive service and support - Total care provides after sales service, maintenance and installation
Provides 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 Chain
Secondary activities
(5-Excellent, 4-Above average, 3-Average, 2-Below average, 1- Poor)
Activities
Analysis
Ranks
Firm infrastructure
Infrastructure 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. 4
Human resource management
304,000 employees worldwide.
Large levels of responsibility.
Employees' welfare and safety
Impacts and ensuring employee satisfaction. 5
Technology development
Adaptive Network Architecture (ANA)
R&D - About $3.5bn was invested in 2008.
Procurement/Purchasing
Advanced 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 segments
S4 Strong financial condition
S5 Human Resources Management
S6 Marketing and Sales
Weakness
W1 Internal control issues
W2 Lack of in-house management consulting division
W3 Unrest among internal employees due to pay cuts and lack of "people care"
W4 Intellectual Capital is under-estimated
W5 No Good People retention policy or HR practices to ensure IC is protected
W6 Recall on products
Opportunities
O1 Emerging markets, particularly BRIC countries
O2 e-Commerce expansion
O3 Restructuring of internal IT structure
O4 Imaging and printing businesses
O5 Consumers expenditure and disposable income
Threats
T1 Intense competition from other PC manufacturers
T2 Increasing competition on imaging and printing
T3 Slowdown in economic conditions in the world
T4 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 control
S3+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 + Threats
Weakness + 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 inclusion
a 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 equipments
It supports diversity in culture and decision-making.

22. Organisational purpose
Mission
Customer loyalty: Earn respect and loyalty by providing highest quality and value
Profit: 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 solutions
Commitment 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.
Evaluation
HP’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 Evaluation
HP’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 printers
Super computer (Servers)
Software development

25. HP Products growth rate in Russia
Portfolio Analysis
HP Products growth rate in Russia
Laser printers
Year
Sales ($mln)
Growth rate %
2005
366.4 20
2006
425.4 16
2007
491.4 15
2008
442.6
-10
Computers
Year
Sales ($mln)
Growth rate %
2005
68.2 37
2006
98.1 44
2007
138.4 41
2008
148.8 8
Laptops
Year
Sales ($mln)
Growth rate %
2005
83.9
2006
98.1 17
2007
110.4 12
2008
131.1 19
Servers
Year
Sales ($mln)
Growth rate %
2006
180.3
2007
216.3 20
2008
288.4 33
Software development
Year
Sales ($bln)
Growth rate %
2005
1.2
2006
1.4 17
2007
1.7 21
2008
2.0 18
2009
2.18

26. Relative Average Sales Share of the Business
Portfolio Analysis
Relative Average Sales Share of the Business
Products
Sales for 2008
Relative average sales
Printers
442,624,000
2.14
Computers
148,828,400
0.72
Laptops
131,100,000
0.63
Supercomputers (server)
288,480,000
1.39
Software
20,000,000
0.09
Total company sales
1,031,032,400

27. Hewlett Packard's BCG Matrix
Portfolio Analysis
Hewlett Packard's BCG Matrix
High
market growth rate
low
BCG Matrix interpretation
STARS
Supercomputers
QUESTION MARKS
Laptops & software
CASH COWS
Printers
DOGS
Computers
High Relative Market Share Low

28. Business Unit Level Strategy
Competitors
Perceived Quality
Price 3 2 1
(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 offer
Good offer
Value for money HP
Dell
Excellence
Premier Quality
Asus
Acer
Good Price
No where
Play safe
Lenovo
Samsung
Sony
Toshiba
Too expensive
No value for money
Low Price
Nonsense
High
Average
Low 3 2 1
QUALITY
Low Average High
PRICE

30. Market Penetration and Consolidation
Development Strategy
Market Penetration and Consolidation
Market Penetration
Business started January 1938
1938: Audio Oscillator (HP200A)
High demand for HP electronics
Acquired Boonton Radio Corp.
HP and Compaq merger
Market Consolidation/ Withdraw or Downsizing
Suspected withdrawal of earlier products
Maintain Market Share
Strategies to gain more market share where embarked upon.
Acquired Heartstream Inc.
2002-Acquired Indigo
2005-Acquired Scitex Vision
2006-Acquired Mercury Corp.

31. Development Strategy Product development Modified Product Development
A frequency synthesizer
1974-first minicomputer
1982-HP9000; HP-75C
1984–HP Thinkjet
1991-Deskjet 500C
1991-HP 3000 & HP 9000 systems
1994-World's brightest LED
1994-Colour laser jet printer
1994-HP 200LX Palmtop PC
1999-Jornada 420
2005-HP Photosmart 8250 Photo
2007-TouchSmart PC
2007-Touch screen consumer tab
2009-HP PhotoSmart premium wit
New Product Development
1951-HP 524A
A Logic Analyser
1979-Integrated microprocessor
1988-HP digital multimeter
1998-Jornada 820 PDA
2000-High-end server line
Complimentary Product Development
Grouping/ Bundling Strategy
1994:printer-fax-copier
Cross Subsidisation Strategy
Not applied

32. International Market Development
Development Strategy
Market development
New Market Segments
1960-Medical field
1991: HP 95LX Palmtop PC
1995: HP Pavilion PC
2004: Digital Entertainment Strategy
New uses
1960:Medical electronics & Analysis
New geographical Markets
1958-Acquires F.L Moseley
1960-Plant in Colorado
1973:Operations in Boise, Idaho
International Market Development
1959: Switzerland & Germany
1963: Asia
Switzerland
1981: Beijing, China

33. Development Strategy Diversification
Related diversification
Related vertical backward integration
acquires F.L Moseley
acquires Apollo computer
corroborates with Intel
HPFS - financial services
Related vertical forward integration
Partakes in the distribution
After sales service
Related lateral/concentric integration
2006-diversification to games
Related horizontal integration
first computer
1984-laser jet printers
inkjet, toner, paper, scanner fax
Unrelated diversification
1943-microwave field
1961-medical field
1965-analytical instrumentation

34. Development Strategy Analysis
Products
Existing products
New products
1. Market Penetration / Consolidation
1997 -Audio oscillator HP 200A
HP equipments High Demand
Acquire Boonton Radio Corp.
Acquire Heart stream Inc.
HP and Compaq merger
2002-Acquire Indigo
2005-Acquire Scitex Vision
2006-Acquire Mercury Corp.
2. Product Development
A frequency synthesize
1974-first minicomputer HP-85
HP consumer products
2004-Vivera Inks
2005-HP Photo-smart 8250 Photo
2007-TouchSmart PC
2008-HP2133 Mini-Note PC
2009-HP Photo-Smart premium
3. Market Development
1960 -Medical field
1991:HP 95LX Palmtop PC
1995:HP Pavilion PC
2004:Digital Entertainment Strategy
1960:Medical electronics & Ana
1958-Acquires F.L Moseley
1960-Plant in Colorado
1973:Operations in Boise, Idaho
1959: Switzerland & Germany
1963: Asia
Switzerland
1981: Beijing, China
4. Diversification
1943- microwave field
1961-medical field
1965-analytical instrumentation
1958-acquires F.L Moseley
1989-acquires Apollo computer
1994-corborates with Intel
HPFS - Financial services
After sales service
2006-diversification to games
1966-ist computer
Laser jet printers
inkjet, toner, paper, scanner fax
Existing markets
Markets
New markets

35. Conclusion
In 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.
Recommendation
In 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.

37. Recommendation
THANK YOU

38. References
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40. References
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