Hewlett-PackardIntroduction to Management

Table of ContentsIntroduction 3Phase 1 ID Card

TimelineProductsHP by Numbers

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Phase 2 Introduction to Phase TwoInnovationEmployee EnvironmentManagement ExcellenceCustomer RelationshipHealthy FinanceConclusion: Improvement Case

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Phase 3 Scenario B: Analysis of ProblemsImprovements: Customer ImageImprovements: Employee EnvironmentImprovements: InnovationImprovements: Healthy FinanceAction Plan

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Conclusion 26

Sources 27

IntroductionIn the framework of our course “Introduction to Management” at the University of Antwerp, we have been tasked with making a case study of a top market listed company.Based on various published sources and conceptual framework, we intend to restructure the overload of information, interpret it and use it to get insight into the problem statement. In this introduction we elaborate on the chosen organization, the problem statement, the conceptual framework and the structure of this group assignment.For this assignment Hewlett-Packard was selected as the subject, because this organization is active globally and within very interesting markets. This gives us the opportunity to gather a lot of facts and data to build up a rich case study.The problem statement of this group assignment is: “Can HP be viewed as a best practice or an improvement case?” This will be determined on the basis of the conceptual framework below.To find out whether or not HP is a best practice or improvement case, phases 1 and 2 will be reviewed. Based on a general description of the organization, and a comparison with competitors based on certain characteristics, a decision will be made whether it is a best practice or improvement case. Thereafter, the organization will be analyzed in phase 3 so recommendations are created and we are able to assess whether this case is tenable.

OverviewHewlett-Packard is a global company that sells personal computers, printers, tablets, and enterprise services to businesses and the general public. Starting UpLike all great technology companies, HP started in a garage. Dave Packard and William Hewitt became partners in 1938 when they invented their first product. After this point they started growing very rapidly. HP entered the New York Stock Exchange in 1961 and showed up on the Fortune 500 list a year later. In 1963 the company released their first computer, followed in 1980 by the first personal computer. Since then they have designed countless computers and printers and performed services for many companies.

Current NewsIn October of 2014, HP announced splitting their services to separate their enterprise services from the printer, PC, tablet, and other products. This split will not be in full effect until 2015. The official purpose of the split is to allow HP to adapt more quickly to the two very different markets. At the end of October of 2014 HP announced the release of an all new product called Sprout, which eliminates the need for a mouse and keyboard with touch technology

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ID CardHP is an American manufacturer of software and computer services with its headquarters located in Palo Alto, California.

HP designed the first personal computer. The company was the first IT company in history to report revenues exceeding $100 billion and was ranked #17 in the Fortune 500 list of 2014.

HP’s main goal as expressed by its founder Dave Packard: “It is necessary that people work together in unison toward common objectives and avoid working at cross purposes at all levels if the ultimate in efficiency and achievement is to be obtained.”

HP does not have an official mission statement but it is expressed through ‘The HP Way’, which states the company’s values and objectives.

HP’s values are trust and respect for individuals, achievement and contribution, results through teamwork, meaningful innovation and uncompromising integrity. HP’s objectives include customer loyalty, to make a profit, growth, market leadership, commitment to employees, leadership capability and global citizenship.

HP owns and leases more than 770 sites in 95 countries worldwide. They have local departments in Europe, Middle East, Africa, Asia, Pacific, Japan and the Americas.

HP’s founding fathers, William Hewlett (right) and David Packard (left).

PHASE 1

Living Progress: How HP strives to create a better future for everyone through their actions and innovations. HP’s Living Progress aims to make a positive contribution to society in 3 dimensions that are listed below.

✓ Human Progress: This aspect aims at advancing the overall health and well-being of people. Enabling human progress around the world is a core commitment for HP.

✓ Economic Progress: This aspect aims at helping businesses and economies thrive. The company seeks to make businesses and individuals more efficient and profitable with their products and services.

✓ Environmental Progress: This aspect aims at making the environment stronger as HP grows. For one example, HP published their complete water footprint for the first time in 2007. Through this report and their carbon emissions report they investigate solutions to minimize water use and manage their environmental impact in the future.

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The operations of the company are organized into seven reportable business units:

1. Personal Systems Group (PSG)“PSG provides commercial personal computers (PCs), consumer PCs, workstations, calculators and other related accessories, software and services for the commercial and consumer markets (Reuters, 2014).”

2. Services“Services provide consulting, outsourcing and technology services across infrastructure, applications and business process domains (Reuters, 2014)”.

3. Imaging and Printing Group (IPG)“IPG provides consumer and commercial printer hardware, supplies, media and scanning devices. IPG is also focused on imaging solutions in the commercial markets (Reuters, 2014).”

4. Enterprise Servers, Storage and Networking (ESSN)

“ESSN provides server, storage and networking products in a number of categories (Reuters, 2014)”.

