Overview of the Strategy of Hewlett Packard

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Hewlett Packard which has $3.5 billion annual R&D provides technology for business and individuals. This way Hewlett Packard can attract more customers and serve them and enter new markets. HP provides customers with intuitive, quality products and services that are environmentally safe and to undertake their operations in an environmentally conscience manner. HP strives to provide diverse array of affordable computer technologies, and continue their company motto :"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." -Dave Packard

Vision, Mission, and Objectives

Customer loyalty - To provide products, services and solutions of the highest quality and deliver more value to HP customers that earns their respect and loyalty. HP's success is dependent on increasing the loyalty of their customers. Listening closely to customers to fully understand what it is they need, then delivering solutions that translate into customer happiness. This is essential to earn customer loyalty. Competitive total cost of ownership, quality, inventiveness, and the way HP does business drives customer loyalty.

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Profit - HP's goal is to achieve sufficient profit to finance Hewlett Packard company growth, create value for HP shareholders and provide the resources HP needs to achieve their other corporate objectives. Profit is the responsibility of all. Balance of long-term and short-term objectives is key to profitability. Profit allows HP to reinvest in new and business opportunities. Profit is highly connected to generating cash, which brings more flexibility to the business at a lower cost. Profit enables the achievement of HP's corporate objectives.

Market leadership - To grow by continually providing useful and significant products, services and solutions to markets that HP already serves and to expand into new areas that build on HP technologies, competencies and customer interests.

Growth- To view change in the market as an opportunity to grow; to use HP's profits and ability to develop and produce innovative products, services and solutions that satisfy emerging customer needs.

Employee commitment - To help HP employees share in the company's success that they make possible; to provide people with employment opportunities based on performance; to create with them a safe, exciting and inclusive work environment that values their diversity and recognizes individual contributions; and to help them gain a sense of satisfaction and accomplishment from their work.

Leadership capability -To develop leaders at every level who are accountable for achieving business results and exemplifying HP's values.

Global citizenship - Good citizenship is good business. HP lives up to their responsibility to society by being an economic, intellectual and social asset to each country and community that HP does business in.

Background and Industry

Bill Hewlett and Dave Packard founded HP in 1939. They knew each other from being fellow Stanford University classmates. The company's first product, built in a Palo Alto garage, was an audio oscillator. Believe it or not, one of HP's first customers was Walt Disney Studios. Disney purchased eight oscillators to develop and test a new sound system for the movie Fantasia. In World War II, the United States Government began having an interest in new technological products. What was a small interest grew into a huge necessity. The government's need for technology helped HP to build its first building and introduce new product lines. HP is incorporated on August 18, 1947. Dave is named president, and Bill vice president.

Hewlett-Packard starts to grow and mature as a company in the 1950s. At this time the company starts offering stock options to employees, something that is very unusual for the time. HP invents the high-speed frequency counter in 1951. Radio stations everywhere use the new frequency counter. The frequency counters will account for billions of dollars in revenues. In 1957 HP becomes a publicly traded company. The corporate objectives are also written at this time, as well as the move/setup of the HP headquarters at 1501 Page Mill Road San Francisco. In 1958 HP acquires its first company, the F.L. Moseley Company. In 1959 HP becomes a global company. The company also gets a foot in the European market.

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The Company makes the Fortune magazine's list of top 500 U.S. companies in 1962. In 1963 HP gets in the Asian market by forming its first joint venture, Yokogawa Hewlett-Packard, in Tokyo, Japan, with Yokogawa Electric Works. In 1964 HP celebrates its 25th anniversary and Dave Packard is elected CEO while chairman of the board, Bill Hewlett, is elected president. In 1966 HP Laboratories is established as the company's central research facility. HP Labs research includes solid state physics, physical electronics, electronics, and medical and chemical electronics instruments. The first HP computer (HP 2116A) is introduced in 1966 as well. The HP 2116A is the largest single mechanical package HP has built to date, and it marks HP's first use of integrated circuits. In 1968 HP develops the first desktop scientific calculator, the HP 9100A. The ads for the 9100A call it a personal computer, which is one of the first documented uses of the term. In 1969 Dave Packard is appointed U.S. Deputy Secretary of Defense. Bill Hewlett becomes CEO after Dave Packard resigns to serve his term in office.

