Overview of the Company.docx

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Overview of the Company

Hewlett Packard is the world‘s leading producer of test and measurement instruments and the

world‘s third largest computer company. It has become a major player in the personal computer market,

and at in a 1999 survey was the sixth biggest in terms of market share, having moved up from fourteenth

largest in 1992. It is also the second largest player in the computer workstations market, and holds the

dominant position in the laser printer business.

The company was the only major computer manufacturer which remained profitable during the

recession. The corporation employs 96,200 staff worldwide, of which 20,200 are employed in Europe and

2,000 in the UK (in the UK Computer Systems Organization). Underpinning the Hewlett Packard culture is

the HP Way, developed by founders Bill Hewlett and Dave Packard, which emphasizes clearly stated and

agreed overall objectives but gives people the freedom to work towards these goals in ways they

determine best for their own areas of responsibility (1999).



The HP Way is probably best illustrated from a number of words and concepts extracted from

Hewlett Packard‘s own publications. These are love of the product, love of the customer, innovation,

quality, open communication, commitment to people, trust, confidence, informality, teamwork, sharing,

openness, autonomy, responsibility ( 2001).

Other pillars of the HP Way include an emphasis on selecting individuals on the basis of their

creativity and their enthusiasm, and the need for cooperation between organizational levels. A

sophisticated performance management process and clear organizational values, together with a single

status culture, has brought strong identification with the company on the part of employees.

Hewlett Packard breaks up units that grow beyond a certain benchmark. Hierarchy and status are

taboo. Even the company president only reluctantly took that title. Any ―perks‖ or status symbols are

immediately dispensed with. The plants are periodically polled anonymously to ensure that the company

lives up to its ideals (1992). The organization has traditionally had a decentralized structure, but with the

growth of the computer business a more centralized approach was taken to reflect the systems nature of

the business.



Background of the Case Study

Mark Hurd is credited to be one of the forerunners who tried to turn around a sprawling, billion

technology company, following years of lackluster performance. One year after he took the job as chief

executive officer at Hewlett Packard, following the forced departure of the flashy but flawed Carly Fiorina,

Mr. Hurd has started to revive the fortunes of a legendary Silicon Valley firm.

The new chief executive is an understated operations geek, the type of manager that excels at HP,

the epitome of an engineering-driven company. ―Vision without execution is nothing,‖ he says. ―Whenever

anyone asks me about vision, I get very nervous. You‘ve got to be able to tie it back to strategy; you‘ve

got to tie accountability to things.‖ Mr Hurd prefers to stand when he talks rather than sit; he wears crisply



knotted ties while his managers are allowed open-collared shirts. At 49 years old, his hair is cropped short

and every strand is perfectly in place, as one might expect from a man who spent the past 25 years

ascending the ranks of a century-old business in Dayton, Ohio called NCR—originally National Cash

Register.

When Mark Hurd joined Hewlett-Packard, what he found was a firm spread thin with many units

losing money and propped up by the sales of printer-ink cartridges. Its activities spanned both the

consumer and business market, selling everything from high-end software to flat-panel television screens.

Yet instead of shedding business units, Mr. Hurd has decided to (in his words) ―double down‖ on his bets,

and simply do more of the same, but better.

Over the past year he has reorganized HP into three main divisions: enterprise computing and

services; general tech hardware (such as PCs, handheld devices and the like); and imaging and printing.

The company hopes to capitalize on trends such as computing on the move, and the growing demand for

printing, including sophisticated commercial printing.



Clearly-defined corporate values, vision, and strategic planning are the key elements in the

remarkable growth achieved by Hewlett-Packard. For nearly half a century, revenue and earnings have

grown at a consistent rate of 20% per year, propelling HP from a small manufacturer to the ranks of the

leading multinationals (1997).

The first strength of Hewlett Packard‘s planning process is vision. Their strategic planning is

guided by a clear vision of what Hewlett-Packard is and where the company heading. This broad sense of

direction focuses the company‘s many product groups and divisions. It helps explain the sustained

success Hewlett Packard had since their inception.

This vision is communicated in several ways. In par t it reflects what they call the ―HP Way.‖ These

are a set of five values enunciated by their founders. They are: (1) trust and respect for individuals, (2)

commitment to high level achievement and contribution, (3) uncompromising integrity, (4) teamwork, and

(5) flexibility and innovation.