5. HP Software“HP Software provides enterprise IT management software, information management solutions and security intelligence/risk management solutions (Reuters, 2014).”

6. HP Financial Services (HPFS)“HPFS supports HP’s global product and service solutions, providing a range of financial life cycle management services. HPFS enables its worldwide customers to acquire IT solutions, including hardware, software and services. The company offers leasing, financing, utility programs and asset recovery services, as well as financial asset management services for global and enterprise customers (Reuters, 2014).”

7. Corporate Investments“Corporate Investments includes business intelligence solutions, HP Labs, webOS software and certain business incubation projects. Business intelligence solutions enable businesses to connect and share data across the enterprise and apply analytics. This segment also derives revenue from licensing specific HP technology to third parties (Reuters, 2014).”

“HP conducts its business in a highly competitive environment. In the Personal Systems Group, HP faces competition from Lenovo, Dell Inc., Acer Inc., Apple Inc., Toshiba Corporation and Samsung Electronics Co., Ltd. While in the Printing segment it has to compete with the likes of Lexmark International, Xerox Corporation and Seiko Epson Corporation (Nasdaq, 2014).”

HP’s main competitors discussed in this paper are Lenovo, IBM and Apple.

ID CardPHASE 1

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TimelinePHASE 1

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ProductsLaptopsHP laptops range from thin and light to detachable and convertible. The HP ENVY Notebook allows users to use apps with Control Zone and view images through HD. All are available to customize.

DesktopsHP desktop computers specialize in high performance, everyday use, and gaming. A new product, Sprout, has just been released with an interactive touchpad where users can touch their creations and instantly capture and view projects.

ServersHP servers have lower hardware acquisition costs as compared to RISC servers with reduced operating costs related to licensing and cooling. HP BladeSystem provides scalability and efficiency, which can reduce data center costs by up to 68% and downtime by as much as 90%.

TabletsAn array of Android tablets with Google apps are offered on HP’s website. Prices range from $150 to around $250.

PrintersDesignjet offers gallery worthy printing, while Officejet can handle a larger amount of printing. HP also offers industrial presses for business that require mass quantities of printing.

SoftwareEnterprise software is directed more at businesses and has over 200 offerings. Among these offerings are software for application defenders, log management, security, big data analytics, and cloud technologies.

ServicesWith consulting, outsourcing, and support services, HP helps enterprise businesses succeed. They deal with data, applications, business processes, and mobility to name a few areas.

PHASE 1

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HP by numbersFounded in

1939HP predates the computer age.

HP serves more than

1 billion customers in more

than

170 countries, on

6 continents.

Hewlett and Packard founded the company with

$538 in capital, including

equipment.

HP created the

1stpersonal computer.

The company works with approximately

145,000 distributors resellers and alliance

partners worldwide.

It holds the

17th position on the Fortune

500 List.

Oct. 6 2014

HP executives announced

that the company will split in two by the end of its fiscal 2015.

Currently, HP is comprised of a

team of

317,500

PHASE 1

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Introduction to Phase Two

Phase TwoPhase two will contain an analysis of HP based on five variables that define performance of a company. Our criteria that define a company’s success include Innovation, Employee Environment, Management Excellence, Customer Relationship, and Healthy Finance. HP’s performance on these variables will be compared with three of their main competitors: IBM, Lenovo, and Apple. At the end of the phase HP will be declared a Best Practice or an Improvement Case.

Main Competitors:IBMInternational Business Machines Corp (IBM) is a large American information technology company. They work with clients to solve business problems and create value for the businesses. In October of 2014 IBM sold x86 server business to Lenovo for $2.1 million. This will give IBM more opportunities to work on their software and service sectors.

LenovoLenovo is a multi-billion dollar Chinese personal technology company. Lenovo is currently the largest personal computer vendor in the world. Lenovo also creates tablets, smartphones, and smart TVs. With the acquisition of IBM’s server business, Lenovo will have the perfect opportunity to expand it’s own product base.

AppleApple is a fast growing company that manufactures and markets smartphones, tablets, PCs, and software. Their popular products include the iPhone, iPad, and Macbook. Apple designed its own operating system for their products, which links all the devices owned by a customer together through their own personal Cloud.

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Variables: InnovationInnovation or Research and Development drives an organization. Without innovation a company can’t change or create more effective processes, products and ideas. The more innovation a company has, the higher the chances are of surviving in a difficult environment. Through innovation a business can grow and create a competitive advantage. Innovation has to be a part of the strategy and the strategic vision of a company.

A company shouldn’t think that innovating just means inventing new products because innovative thinking and creative problem solving are also consequences of a company being highly concerned with innovation. Innovating affects all departments of a company in a positive way. It may not look like this, but innovation saves a company time and money and it can even increase customer satisfaction. A company can measure the advantages of being innovative by looking at their ROI or Return on Investments. This ROI can evaluate the efficiency of all kinds of investments like for example the return of an innovation program. There are different ways to calculate the ROI, the most common one is to divide net profit by the total assets of a company.

