Student Presentation HP
Transcript of Student Presentation HP
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Group members
Afor Okala
Oluchi Iwuh
Anthony MomohOmamoke Om'iniabohs
Asatur Tumanyan
HEWLETT PACKARD (HP)STRATEGIC GROUP ANALYSIS
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Hewlett Packard
TABLE OF CONTENTS
1 Phase 1: Strategic Position Analysis
2 Phase 2: Formulation of Strategy
3
Phase 3: Conclusion and Recommendation
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Organisational Background
Hewlett-Packard was founded in 1939,Palo Alto, California.
Today HP is one of the world's largestcomputer peripheral companies and the
foremost producer of test and measurementinstruments.
The company mainly produces computers
and its related gadgets.
It was founded byBill Hewlett and Dave Packard.
http://www.google.co.uk/imgres?imgurl=http://www.tech-news.com/imagesap/packard_hewlett.jpg&imgrefurl=http://www.tech-news.com/another/ap200609.html&usg=__RB5Y_Ti9YMg7DiR8dta9zJ8Av_A=&h=364&w=335&sz=28&hl=en&start=22&zoom=1&um=1&itbs=1&tbnid=hyhxe2HDm3QN5M:&tbnh=121&tbnw=111&prev=/images%3Fq%3Ddave%2Bpackard%2Band%2Bbill%2Bhewlett%26start%3D20%26um%3D1%26hl%3Den%26sa%3DN%26ndsp%3D20%26tbs%3Disch:1 -
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PEST Analysis
Russia
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PEST Analysis
RussiaPolitical FactorsPopulation 142 mln. People
Area 17,075,200 sq km
Income tax 13 %
Corporate tax 24 %
Economic FactorGDP PPP (Purchasing Power Parity): 8th
Position
$2.11 trillion (2009 est.)
$2.291 trillion (2008 est.)
$2.17 trillion (2007 est.)
GDP PPP (per capita) estimated: 72nd
position
Socio-cultural factors Gini index is 42
EU31
USA46
Lifestyle, attitude to work and leisure
changes with increase in income.
Welfare is mostly created by privatebusinesses.
State organisations still suffer from low
wages.
Technological factors
Huge potential and qualified workforceGovernment encourages investments in
hi-tech research and development.
Internet eases access of Russian
products to the International Market
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PEST AnalysisPolitical factorsGovernment Stability
Taxation, employment and safety lawSocial welfare policies
Foreign trade regulations
'Green' issues that affect the environment
Economic factorsTotal GDP and GDP per head growth rates
(trends)Inflation
Consumer expenditure and disposable
income
Interest rates
Currency fluctuations and exchange rates
Investment, by the state, private enterprise
and foreign companiesBusiness cycles
Unemployment
Socio-cultural factorsShifts in values and culture
Change in lifestyle
Consumerism
Attitudes to work and leisure
Green environmental issues
Education and health
Social mobility
Technological factorsGovernment investment policy on research
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Hewlett PackardX - Average ranks of PEST analysis
Y - Rank
Y
X
(5-Most favourable, 4-Favourable, 3-Neutral, 2-Unfavourable, 1- Most unfavourable)
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Hewlett Packard
Major competitors
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Strategic Group Analysis
Intra group competition
Competitors Price
(Ranking)
Quality
(Ranking)
HP 7 6
Dell 6 6
Lenovo 7 5
Sony 7 6
Toshiba 5 5
Acer 4 6
Samsung 5 5Asus 6 6
X
Y
X - Price
Y - Quality
(1-Very Low, 2-Low, 3-Low to Moderate, 4-Moderate, 5-Moderate to High, 6-High,
7-Very High)
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Industry Life cycle
PC Industry Sales in Russia
Year Total industry Sales
($ 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
X
Y
X - Year
YTotal Industry Sales
The Russian Personal computer industry shows a steepincrease in sales over a 4 years (2004 - 2008) and a
sharp decline in 2009 which was a result of the
economic down turn. All sales figures are in Million
Dollars.