In 1972 Dave Packard retires as Deputy Secretary of Defense, and is elected chairman of the board at HP. Bill Hewlett retains title of president and CEO. HP makes another breakthrough in 1972 with the world's first scientific handheld calculator (HP-35). 1974 marked HP's introduction of the first minicomputer to be based on 4K dynamic random access memory chips instead of magnetic cores. In 1977 Bill Hewlett retires as president but remains CEO. Dave Packard remains chairman of the board, and John Young is named president. Young was executive vice president responsible for HP's instrument, computer systems and components Groups at the time. Under his term as president, HP will grow to lead the computing industry. Bill retires as CEO in 1978. John Young succeeds him as CEO.

HP evolves into a major contributor to the computer industry in the 1980s. HP introduces its first personal computer (HP-85) and the first laser printer in 1980. In 1981 Hewlett Packard opens an office in Beijing, China in order to make their products available there. 1983 was the year that HP introduced the first HP touch screen personal computer (HP-150). The National Medal of Science is given to Bill Hewlett in this year as well. HP's first affordable personal printer was made available in 1984. The first high tech joint venture in China is created in 1985 by the formation of China Hewlett Packard. Bill Hewlett retires as vice chairman of the HP board of directors in 1987, and is named director emeritus. Also in 1987, the original garage rented by Dave Packard at 367 Addison Ave., is granted California state landmark status as California Registered Landmark No. 976. The company mass produces its first ink jet printer in 1988 (DeskJet printer). The company also gets its first out of country stock listing by making to the Tokyo stock exchange.

The 1990's marked significant advances in the portable computer industry, as well as in the home computer market. For most of this decade, HP had a growth rate of 20%. Around 1991, John Young retired and is replaced by Lew Platt. HP gains recognition as a company who actually cares about an employyees home life as well as job performance. HP make strides in helping the community as well. At the end of the 90's, HP splits its measurement and components businesses to form a new company, Agilent Technologies. Lew Platt retires at the end of the 90's, forcing HP to bring on a new CEO and President, Carleton (Carly) Fiorina. Fiorina focuses the company on preparing itself for growth and leadership in the next century. In the 90's the company focused its advertising on the all the inovations HP has made over the past decades. The company also introduces a new logo at this time.

At the beginning of the 21st century, HP focuses on reducing the cost of computer systems (or IT: Information Technologies) for business and improving the overall shopping experience consumers have with today's changing technology.

The most notible thing that happened for HP in the new century occurred on May 3, 2002, when HP completed its merger transaction with Compaq Computer Corp., the largest tech merger in history. "The new HP is a leading global provider of products, technologies, solutions and services to consumers and business. The company's offerings span IT infrastructure, personal computing and access devices, global services, and imaging and printing.

Products and/or Services

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Hewlett Packard provides computer, and computer related technologies for today's fast expanding business world. HP continues to better itself at serving top of the line technological products to their customers, and to make strives and innovations in new fields of technology as well. Below is a list of the current Hewlett Packard products and services.

Desktops & Workstations - Compaq Presario desktop Personal Computers, HP Pavilion desktop PCs, HP Media Center PCs , HP Pavilion Slimline PCs, and HP also provides smaller more cost effective PCs (like the Thin clients or Blade PCs) for business or home office use.

Notebooks & Tablet PCs - HP Pavilion notebook PCs (DV, ZD, ZE and ZV series), Compaq Presario notebook PCs (Integrated wireless features. Includes R and V series notebooks.) HP also has the Tablet notebook. This laptop is the ultimate in portability and versatility by actually adapting to the way you work.

Printing & Multifunction- In addition to providing top of the line PCs and notebooks, HP has an impressive line of printing products as well. The products include: Color inkjet printers, color laser jet printers, color multifunction printers, photo printers, black & white laser jet printers, black & white multifunction, mobile printers, large format printers, digital printing presses, print servers and network software, and even products servicing graphic arts solution and printing & imaging solution needs.