To conclude this part of innovation being important for a company we can say “The real act of discovery consists not in finding new lands, but in seeing with new eyes”, a phrase by Marcel Proust. If HP wants to be an innovating company it should not just make new products but it should use its current weaknesses on behalf of innovation and turn them into strengths for the future.

HP wants to accelerate innovation in order to drive revenue, manage risk and lower costs. In their annual report they mention innovation in each of their divisions. Innovation is a key element for HP. “Our development efforts are focused on designing and developing products, services and solutions that anticipate customers’ changing needs and desires, and emerging technological trends. Our efforts also are focused on identifying the areas where we believe we can make a unique contribution and the areas where partnering with other leading technology companies will leverage our cost structure and maximize our customers’ experiences.” The last three years HP invested approximately 3 billion dollars in R&D. The Moonshoot server, Converged Storage Portfolio, HAVEN, Ink Advantage are some of the new products and services HP came up with last year. HP wants to moderate revenue declines from previous years with product innovation.

PHASE 2

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Variables: Innovation

First, the column above shows R&D expense increased in fiscal 2012 due to additional expense from the acquisition of Autonomy and innovation-focused spending for Storage, Networking and converged cloud. Second, the column shows that in 2013 HP invested less in the Printing and Enterprise Group division when we consider R&D. How can you innovate in these divisions when you invest less? HP mentions that lower R&D expenses in Printing are due to ongoing restructuring efforts and the ones in Enterprise Group are due to the rationalization of R&D. When we consider all divisions in 2013 we see a decline in R&D expenses. This is due to cost savings from restructuring, as we’ve seen in Printing, and higher value added R&D tax subsidy credits.The column underneath shows the share of R&D expense in the total costs and expenses of HP in 2014 after nine months. R&D has a percentage of 3,3 % in the total costs and expenses of HP in 2014. This was slightly higher than the R&D percentage in 2013.

The numbers above show HP compared to their three main competitors. HP doesn’t have the lowest percentage spent on R&D, but if you compare HP to Apple and IBM, they are far behind. Based on this HP receives a score of 2 out of 5 for innovation, because they still have a lot of work to catch up with the biggest competitors in the market.

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Variables: Employee Environment

An organization is a social unit of people. Employees need to be managed, motivated trained and retained. Talented, diverse and motivated workers are one of a company’s main strengths and could provide the organization a competitive advantage.  Employee satisfactionKeeping employees satisfied with their job should be one of the priorities of HP. There are many reasons why employees can become dissatisfied with their job and eventually resign. Its HP's job to detect and avoid these reasons. When employees are engaged and loyal, companies perform better. Also, satisfied employees will not have the intention to leave the company. Moreover, job satisfaction can be measured by anonymous surveys within the organization. From these results an organization can learn and take necessary actions.

Employee retentionRetention policy consists of recruiting the right people and retaining these talented employees. The challenge is to reduce the number of employees leaving the company. Because employees who leave the company must be replaced and this takes time and costs money. Also, the high performers contribute to the effectiveness and efficiency of a company. In short, a company must try to avoid the loss of personnel who has the necessary skills and experience by keeping them satisfied. 

DiversityDiversity of the workforce is important in every company. Differences in interests, ethnic groups, generations, age, backgrounds, gender and also differences in education, experiences and perspectives will lift the creativity within a company. Creativity will stimulate innovation and increases inventions. Diversity of the workforce will help a company to understand customers’ needs all over the world and maintain a good relationship with all of their customers.

For the moment there are 317, 500 employees worldwide who work for Hewlett-Packard. In 2013, HP tried to ameliorate the work environment, fostering pride in the company and they has focused engagement efforts on career development, recognition and and rewards. It all has paid off because the employee feedback shows increasing satisfaction with the company, with 71% recommending HP as a “great place to work,” up from 60% in 2012.

HP promotes engagement through different programs, such as:“Voice of the workforce: This is an annual, anonymous survey to reflect HP’s business priorities and employee attitudes related to innovation and quality. In 2013, 80% of all employees took part (HP, 2013).”“HP Pride Builders: It is HP’s new global network of 2 100 leaders who integrate the HP Way Now culture and make the connection to daily work, including reinforcing positive behaviors and identifying new opportunities to improve business performance (HP, 2013).”

PHASE 2

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Variables: Employee Environment

Due to the increasing job satisfaction we can assume that they will not leave the company quickly.

HP tries to recruit the right people because they are convinced that their success depends on recruiting, developing and retaining the best people available in the highly competitive industry.