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Porters 5 forces
External AnalysisThreat of New EntryEconomies 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
Switching costs
The threat of forward
integration by the supplier
Threat of Substitutes
Relative price /
performance of substitutes
Switching costs
Willingness of buyers to
substitute
Brand loyalty
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Porters 5 forces
External Analysis
X
YRanks
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
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Internal AnalysisResource 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
5
Experience In-depth industry specific knowledge 4Training Involved with staff and distributors training 3
Motivation Discount rates on products purchased, salaries,
medical costs, long term return on plan assets.
5
Turnover High risk in employee mobility 1
Attitude and
cultural awareness
Multi cultural employee population and language
translations
3
Flexibility Flexibility work hours and reduced work pressure 3
(5-Most favourable, 4-Favourable, 3-Neutral, 2-Unfavourable, 1- Most unfavourable)
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Internal AnalysisResource Audit
(5-Most favourable, 4-Favourable, 3-Neutral, 2-Unfavourable, 1- Most unfavourable)
Physical Resource Analysis RankLocations 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.
4
R&D facilities Invest in R&D projects2.8 million in 2009 5
Quality Engages in extensive product quality
programmes and processes.
5
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Internal AnalysisResource Audit
(5-Most favourable, 4-Favourable, 3-Neutral, 2-Unfavourable, 1- Most unfavourable)
Financial Resources Analysis RankBorrowing capacity In the acquisition of Compaq 2
Internal funds
generation
Shareholders participation 3
Global accounts Special requirements for customers paymentglobally
5
Control systems Improvements in corporate governance andinternal control procedures as a result of the
activities of the leak investigation
2
International
accounting systems
Compliance with IAS 5
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Internal AnalysisResource Audit
(5-Most favourable, 4-Favourable, 3-Neutral, 2-Unfavourable, 1- Most unfavourable)
Intangible Resources Analysis RankTechnologyknow
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 propertyrights in the technology and products they
produce and sell
3
Customer loyalty Customer loyalty rating is high among other
competitors
5
Brands
Two brands which are widely recognised are theHP and Compaq 4
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Value ChainPrimary 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
4
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.
4
Marketing &
Sales
Products are made available to customers through direct and channel sales.
Competitors like Dell and IBM have strategically position themselves in the laptopindustry, focusing their business on PC and server hardware.
4
Customer
service
Extensive service and support - Total care provides after sales service, maintenance and
installation
Provides service for calls, emails and chats with an HP technician online and HP house call
for PCs.
4
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Value ChainSecondary 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 resourcemanagement
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.
4
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.
4
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SWOT AnalysisStrength
S1 Strong brand equity
S2 Diversified product portfolio (offeringsspans 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 condition
S5 Human Resources Management
S6 Marketing and Sales
Weakness
W1 Internal control issues
W2 Lack of in-house managementconsulting 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
countriesO2 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
manufacturersT2 Increasing competition on imaging and
printing
T3 Slowdown in economic conditions in
the world
T4 Supply chain disruptions
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SWOT Analysis
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 featuresover 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 tohave an edge over its competitors.
Strength + Opportunities Weakness + Opportunities
Strength + Threats Weakness + Threats
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Organisational purpose
HPs VisionAt 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.
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Organisational purposeMission
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 promotingand 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
HPs 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.
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Organisational purpose
Objective Evaluation
HPs 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.
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Portfolio Analysis
Products and services
Computers
Laptops
Laser printers
Super computer (Servers)
Software development
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Portfolio AnalysisHP 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
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 ($bln) Growth
rate %
2005 1.2
2006 1.4 17
2007 1.7 21
2008 2.0 18
2009 2.18
Computers
Year Sales ($mln) Growth
rate %
2005 68.2 37
2006 98.1 44
2007 138.4 41
2008 148.8 8
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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
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Portfolio Analysis
Hewlett Packard's BCG MatrixHi
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High Relative Market Share Low
BCG Matrix interpretation
STARS Supercomputers
QUESTIONMARKS
Laptops &software
CASH COWS Printers
DOGS Computers
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Business Unit Level StrategyCompetitors Perceived Quality Price
3 2
3 2
3 1
2 2
2 2
2 2
2 2
3 1
(3-High 2-Average, 1- low) (3-Low 2-Average, 1- high)
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Quality price matrix
Best offer Good offer
Value for money
HP
Dell
Excellence
Premier Quality
Asus
Acer
Good Price
Value for money
No where
Play safe
Lenovo
Samsung
Sony
Toshiba
Too expensive
No value for money
Low Price No value for money Nonsense
Hi
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A
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Q
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3 2 1
3
2
1
Low Average High
PRICE
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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 ShareStrategies to gain more market share where embarked upon.
