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hp case study "Strategic Analysis"
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CASE STUDY (HP)STRATEGIC ANALYSIS OF
“HEWLETT PACKARD CORPORATION”
Contents • Introduction & history• Vision & mission• SWOT • Formulation (stage #1) Input EFE IFE CPM Matching SWOT IE MATRIX SPACE MATRIX BCG MATRIX GRAND MATRIX Decision QSPM • Implementation (stage # 2)• Evaluation stage (stage # 3)
Introduction
Strategic management is all about FormulationImplementation& evaluation of strategies So our project will revolve on these critical
parameters.
Strategic Management
Strategy Formulation– Input /action stage– Matching stage– Decision stage
Strategy ImplementationStrategy evaluation
STAGE # 1INTRODUCTION
Introduction of Hewlett Packard Corporation
Bill Hewlett & Dave Packard graduated in electrical engineering from STANFORD university in 1935.
The company originated in garage in nearby Palo Alto,California,USA during a fellowship in 1939 with initial capital investment of us $538
Hewlett Packard company commonly referred as ‘HP’ American multinational information technology corporation
headquartered in Palo Alto , California , USA Nearly in each country hp product lines include 01)personal computing devices 02)enterprise servers 03)related storage devices 04)diverse range of printers & imaging products Hp markets it’s products to household, small to medium size consumers
and enterprise directly as well as via online distribution
VISION & MISSION
• Vision statement “To view change in market as an opportunity to grow,
to use our profit and our ability to develop & produce innovative products , services and solutions that
satisfy emerging customers need”
• Mission Statement“To provide product, services and solution of highest
quality and deliver more value to our customers that earn their respect and loyalty ”
SWOT ANALYSISStrengths Weaknesses
Opportunities Threats
Brand name
Low debt
Wide range of innovative products
Developing of own hardware and software
Web technology used for product awareness & sale
Lack of in-house management consulting division
Intellectual capital is underestimated
No aggressive investment in R & D
No good people retention policy
Expansion of retailed stores for customer convenience
Participation in joint venture
Make easy to use product for upcoming retirees
Computer and cell phone software & hardware
Competitor’s technology & pricing
low compatibility with non- HP product
Availability of substitute
Less global coverage than competitor
STAGE # 2 INPUT STAGE
IFE (INTERNAL FACTOR EVALUATION
MATRIX)
Key Internal factorsKey Internal factors WeightWeight RatingRating Weighted Weighted ScoreScore
Strengths
Brand name
Low debt
Wide range of innovative products
Developing of own hardware and software
Web technology used for product awareness & sale
0.14
0.13
0.13
0.11
0.10
4
4
4
4
3
0.56
0.52
0.52
0.44
0.30
Weaknesses
Lack of in-house management consulting division
Intellectual capital is underestimated
No aggressive investment in R & D
No good people retention policy
0.10
0.08
0.11
0.10
1
2
2
2
0.10
0.16
0.22
0.20
Total 1.00 3.02
EFE (EXTERNAL FACTOR EVALUATION
MATRIX)
Key External factorsKey External factors WeightWeight RatingRating Weighted Weighted ScoreScore
Opportunity
Expansion of retailed stores for customer convenience
Participation in joint venture
Make easy to use product for upcoming retirees
Computer and cell phone software & hardware
0.11
0.20
0.09
0.12
3
3
2
4
0.33
0.60
0.18
0.48
Threat
Competitor’s technology & pricing
low compatibility with non- HP product
Availability of substitute
Less global coverage than competitor
0.14
0.13
0.10
0.11
4
3
4
2
0.56
0.39
0.40
0.22
Total 1.00 3.16
CPM(COMPETITIVE PROFILE MATRIX)
Critical success factorweight
HP DELL CANONRating Score Rating Score Rating Score
Innovation 0.11 2 0.22 4 0.44 3 0.33Management 0.08 3 0.24 4 0.32 2 0.16Technology 0.12 4 0.48 2 0.24 3 0.36Financial Position 0.10 4 0.40 3 0.30 2 0.20Market share 0.09 3 0.27 4 0.36 2 0.18Customer loyalty 0.10 4 0.40 3 0.30 2 0.20Brand name 0.11 2 0.22 4 0.44 3 0.33Pricing 0.11 4 0.44 3 0.33 2 0.22Product Quality 0.09 4 0.18 3 0.27 2 0.18Compatibility 0.10 2 0.20 3 0.30 4 0.40Promotion 0.08 3 0.24 2 0.16 4 0.32Total 1.00 3.29 3.46 2.88
STAGE # 3MATCHING STAGE
TOWS MATRIX
TOWS
MATRIX
Strengths - S
1. Brand name
2. Low debt
3. Wide range of innovative products
4. Developing of own hardware and software
5. Web technology used for product awareness & sale
Weakness – W
1. Lack of in-house management consulting division
2. Intellectual capital is underestimated
3. No aggressive investment in R & D
4. No good people retention policy
Opportunities – O
1. Expansion of retailed stores for customer convenience
2. Participation in joint venture
3. Make easy to use product for upcoming retirees