 For recruiting the right people, HP introduced in 2013 a new career-development model. HP describes this new career-development model as follows: “It puts the employee at the center, providing an interactive, inviting, and integrated experience. Employees can explore their strengths and interests, find roles that fit them best, define their career goals, create a plan to achieve them, and make meaningful career choices. The Career Development @hp landing page received more than 285,300 visitors during 2013, compared to about 125,000 in 2012 (HP, 2013).”

Besides the employee satisfaction and employee retention we can also say that HP’s workforce is diverse. HP employs workers from all over the world  with different cultures, ethnic groups, generations, backgrounds and with a wide range of skills and interests.

In 2013, more than 350 diversity-focused events in 34 countries have been led by HP’s Employee Resource Groups. Topics as career development, diversity recruitment, cultural awareness, and community volunteering were included.

The picture on the right visualises the gender gap within HP. The current HP staff consist of 27% women and 73% men.

50 diversity-focused events in 34 countries have been led by HP’s Employee Resource Groups. Topics as career development, diversity recruitment, cultural awareness, and community volunteering were included.  

We can decide that HP scores well on employee satisfaction and the diversity of their workforce but there is still a gender gap. Therefore, HP receives a score of 3,5 out of 5 for Employee Environment. HP is aware of that and already took some actions. To increase the percentage women working in the company they, in 2013, introduced two initiatives to help women, in and outside HP to advance their technology careers.

First initiative is Ascend. It is a global sponsorship program to help talented women, in and outside HP.

In 2013, HP established a Women’s Innovation Council. This council brought together 25 female technology leaders from among our customers, partners and employees.

PHASE 2

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Female 32,5%

Male 67,5%

Variables: Management Excellence

Management continuity is very important for an organization. The CEO is like the captain of a ship, he or she decides the course of action within the organization. Investors do not favor companies that are unstable due to governance problems. A best practice company has stable management and a reliable leader. HP has had some serious issues concerning management continuity and stability.

Since 2005, HP has had four different CEO’s including Mark Hurd, Cathie Lesjak, Leo Apotheker, and Meg Whitman. . The current CEO, Whitman, was appointed in 2011. She was the leading lady of EBay from 1998 until 2008. She is a proven executive. Since her appointment, she has been working to reinvent HP. These struggles with leaderships have taken their toll and have turned HP into a market following instead of a market-leading and innovative company. HP has been hurt massively by these internal problems.

Meg Whitman on her LinkedIn account: “As I’ve told employees at HP since accepting the role of CEO, there is no greater challenge in business than carrying out a corporate turnaround. But there is also no opportunity as exciting as working to restore one of the most iconic companies in the world. It’s why I took the job. (...) We’ve brought stability back to the business through a range of actions, including improving operations, implementing an aggressive cash management program and putting in place clear strategies across the company. My message to our top leaders is simple: Results matter. Hit your numbers.” 

HP scored worse on management excellence in the past but since the appointment of Mrs. Whitman things are turning around for the better but they still have a long way to go. HP gets a 2,5 out of 5 for Management Excellence.

Meg Whitman on the cover of Forbes magazine: “Can the queen of Silicon Valley save its original startup?”

“Blunt, folksy and persistent, Meg Whitman is the leader that Hewlett-Packard desperately needs. She’s decisive without being abrasive, persuasive without being slick. She’s a team builder who knows that turnarounds call for repairing hundreds of small failings rather than betting everything on a miracle cure that might be a mirage. In the words of HP director Mark Andreesen, one of Silicon Valley’s top venture capitalists, “She’s the best CEO the company has had since its founders.”” (Forbes, 2013)

PHASE 2

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Variables: Customer Relationship

Customer satisfaction is a good indicator how an organization is performing. Satisfied customers are more likely to purchase products or services from an organization again and develop loyalty. It is cheaper to keep customers than to obtain new ones. According to Harvard Business School, “A 5% increase in customer retention increases a company’s profits by 25% to 95%.” Customer loyalty can significantly affect a company. Additionally, an extremely satisfied or dissatisfied customer will spread the word to other potential customers. If customer satisfaction is high, this is an indicator of a best practice case. On the other hand if customer satisfaction is low, this indicates a need for improvement.

An organization should also be judged on its impact on society and the environment. In order for a company to be healthy, it needs to keep the area and people around it healthy too. It is ethical for an organization to at least maintain the current status of the environment around its customers, if not better it. Helping in the community can help improve an organization’s image and advertise it at the same time.

Brand equity is caused by increased respect for an organization’s products or services. When a customer is willing to pay more for a product based on the brand, an organization has done a good job creating a reputation for itself. Poor brand equity can result in the loss of sales on the same product because an organization is not well known. This also reflect the strength of an organization's marketing. 