Calculators - HP offers calculators for any finance or business need. HP models include: 10bII, 12c, 12c platinum, 17bII+

Handhelds- HP offers handheld iPAQ pocket PCs for home/personal and business use. The models are to numerous to be listed here. Prices range from $200 to almost $700.

Monitors & Projectors- HP provides monitors for entertainment or business use. The two main models are the CRT model (a box like television box style monitor), or the flat liquid crystal display (LCD) monitor. Sizes and styles vary to preference. In addition to monitors for PCs, HP provides projectors for digital home cinema use and digital projectors more suited for business.

Fax, Copiers & Scanners- HP provides Home/Home office Fax machines ranging from $129.99 to $169.99. Fax machines more suited for business range from $99.99 to $169.99. Copiers for home use or business vary in price from $299.99 to $399.99. Scanners for business or home use vary from $79.99 to $1499.99. HP also offers large black and white multi function printers for office or corporation use. Prices vary from $199.99 to $9,999.00 and up.

Digital Photography - HP offers many different types of digital cameras. Prices vary from $129.99 to $349.99. HP also supplies quality photo printers from $99.00 to $449.00.

Entertainment -HP has an impressive array of televisions as well. Micro display televisions, plasma televisions, and LCD televisions are available. HP also provides entertainment systems such as HP Digital Entertainment Centers for home use, Entertainment notebook PCs (listed above), and iPAQ Pocket PCs (listed above). HP also provides DVD writers, as well as entertainment accessories for PC notebooks and Desktop PCs.

Storage - HP provides hundreds of storage products and services. Products vary from network and server storage, to internal/external and removable hard drives. HP also provides amazing technical support for each of these areas.

Servers -HP has many types of servers to suit their consumer's needs. HP ProLiant servers: (DL, ML, BL blades). HP Integrity servers: entry-class, mid range, superdome/high-end, HP integrity BL blades. HP Integrity Nonstop servers : HP 9000 servers, HP Alpha Server systems, Telco and carrier-grade servers, HP e3000 servers, and even provides information on their discontinued and retired systems

Supplies & Accessories - HP provides accessories for all printing, digital camera, and imaging needs. Accessories vary from: ink and toner cartridges, paper, printing materials, memory cards for digital cameras, and accessories for HP printers, fax, copiers, scanners, digital cameras, and digital projectors. HP also services also supplies accessories and options for PC computing products such as memory, monitors, networks/network accessories, and most software for all HP and Compaq PCs.

Networking - HP offers too many networking options and services to be listed here. HP has networking software and support for any home or business need. They can provide service for simple at home or small business networks, or more large scale networking with copper and/or fiber optic possibilities.

Software Products -HP provides many types of software that include: management software and solutions, server, storage, PC and workstation software, printing and imaging software, several different types of operating systems (such as Windows, Linux, ect), downloads directly from the website, and application development software.

HP provides products and services that meet the growing demand for technological superior technologies for both home and business use. HP continues to lead the way in the PC and printing industry, as well as breakthrough to new industry changing technologies.

Growth Strategy

HP is focused on three technology shifts:

Next-generation data center

mobile computing

printing and imaging

HP's history on its growth strategy is based on a mix between invention and innovation.

HP reiterated its forecast for fiscal 2007 a revenue of $97 billion. Forecast on its revenue will top $100 billion for the first time in fiscal 2008, with growth driven by its computer hardware and printing business and cost-cutting.The company has already cut more than 15,000 jobs this year.

HP saw fiscal 2008 operating profit margin of 4 percent to 5 percent in its personal systems group, and 14 percent to 15 percent in its imaging and printing segment. The company expects revenue to grow by 4 percent to 6 percent at both units.

HP has discussed in December the company's $3.6 billion annual R&D technology investment. Technology spending is aligned with the HP's growth strategy and that it positively impacts HP's bottom line.

HP's investment philosophy is to consider partnering with companies with whom HP can develop a strategic and/or technical relationship.

•Enterprise Servers, Storage, Management Software, Networking, and Services

Personal Computing Products

Imaging and Printing (including Entertainment and Digital Photography)

Types of investment relationships that typically will be considered are for:

•Acquisition

Joint Venture

Joint Development

Minority Equity Investment

Partnership

HP said it agreed to acquire Knightsbridge Solutions Holdings Corp., a services company specializing in the information management areas of business intelligence and data warehousing.Microsoft and HP plan to spend $300 million over the next three years in an expanded effort to jointly sell technology to large businesses.