4. Computer and cell phone software & hardware
SO - strategies (S1, S3,O1,)
(must open new retail stores throughout the world to take advantage of financial strength) (S4, O3)
(develop easy pc and cell phone for old generation)
WO – strategies (W1,W5,O2)
(develop new HR policy in order to retain human capital by taking advantage or other firm management )
Threats - T
1. Competitor’s technology & pricing
2. low compatibility with non- HP product
3. Availability of substitute
4. Less global coverage than competitor
ST – strategies(S4, T1)
(developed low price and innovative pc & cell phone than competitors )(S5,T2)
(developed such hardware and software for computer & cell phone which are compatible with other companies software and accessories)
WT – strategies (W1,T1)
(give attention to management consulting division to have more focus on technology improvements)
Interpretation
Critical Region:“ST”
Managerial Decision:“Market development
Horizontal Integration”
SPACE (STRATEGIC POSITION & ACTION
EVALUATION MATRIX)
Internal Strategic Position External Strategic position
Financial Strengths (FS) Environmental Stability (ES)
Return on Investment
leverage
Working Capital
Liquidity
Price earning ratio
Total
Average
+5
+3
+4
+5
+4
+21
+4.2
Technological changes
Rate of Inflation
Price range of Competing products
Competitive pressure
Barriers to entry into market
Demand variability
Total
Average
-3
-2
-3
-5
-4
-2
-19
-3.17
Competitive Advantage (CA) Industry Strength (IS)
Market Share
Product Quality
Customer Loyalty
Technological know-how
Control over suppliers and distributors
Total
Average
-2
-3
-2
-2
-4
-13
-2.6
Growth Potential
Profit Potential
Financial Stability
Labor costTechnological know-how
Total
Average
+5
+5
+4
+3
+4
+21
+4.2
-6 -5 -4 -3 -2 -1 +1 +2 +3 +5 +6
+6
+5
+4
+3
+2
+1
-1
-2
-3
-4
-5
-6
AggressiveAggressiveConservativeConservative
CompetitiveCompetitiveDefensiveDefensive
ISISCACA
X-axis =CA + IS
= -2.6+(4.20)
= 1.60
Y-axis = FS + ES
= 4.2+(-3.17)
=1.03
FS
ES
According to the space matrix score HP falls in the “AGGRESSIVE quadrant” . Their strategies should be one of the following:
• Vertical and horizontal integration•Market penetration•Market development•Product development•Diversification
INTERPRETATION
BCG(BOSTON CONSULTANTING GROUP
MATRIX)
Table for BCG Matrix HP division
ID SEGMENTS REVENUE % PROFIT % GROWTH RATE %
MARKET SHRE %
A ESS 19 2 11 0.8
B HPS 17 20 8 0.1
C SOFTWARE 1.4 5 14 0.6
D IPG 29.2 30 8 0.8
E PSG 32 42 -10 0.7
F HPHS 2.2 2 -14 0.2
HP BCG Matrix
STARS C
A II D
Question Mark
I B
CASH COWS E
III
DOGS
IV F
Relative market share
Indu
stry
gro
wth
rate
High Medium Low 1.0 .50 0.0
High +20
Medium 0
Low - 20
IE (INTERNAL-EXTERNAL MATRIX)
i
HP
ii iii
iv v vi
vii viii ix
Strong 3.0 – 4.0 Average 2.0 – 2.99 Weak 1.0 – 1.992.03.04.0
IFE Total Weighted Score 3.02
1.0
2.0
3.0
Low
1.0 – 1.99
Medium
2.0 – 2.99
High
3.0 – 4.0
EFE
TOTA
L W
EIG
HTE
D S
CORE
3.1
6
INTERPRETATION
HP falls in first region of IE matrix and there main focus will be on “GROW AND BUILD” and they will mainly focus on strategies which are:
• Market development• Horizontal integration
GRAND STRATEGY MATRIX
Quadrant II Quadrant I
HP
Quadrant III
Quadrant IV
Slow market growth
Rapid market growth
Stro
ng c
ompe
titive
pos
ition
Wea
k co
mpe
titive
pos
ition
INTERPRETATION
HP has rapid market growth and strong competitive position so it falls in first quadrant and the most suitable strategies for HP are:
• Market development • Horizontal integration
STAGE # 4DECISION STAGE
QSPM(QUANTITATIVE STRATEGIC
PLANNING MATRIX)
Key Internal Factors HORIZONTAL INTEGRATION
MARKET DEVELOPEMNT
Strengths Weight AS TAS AS TAS
Brand name 0.14 3 0.42 4 0.56
Low debt 0.13 3 0.39 2 0.26
Wide range of innovative products 0.13 4 0.52 3 0.39
Developing of own hardware and software 0.11 4 0.44 3 0.33
Web technology used for product awareness and sale 0.10 2 0.20 3 0.30
Weaknesses
Lack of in-house management consulting division 0.10 2 0.20 3 0.30
Intellectual capital is underestimated 0.08 -- -- -- --
No aggressive investment in R & D 0.11 3 0.33 2 0.22
No good people retention policy 0.10 3 0.30 2 0.20
Total weight 1.00
Key External Factors HORIZONTAL INTEGRATION
MARKET DEVELOMENT
Opportunities weight AS TAS AS TAS
Expansion of retailed store for customer convenience 0.11 3 0.33 4 0.44
Participation in joint venture 0.20 4 0.80 2 0.40
Make easy to use product for upcoming retirees 0.09 3 0.27 2 0.18
Computer and cell phone software and hardware 0.12 3 0.36 2 0.24
Threats
Competitors technology and pricing 0.14 4 0.56 3 0.42
Low compatibility with non-HP product 0.13 3 0.39 2 0.26
Availability of substitutes 0.10 4 0.40 3 0.30
Less global coverage than competitors 0.11 3 0.33 2 0.22
Total weight 1.00
Total Attractive Score 6.24 5.02
INTERPRETATION
According to the total attractive score of QSPM HP should go for
“HORIZONTAL INTEGRATION”