HP has varying consumer satisfaction ratings across its product and service mix. Consumer reports recommends 75 printers, 13 of which are from HP. This is the highest amount from any one brand, with Brother and Cannon coming in second each having 10 printers recommended. HP's G8 ML350p server came in at number 3 on a list of the best servers according to findthebest.com with a rating of 99.4 out of 100. Their personal computers on the other hand are not doing so well. Customer satisfaction has decreased by 7.5% between 2013 and 2014, which is 4% below the industry average for percentage changed. According to a report from Vocallabs, customer satisfaction for HP overall went from 48% in 2009 to 43% in 2011. Apple had a rating of 56% in 2011, while Dell had only 40%.  Indeed HP is ahead in some sectors, but behind in others.

Customer loyalty and retention is a focus for HP. They recently released SmartVideo, which allows HP to send videos with personalized and relevant information to individual customers. Jim Dicso, president of SundaySky said, “SmartVideo creates better customer experiences that drive loyalty, increase lifetime customer value and boost brand advocacy.” This should help HP to increase its customer loyalty. In 2011 68% of surveyed HP customers said they would repurchase at product or service from HP. This is up 1% from 2009, but is not close enough to Apple’s 82% repurchase rate. This area could still use some improvement. 

PHASE 2

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Variables: Customer Relationship

Global citizenship is one of HP’s seven corporate objectives. They work to achieve this by investing in human, economic, and environmental progress. This equated to a 135.3 million dollar investment in 2013. HP is doing their part to be a good corporate citizen. However, HP’s brand worth is not keeping up with its competitors. In 2014, Core Branded ranked the 100 highest brand power companies. Apple was ranked number ten. Dell was 48 followed by IBM at 49. HP only came in at 75. HP is not respected enough as a technology brand.

HP’s relationship with its customers is below its potential. In printers it is doing well, but overall they are falling behind. Apple is dominating the personal computing industry and HP is unable to stop them. This is hurting HP’s brand even more. HP is an alright choice in customers minds, but they have many better alternatives to choose from. HP gets a 3 out of 5 in Customer Relationship. They are a possibility to customers when looking to invest in new technology, but not the clear choice. The company is doing well in some areas, but not in all. Customers can see their social responsibility, but this won’t make them buy inferior products. Although their overall customer satisfaction is not high, it is not the lowest of HP’s competitors.

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Variables: Healthy Finance

Revenue GrowthRevenue is vital to the success of any company. In order for a company to grow, it must increase profits each year, either by increasing revenue or decreasing costs. Positive revenue growth is a good indicator of how the company is doing, and how it will do in the future. HP has seen revenue decline every quarter for more than a year.

Dividend YieldDividends are part of what make a stockholder invest in a company. A potential investor will monitor the past dividends to get a grasp on what future dividends will be. The dividend yield is the percent of the share price that is given back to the shareholder. Many shareholders will decide whether or not to purchase a new stock based on the dividend yield, so it is important for a company to maintain a steady return for the current and future shareholders.

The numbers in the table above shows the financial data for HP and it’s main competitors. Knowing the numbers solely for HP does not give an accurate description of the state of the company. The numbers must be compared to other companies in the industry in order to truly have a perspective of how a company is doing. Averaging the numbers of the three competitors gives an industry average that HP can be compared to.Based on these numbers, HP received a score of 2 out of 5 for Healthy Finance because it is significantly lower than the competitors in all three categories.

PHASE 2

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Variables: Healthy FinanceDebt to Equity RatioD/E ratio is a measure of a company's financial leverage which shows the proportion of debt and shareholder’s equity the company is using to finance its assets.  A high D/E ratio can mean that the company is growing aggressively by financing its debt, which can result in unpredictable earnings and more interest expense.  A higher ratio is a higher risk for investors, but it can lower the company’s earnings before taxes.HP’s D/E ratio has decreased significantly in the past few years, however the ratio itself still remains high. This is a concern because if HP was in a financially stable position, it would want to keep the tax advantages of a high D/E ratio

Return on Equity (ROE)ROE is a measure of how much profit a company makes with the equity the shareholders have invested in a company. Before making a new investment, many shareholders will look at a company’s ROE to determine if the investment will be worth their while or not.

PHASE 2

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Conclusion: Improvement CaseOur team defines company performance through 5 variables, all of which are crucial to the success of organizations. The 5 variables selected include Customer Relationship, Management Excellence, Employee Environment, Healthy Finance, and Innovation. The variables are assessed on a numerical scale of 1 to 5, in which 5 signifies excellence in performance, and 1 is a poor score which indicates a great amount of improvement needed.  We concluded that in order for any corporation to be one of best practice, the company must achieve perfect scores of 5’s for all five variables, with an exception of a two 4s.Through our analysis and application of this numerical rating system, HP’s performance variables earned the following scores:

HP’s decrease in customer satisfaction and loyalty earned them a score of 3. Despite Meg Whitman’s positive outlook on stability in the future, the corporations’ obvious lack of leadership consistency, seen through the corporations four appointed CEO’s in the past 10 years, earned them a 2.5 score. In regards to stimulating the employee environment, HP currently has many encouraging programs and diversity focused events, as well as efforts to rid the company of a gender gap, which earn them a 3.5 score. The fact that revenue growth, dividend yield, and return on equity were all lower than the competitions scores as well as identifying revenue growth as negative this year earned HP a 2 for healthy finance. The undersupply of corporate spending on innovation through investments in research and development earned HP a 2.