Acquired Heartstream Inc.
2002-Acquired Indigo
2005-Acquired Scitex Vision
2006-Acquired Mercury Corp.
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Development StrategyProduct development
Modified Product Development1963-5100A frequency synthesizer
1974-first minicomputer
1982-HP9000; HP-75C
1984HP Thinkjet
1991-Deskjet 500C1991-HP 3000 & HP 9000 systems
1994-World's brightest LED
1994-Colour laser jet printer
1994-HP 200LX Palmtop PC
1999-Jornada 4202005-HP Photosmart 8250 Photo
2007-TouchSmart PC
2007-Touch screen consumer tab
2009-HP PhotoSmart premium wit
Complimentary Product
Development
Grouping/ Bundling Strategy1994:printer-fax-copier
Cross Subsidisation StrategyNot applied
New Product Development1951-HP 524A
1973-5000A Logic Analyser
1979-Integrated microprocessor
1988-HP digital multimeter
1998-Jornada 820 PDA2000-High-end server line
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Development Strategy
New Market Segments1960-Medical field
1991: HP 95LX Palmtop PC
1995: HP Pavilion PC
2004: Digital Entertainment Strategy
New uses1960: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
Market development
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Development Strategy
Diversification
Related diversificationRelated vertical backward
integration
1958 - acquires F.L Moseley
1989 - acquires Apollo computer1994 - corroborates with Intel
HPFS - financial services
Related vertical forward
integrationPartakes in the distribution
After sales service
Related lateral/concentric
integration2006-diversification to games
Related horizontal integration1966 - first computer
1984-laser jet printers
inkjet, toner, paper, scanner fax
Unrelated diversification
1943-microwave field
1961-medical field
1965-analytical instrumentation
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Development Strategy Analysis
1. Market Penetration / Consolidation
1997 -Audio oscillator HP 200AHP 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
1963-5100A frequency synthesize1974-first minicomputer 1980-HP-85
2003-100 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 Development1960 -Medical field
1991:HP 95LX Palmtop PC
1995:HP Pavilion PC
2004:Digital Entertainment Strategy
1960:Medical electronics & Ana
1958-Acquires F.L Moseley1960-Plant in Colorado
1973:Operations in Boise, Idaho
1959: Switzerland & Germany
1963: Asia
Switzerland
1981: Beijing, China
4. Diversification1943- microwave field
1961-medical field
1965-analytical instrumentation
1958-acquires F.L Moseley
1989-acquires Apollo computer
1994-corborates with IntelHPFS - Financial services
After sales service
2006-diversification to games
1966-ist computer
1984 - Laser jet printers
inkjet, toner, paper, scanner fax
Existingmarkets
New
markets
Existing products
Markets
New productsProducts
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Conclusion
In conclusion, the external environment is beneficial to thecompany because the Political, Economical, Socio-cultural andTechnological factors are favourable to the operations of thebusiness. The company has been able to organise resourceaudit 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 thatemployees/human resources are the most important assets ofan organisation, and customer and stakeholder expectations
are very high. The company has come up with differentproducts and services, which have helped to give it acompetitive edge in the industry in which it operates.
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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.
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Recommendation
THANK YOU
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ReferencesAnnual Review (2010) Environmental Issues in Russia [online] available from
[25
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Referenceshp (2010) Annual report & proxies - 2009 10-k [online] available from
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hp (2010) Annual reports & proxies - 2009 Annual Report [online] available from [29 September 2010]
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ReferencesLaptop Reviews Online (2010) HP Pavilion [online] available from
[17 September 2010]
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