Hewlett Packard‘s planning is also guided by more specific long-range goals. These are called

Hoshins. Hoshin is a Japanese word meaning ―a shining piece of metal that points the direction,‖ in other

words –a compass (1997). These Hoshins are not hollow pronouncements. They‘re deeply felt business

objectives that cascade down through the organization. Each business unit translates the Hoshin into

terms that reflect its own mission.

The second strength of Hewlett-Packard‘s strategic planning is that it‘s decentralized.Hewlett-

Packard has nearly 112,000 employees in 110 nations. Their marketing reaches even more places.

Hewlett Packard sells over 87,000 products and services in 250 countries. No central office could

manage detailed projections for all these far-flung units, thus the need for decentralization. The results of

this decentralized approach have been impressive.

Their product divisions are fully functioning global businesses with their own research and

development, marketing, administration, sales and support. They form the nucleus of Hewlett-

Packard, and are the primary drivers of its growth and profitability. So Hewlett Packard‘s planning is multi -

business.



The third strength of Hewlett Packard‘s strategic planning process is that it emphasizes

innovation. This commitment shapes all the company‘s plans and their devotion to research and

development. And it‘s been one of the keys to the company‘s success in the rapidly changing world of

high technology.

The next and fourth strength of Hewlett Packard‘s planning process is that it is responsive to the

needs and expectations of their customers. This quality, like the others already mentioned, is crucial to

the company‘s success. The company believes that they will continue to grow only if they go beyond

simply satisfying the needs of their clients and work to delight them.

The fifth strength of strategic planning at Hewlett Packard is that it is constant. It‘s driven by the

calendar and by events. And this too has been a secret of the company‘s success. As a result of this

approach the company is always in a planning mode. Hewlett Packard reinforces this planning process by

measuring, at each stage, the progress made toward their objectives. They also reinforce this planning by

linking employee compensation — and other regular activity — to results.



Analysis and Discussion

In each and every line of business, the entrepreneurs compete with each other is the sale of their

products or services. Thus, we can see that competition is basic in a system. This is seen in the case of

Hewlett Packard. The institution of free public enterprise implies freedom on the part of any entrepreneur

to enter any field of business and to compete with those already established therein for the favor of the

buyers in the market.

Competition is a risk that the company has to face. What the company needed to do was to

implement the right strategies to be able to overcome this competition. In the case of Carly Fiorina, she

wasn‘t able to guide the company to overcome this risk, as well as many others.

Risk is always present in private enterprise. Of greatest importance is the risk of complete failure

– of bankruptcy – in which case the entrepreneur stands to lose all of his investment. In the case of the

sole proprietorship or partnership he may possibly also lose his personal property and savings ( 2001).

This is one risk that a company would never want to face. All other risks that are not properly managed



would eventually lead to this. If Hewlett Packard was not able to make a good turnaround, it would have

started to go bankrupt, or at least one of its branches would have.

This risk is apt to be greater when a new business is being launched than after it is well

established. A similar danger exists, however, when an old concern fails to keep abreast of the times and

loses out to newer, more wide awake competitors (2001). Herein we see again the role of competition in

bringing a business up or down. And Mr. Hurd has brought Hewlett Packard up – from his reorganization

of the company to integration, this new chief executive has definitely played his cards right.

At all times a firm must be aware of the risks that are inherent in competition – chances for loss

through shifts in the price level, changes in style and fashion, and the appearance of substitutes on the

market that sometimes render present models obsolete. Consumers could switch from an ordinary printer

to a three-in-one printer although the ordinary printer is still a new one and has no defects. Also,

consumers could switch to a cheaper printer of another competing brand but with the same quality. There

is always a risk involved in the use of substitutes for materials formerly used.



The appearance of innovative competition in the past couple of decades has markedly enhanced

the risk aspects of entrepreneurship in all economic areas. Two other factors are noteworthy as

contributors to risk. These are automation, which involves the substitution of mechanical for human effort

with a frequently resulting reduction in cost; and electronic data processing through the use of computers,

which permits of the assembling and use of large amounts of vital information by management.

With the proliferation of technology-oriented businesses, it is appropriate to first take a look at the

distinguishing characteristics of this type of enterprise. First is the nature of technology itself, as an asset

of the business and also as a vital ingredient of the product delivered. The second characteristic relates to

the various options available for profitable utilization of the technology assets, and the role that these

options can play in the development of an effective strategy for the business ( 1998).