After observing the above lack of outstanding scores on the judgment variables, the arrived outcome is that Hewlett-Packard is an improvement case. The company is not perfectly healthy and there are several techniques that should be taken in order to improve company performance concerning these critical business variables.

PHASE 2

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Scenario B: Analysis of ProblemsInnovation

HP is not unique, they should be more innovative in order to become a market leader and not a market follower. HP invests less money in R&D than its main competitors, so it needs to increase and accelerate R&D investments. HP needs to focus on more than creating new products, they should be innovative in all company divisions and also in the way the reach customers and employees. The difficulty for HP is that they need to catch up with the profits lost previous years, so an extra contribution is necessary. Poor presence in the tablet market and less investments due to restructuring last years haven’t done anything good for the company. They lost competitive advantage.  Customer ImageThe relationship between HP and its customers is below the company’s potential. The brand name HP is one of global recognition however, not one necessarily associated with instant intrigue and excitement in the eyes of the public. The corporation currently facilitates limited direct interaction between informed HP employees and their eager customers. This shortfall of communication and synergy leads to poor customer knowledge and comfort with products, services, and the brand itself. The improvement of customer image leads to stronger brand loyalty through the expansion of a dedicated customer following that would support HP’s actions and innovations. In a consumer world that is shifting away from purchasing technology from retail stores such as Best Buy and Staples, HP needs to gain a stronger position to sell its products to consumers and reach new customers.  

Employee Environment32.5% of the HP workforce is female. This number has gone down from 32.9% in 2009. It is important to have diversity in a company, as diversity leads to more creative ideas and open minds. Studies have shown that women in the workplace are more empathetic and spark more creativity in everyday tasks. HP has already taken some steps to narrowing this large gap such as offering a scholarship to women who major in and graduate with a degree in IT security. While this scholarship is a step in the right direction, HP needs to reach out to women who haven’t already decided on a career in technology.

Healthy FinanceHP has significantly lower profitability than its competitors. It is not getting enough money back to reinvest or payback in dividends for the amount that it put into its business. Part of the problem results from unstable management. Stable management creates shareholders’ trust, transparency and reliability. Without it, employees work inefficiently towards unclear and shifting goals. HP’s current strategy is not achieving acceptable profits and is not being executed well by HP’s employees. Since HP has many investment needs currently, its debt-equity ratio does not need to be fixed until it has extra profits.

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Scenario B: ImprovementsInnovation

Innovate Outside of Personal Computer MarketHP needs to invest in new products and research due to the slowing growth rate of the personal computer market and rapid technological change. Unfortunately, as of the 2013 SWOT analysis, 29% of HP’s income came from the PC systems division, especially focused on the sales of laptops. This market is expected to potentially decline in the near future. Also, the profit margins on PCs and other computer hardware are getting smaller and smaller, which means that their Personal Systems division becomes more of a weakness than a strength. Their failed attempt to enter the tablet market also means that they currently are not capable of successfully penetrating into that lucrative market which is dominated by competitors such as Apple and Samsung. Their competitors such as Apple, Dell, and Lenovo also create excellent laptops and tablets, making it difficult for HP to expand on its market share in the personal computers market. The company needs to focus on innovation because of the rapid technological change, and many industry professionals consider HP as being behind many of its competitors in terms of quality, price and technological advancement of some of the products.

Cloud Based ServicesHP should continue to focus on cloud based services, and potentially widen their market share. The company announced in May of 2014 that it will spend $1 billion over the next two years in research and development in this division. Currently, HP offers a wide variety of cloud services and appears to be doing fairly successful, however, IBM still beats the company in the eyes of the majority of businesses. This is a very rapidly growing market, expected to grow 22% each year through 2020. An IDC (International Data Corporation) survey of more than 400 enterprises indicated HP as one of the top 3 cloud service providers, along with IBM and Cisco. HP needs to continue investing in these successful services in order to keep up with technological change.

SproutHP’s newest product Sprout, which was released in the US November 9th 2014, contains a touch-sensitive mat which can project 3D interface objects. The computer costing $1899 is a multimedia station that has a built in projector and scanner. Use of your hands is crucial to moving objects around and creating art, modifying scanned objects, etc. It is a very unique and ambitious product that attempts to blend the physical and digital worlds, and was specifically designed for people to complete creative design projects. It is too early to determine if Sprout will be successful, but HP should continue to release creative products and services in order to stand out from the competition.

PHASE 3

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Scenario B: ImprovementsCustomer Image

One possible solution to improve HP’s image in the eyes of consumers is through the creation of Hewlett-Packard brand retail stores. At these locations, HP could create a forum to display all of the products and services they offer, while building a stronger connection with the consumer market. These stores would provide a personalized setting for the corporation to show off product benefits and initiate hands-on interactions in a positively controlled environment. HP currently has weak control over its retail sales, through the use of medium vendors such as Best Buy and Staples. In an HP merchandise shop, the consumer would have the ability to compare HP products with other HP products, which is not the case in retail stores such as Best Buy where products are compared with their competition’s offerings that are striving to fulfill the same customer need.Potential HP brick and mortar buildings would offer consumers a setting to connect with an HP specialist “in house” where they could help customers to decide which products would best suit their merchandise wants and needs, while answering any questions they have, and resolving any issues or concerns. Employees could teach the basics and make the experience with HP creations as simple as possible. Even in the case where companies design products that are simple to use, the wide range of desired use of technological goods frequently creates complexity. Due to this fact, consumers may need some occasional handholding.

These locations would also generate demand for products through customers seeing new creations and interacting with them to learn benefits that they were unaware of prior to demonstrations. These stores improve brand image and a corporation’s relationship with new as well as repeating customers. “Customers shouldn’t think of your business as a place to buy a product or service. It should be a fun place to be!” – Richard Branson

One of HP’s main competitors, Apple Inc., has had great success with its own retail stores. In 2009, when retail sales declined around 2%. Apple’s retail sales rose roughly 7%. In 2010, Apple’s about 15% of its revenues of $76.3 billion, compared to the overall retail industry’s sales growth of 4.5%. The stores provide a chance for staff to present a solution for the customer to take home today. The Apple retail store is the most profitable store on the planet, with the Average store generating $5600 per square foot and attracting more than 20,000 visitors per week. You don’t simply go to an Apple store to pick out your computer; you go to pick out your Mac. “The [Apple Store] staff isn’t focused on selling stuff. It’s focused on building relationships and trying to make people’s lives better” – Ron Johnson former Apple Senior VP of Retail

HP should implement this technique to put a spotlight on their strengths, which are their products. The tech-giant should open up a select amount of their own retail stores across the globe to distribute products and expand brand loyalty and excitement of consumers.

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Scenario B: ImprovementsEmployee Environment

High School PartnershipIn addition to reaching out to college age women, HP should reach out to high school students. Many high schools are moving towards using technology in the classroom in order to teach the students. HP should partner with these schools and offer discounted or free products to these schools and students. Introducing HP products to the students would benefit the company by spreading awareness of their product and also spreading awareness of their company. HP should visit the schools they have aided and give talks to the students about the importance of women working in the field of technology. This would encourage more females to go into the field, which would increase the number of women applying for technology jobs, thus giving HP more opportunities to hire women in the coming years.

Club OutreachHP needs to reach out to women at a young age. Many schools have Women in Technology clubs, which encourage young women to enter the technology field and work for technology companies. HP should reach out to these clubs, and offer presentations to the young women about their company. This would attract females to apply to HP when they are looking for a job.

Career FairsAnother way HP should reach out to graduating females is by going to college career fairs. HP may not be able to go to a fair at every college, so they would need to target schools with high percentages of women in technology majors. This would encourage more women to apply to HP when they are looking for a job after graduation.

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Scenario B: ImprovementsHealthy Finance

SolutionsProfitability may be enlarged by increasing sales, decreasing costs, and making the whole company run smoother. These solutions focus on making HP run smoother. The company’s leadership has been characterized by a great deal of change that needs to be stabilized to aid profitability. Meg Whitman and Dion Weisler will each lead the newly formed HP Enterprise and HP Inc. respectively, and HP must remain consistent with this leadership. . Stable leadership in line with clear goals will enable and empower employees to work harder and more effectively. HP can get more return on the equity invested in them this way. Whitman has a plan to bring employees back to the office where they will be close to their supervisors and in addition feel personally responsible for the company. Employees and team members need to be present to absorb the new direction of the company and feel like they are integrated with the change.The strategy HP employs needs to be rethought. To increase profitability, HP should focus more on its leadership style and ability to communicate its strategy to its employees. Weisler could have a blog that employees could follow to stay up to date on the company’s strategy. Whitman has already given the example of starting up a blog. They could both post a weekly video so employees would feel informed about where the company was going and any changes that would be happening. Knowing why procedures are being changed will make it easier to adopt new changes. Every six months they could also send out a questionnaire asking how employees would improve the company. HP has a vast force of bright minds that it should be fully utilizing.