These two characteristics differentiate technology-driven businesses from others, such as retail

establishments, restaurants, various service providers, and so on. The failure to recognize these very real

differences can serve to limit the potential for success in these businesses. This is not so a problem with

Hewlett Packard as the company knows that it is a largely technologically driven company.



For those companies unable or unwilling to utilize either or both of these factors, the risk of falling

behind competitively may be serious. Good thing Hewlett Packard is already utilizing these. It is really a

must for companies to be technologically adept.

Technology is one of the most accessible assets available to the entrepreneur. In addition to the

obvious approach of inventing the technology oneself, there are many outside sources, such as other

businesses, colleges and universities, government agencies, and individuals.

There are also, it should be added, a multiplicity of methods for tracking down technology from

these other sources, including catalogs, trade shows, agents, and both for-profit and nonprofit institutions.

It is also worth noting that while these assets are not usually available on a no-cost basis, the financial

terms for access can be very attractive, with little or no up-front payment required in some cases (1998).

Probably the most common application of technological assets is to serve as the basis for the

captive manufacture of a product for sale. In some cases, this involves a new product; in others, it

involves a new, and presumably better, way of manufacturing an existing product. In either case,



commercialization of the technology will yield financial benefits, either through sales of a new product, in

the first instance, or through higher margins on sales of existing products, in the second instance. While

both may entail technological risk, the new product option will also involve market risk. Nevertheless, this

is the most common entrepreneurial approach to the commercialization of technological assets (1998).

Increases in technology have resulted in increased skill levels for some practices and processes,

and deskilling in others. At Hewlett Packard, engineers must move from repairing individual personal

computers and printers to working on networks, a significant jump in skill level (1999).

In an increasing number of instances, especially in this global economy, technological assets are

finding use as ―trading chips‖ in joint ventures or strategic alliances. Consider, for example, the case of an

entrepreneur seeking to utilize a new technology on a worldwide basis.

In one‘s home country the technology can be applied as discussed in the preceding paragraphs;

however, in an area of the world where the company does not now operate, the approach is considerably

more complex. One approach that has been taken by some entrepreneurs is to develop a joint venture



with an organization that already has a market position in the area in question. The technology owned by

the entrepreneur will serve as all or part of the equity contribution to the joint venture, and the partner‘s

market position will account for another portion of the equity in the venture. This, of course, is only one

example of joint ventures (JVs) or alliances wherein an effective business strategy entails the use of

technology instead of financial assets (2001).

Advances in technology have therefore dramatically altered the basis of competition in many

industries, most especially that which deals with technology. The rate of technological change –that is, the

introduction of new technology such as ‗personal computers, cellular phones, fibre optics, the Internet,

massive databases, LANs (local area networks), artificial intelligence, virtual reality, satellite transponders

and teleconferencing‘ –has shortened product life cycles and development cycles (1999).

This is so true in Hewlett Packard wherein products become obsolete only in a manner of

months. Consumers then are always looking for something new. What is bought six months ago could be

considered by the consumer as obsolete and therefore would need a new replacement. This is not

questionable since at the rate technology is driving change in our society, it is virtually everyday that new

products are invented.



The speed of technological diffusion –the rate at which technological information is absorbed into

the industry –is also increasing, encouraging copying and increased competition in the form of ‗me too‘

players. These issues have large implications for organizations which are technology-intensive, such as

Hewlett Packard.

In many large companies with diversified product lines, Hewlett-Packard included, the concept of

decentralization has been extended to the point where each product line becomes the basis of a more or

less semi-autonomous division. In such a situation the responsibility for designing, producing, and selling

its product line and of making a profit is given to the division management. The General Motors

Corporation, General Electric Company and IBM are just some of the companies that follow this practice.

The rationale behind this practice is that these companies have become too large and their

product line too varied for a centralized management to supervise satisfactorily. Each division therefore

acts as though it were an independent company.



All large companies, however, do not look with favor on such a practice of division within the

organization. Other large companies favor the adoption of a functional type of control structure. With this

sort of arrangement, a company‘s physical operations may be dispersed, but the managerial control for all

of its different operations is centralized. This means that a single sales force sells all of its different

products and manufacturing plants are directed from the home office.

Such an arrangement focuses the responsibility centering on the president of the company. In a

large company, this does not sound very good. This concentration of responsibility may overburden the

chief executive with supervisory duties, leaving him too little time for creative thinking and acting. It also

tends to create a shortage of potential managers because of the centralizing authority at the top.

What has contributed much to the success of Hewlett Packard when Mr. Hurd took over? Mainly

it is his decision making process that has helped the company survive and prosper despite increasing

competition. He all but made the right decisions for the company.