Evaluation of Solutions:After HP has gone through so much leadership change, it is time for some stability. Constantly having new leaders with new views and ideas is harmful to a company because employees will struggle to keep up with what their current objectives should be. It is hard to aim at a target that is continually shifting. However, this solution is not perfect. Having one leader will not solve all of HP’s problems. The future cannot be predicted and if a leader is harming the company, it may be worth it to break the stability to remove them.Increasing sales and cutting cost is important, but to achieve success it is necessary to have a strong company. Simply cutting one cost will not increase a company’s long term profitability. Whitman’s solutions to profitability have flaws also. It is easier to communicate to people in-person, but this proximity will not force the adoption of ideals. Additionally, eliminating the ability to work from home will cause some employees to quit and some customers to question why a tech company finds online communication ineffective for internal use.While communicating with employees is not the most direct or fastest way to address the profitability problem, it may be one of the most effective. HP has the resources and potential to thrive if it can operate at its full potential. A large number of capable people working towards the same goal with a strong strategy leads to remarkable results. HP can show these results by slowly increasing its profits every year, even if it is not by a large amount.

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Action PlanSetting GoalsThe action plan for HP focuses on the four problems we discussed before: Customer image, skills, gender gap in the employee environment and profitability. As an improvement case, we have created specific recommendations are given for each of these four problems. If HP wants to survive in a highly competitive environment they should consider introducing following recommendations.

InnovationHP should continue to innovate in cloud based services and introduce new products into the technological field. Each division will strive to release two new quality products by 2018. Focus in research and development is crucial to achieving this goal.

Customer ImageBy January 1, 2017 introduce 4 Hewlett-Packard brand domestic retail stores to improve communication with customers. Through these locations, HP specialists will focus on customer relationships and implement straightforward marketing in order to build a solid company image. HP will create a department within each store consisting of 3-4 specially trained experts forming a new customer assistance service named “HP made EZ.” These specialists will be easily accessible to help customers concerning both technical and instructional problems.

Gender gap in the Employee EnvironmentBy 2020 partner with 20 elementary schools, 20 middle schools, and 20 high schools to bring HP technology into the classroom through their products in order to instill a positive image of the company in a future market. This strategy will create relationships and foster the growth of diversity for HP. The corporation should recruit at colleges with a high percentage of female students in IT programs. As well as offer a new scholarship each year in a variety of technology fields.

Healthy FinanceHP should work to have positive revenue growth by the end of the fiscal year in 2016. This positive growth should continue in the years to follow to maintain long-term success and follow Meg Whitman’s vision.In order to build internal communication leading to increased profitability, Meg Whitman and Dion Weisler should release weekly videos informing the employees of any changes. Every six months they should distribute a survey to all employees asking for suggestions for the future and feedback on current predicaments and successes.

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ConclusionThe purpose of this group assignment for the ‘Introduction to Management’ course was to apply seen theories and concepts to a real company, in this case Hewlett Packard. After an accurate analysis, consisting of both financial and non-financial data, of Hewlett Packard and going thoroughly through the structure and the culture of this company, some final conclusions can be written.

The variables discussed: innovation, employee environment, management excellence, customer relationship and healthy finance make a company healthy. We decided to consider HP as an improvement case because of the lack of investments in these five variables. HP has to invest more in R&D and keep up with the competitors when creating new products or services. HP employees should be thrilled to work for an organization that has a lot of possibilities ahead, especially in the field of R&D. The management has to make sure that their employees aren’t demotivated because of constantly changing management, so HP managers have to guard the management continuity. Satisfied consumers who are willing to buy HP products and to use HP services make sure that the company can continue to exist and expand.

HP grows because of these consumers and in this way is able to reach a healthy financial state, which is important with regards to attracting new investors. The money from these investors can be spent on R&D and so the process starts again. It is important for HP to be convinced that each variable affects the other one and if one isn’t performed well it is difficult to be excellent in the others.

We defined HP as an improvement case, rather than a best practice case. Four specific problems within the company were found. These problems integrate all of the five variables and are the basis of the final action plan HP should consider to apply. Skills, customer image, gender gap and profitability are domains HP has to work on in the future. HP should try to change, whilst carefully evaluating these changes so unnecessary stress is not added to the organization. It is important to have on-going correspondence with feedback and iteration to adopt new views and create accountability. Only with change can HP reach more profitability and improve its skills. Fortunately HP has a CEO, Meg Whitman, who understands the new way of thinking that HP needs: “When it comes to speaking with customers, I want to know the good, the bad and the ugly. If we’re performing well, I want to know how we can replicate it across the company. If we’re falling down, I want to hear about it so we can fix the problem immediately. And if we lose a deal, I want to learn where we came up short so it doesn’t happen again”

In conclusion, HP is a company with a tough past but a bright future. They need to cement their good decisions and create new opportunities that will bring them closer to the competition and eventually surpass them.

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