In the past few years a number of things have come into being that have brought the decision-

making process into a sharper focus. Form the purely mechanical side, the rapid and extensive

development of high-speed computers and data processing procedures have added immeasurably to the

quantity of information available to the executive (2001).

This would specifically enable Mr. Hurd to base his decisions on far greater amounts of relevant

data than ever before. By having vast amount of information regarding a certain matter, Mr. Hurd would

be able to analyze and pick the right choice, thus making correct decisions which are for the good of the

company.

The ability to make correct decisions in business has long been recognized as a prime attribute of

successful management and there is therefore a need for inquiry into the decision-making process. With

the growth of large corporations, with their vast resources in the areas of finance, productive capacity,

and manpower, and the increased tempo of competition, the possible consequences of unwise decisions,

both on the companies involved and on the economy generally, have served to focus attention on further

research and studies on the topic (2001).



Hewlett Packard is seen by practitioners and academics as a people management benchmark,

yet there are still concerns raised about integrating the rapidly changing business imperatives with the

human resource systems to create a measure of continuity and consistency (1999).

Hewlett Packard could be described as having a unique ‗cultured‘ soft model of human resource

management, in that HR considerations were an intrinsic part of the corporate strategy and management

style, rather than being grafted onto it. This created a situation where HRM permeated the culture of the

organization, and the whole way in which people operated, becoming ‗owned‘ by everyone, not the HR

function itself –‘the ownership of managing people and practicing the HP Way (which is already described

in the previous paragraphs) is a line management-owned function‘ (senior manager).

For instance, the Managing Director articulated the six key processes for the organization as

‗customer focus, planning process, order generation, product generation, order fulfillment, people

fulfillment‘. The emphasis placed in this model on development, fulfillment, and quality is indicative of the

soft model.



In Hewlett Packard, people considerations were seen as a fundamental component of the

business strategy itself. According to the case study, by making managers and the sales force more

accountable and by encouraging cross-selling, the firm has increased the amount of extra products it sells

alongside its hardware. The business strategy employed by Mr. Hurd focuses not only on processes but

on people as well. This proved to be suited well to the company and its employees.

An important factor concerning the implementation of performance management processes is the

degree of change the organization is undergoing and the experience of change the organization has had.

At Hewlett Packard, operating in the computer business for twenty-five years has given the firm a long

history of change management and a decentralized management style, which has resulted in a flexible

performance management system, able to cope with changing circumstances.

With this continuity and consistency, the expectations of employees remain relatively stable. The

enduring culture, exemplified by the HP Way, also provides continuity in terms of values which in turn

reinforce desired behaviours (1999).



A number of factors appear to have contributed to this turnaround that is happening to Hewlett

Packard under the management of Mr. Hurd. Apart from market changes, new product launches, and

cost-cutting measures, the level of bureaucracy within the company was also attacked. A company that

had been started by entrepreneurial engineers, advisers urged that it had become too centralized.

In addition, new ideas were being squashed if they appeared too unorthodox. Hewlett Packard‘s

response was to return to a decentralized structure that gave freedom back to the individual business

units. This decentralization arguably helped one business division to take off in business terms and

capture a significant proportion of a new product market ( 1999).

The achievements of an organization are the result of the combined efforts of each individual in

the organization working toward common objectives. These objectives should be realistic, should be

clearly understood by everyone in the organization, and should reflect the organization‘s basic character

and personality ( 1992). These sentences clearly mirror what is happening at Hewlett Packard under Mr.

Hurd as chief executive.



Conclusion

Organization means that management endeavors to achieve its objectives by directing the efforts

of the people under its supervision. This procedure is a necessity whether it be a large or a small

company. This has been taken seriously by Mr. Hurd as chief executive of Hewlett Packard. While the

success of a Hewlett Packard may be attributed to many other causes, the skills with which Mr. Hurd

directs and manages the organization is one of the major factors in the positive end result.

Probably the most foremost responsibility of management at all levels, but especially top

management – that of Mr. Hurd, is the making of decisions. In many, if not most, instances, the decisions

that chief executive officers have involve the making of choices between two or more alternative courses

of action. The company therefore rests on whether Mr. Hurd will choose the right decision or not.

Thankfully, Mr. Hurd has enough experience and perhaps plenty of references that enabled him to make

the right decisions and helping Hewlett Packard succeed.

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Overview of the Company.docx