In December 20th, HP announced that it has signed a definitive agreement to purchase Bitfone Corp., a privately held global software and services company that develops software solutions for mobile device management for the wireless industry.

The acquisition is part of HP's strategy to grow its mobile enterprise business. Mobile devices are increasingly becoming part of the core IT infrastructure and there is a growing requirement that they need to fit into existing management systems and frameworks. This acquisition provides HP the software tools to help business customers reduce device support costs and smooth device deployments, migration and replacement.

The Market

In relation to Hewlett Packard the market that they would be involved in would be the IT market. The IT market is expanding more and more each day with new upgrades becoming available to consumers. The whole world is experiencing a whirlwind of technological change. Most people feel the change each time they encounter a new consumer gadget, read about the possibility of human cloning, or observe children as young as six or seven socializing with their school friends via online instant messaging. There have been periods, such as the late 1800s, when new inventions appeared in society at a comparable rate. But the pace of change today, with its social, economic, and other impacts, is as significant and far reaching as at any other time in history. Technology is the process by which humans modify nature to meet their needs and wants.

Target market is the market segment to which a particular product is marketed. This can be done by gender, age, geographic location etc. In relation to Hewlett Packard they would have a huge target market. With almost every household now owning at least one personal computer it is clear to see that computers are quite popular in society today. Personal Computers can satisfy needs to a range of people/institutions.

The Following would be the target market:

Institutions such as schools and colleges are huge computer users, they are used for the internet, projects, looking up information, typing etc and therefore would be part of the target market.

Businesses are heavy users of computers, computers are very important to businesses as they can use them for a number of reasons such as for storing important files, making invoices, cash flow statements even having meetings through the computers. They also use them as a method of advertising.

People at home may use them for personal use such as checking their e-mails, booking holidays, children doing their homework. people over 60 years of age are also very familiar with the use of computers.

As time goes on it is becoming more apparent that people are becoming more and more involved with computers every day. Internet Cafes are being set up everywhere so there is computer access available everywhere you go. Therefore I would give as a conclusion that it is fair to say that it would be targeted to almost everyone.

Competitors

Hewlett Packard would have 2 main competitors, they would be Dell and Apple. Both of these are multimillion companies with huge production and sales levels. Dell is the world's largest mail-order computer seller. It was founded by Michael Dell in 1984, Dell Computer has built a reputation for delivering quality PC's at competitive prices. Dell is involved in building machines using less expensive standardized parts instead of developing their own far more expensive parts. Dell then uses these parts to drive their capability and to create standardized machines to lead them to be one of the leading competitors in the IT sector today. For a long time IBM were the only company who made computers then other companies joined the force to create a healthy market for computers. Dell have a competitive advantage in so far as specializing in cost control and also customer experience dell can offer you a package where you can basically make your own computer online it will show you the total cost. You can then order it online and then it will be delivered to you within a few weeks. This may appeal to a lot of consumers as it saves then the hassle of going to computer stores searching for the right laptop to suit their needs. they can choose exactly what they want/need in their laptop at their own ease on the internet.

The second competitors would be Apple. Apple Macintosh computers were first introduced in 1984. They are also one of the leading forces in the computer industry today and are characterized by their designs and applications base, built-in networking, graphics and multimedia capabilities. The company offers a range of personal computing products, including desktop computers, notebooks, related peripherals, software and networking and connectivity products. Where Apple really stands out and where it has a competitive advantage is in its marketing. The company simply seems to understand what will get people excited about its products, and then it executes on that vision. the company does not focus mainly on features or technology, but about how the computer will make your life better. Apple's design of computers are very elegant. Apple has done little things like putting the power button on the iMac into the screen, where it is both easy to access and provides an experience. if you look at the laptop hinges on the new PowerBooks and eBooks, you'll see the way screens should be attached to laptops. The screen opens out and down, minimizing the height of the open laptop and making it much more practical for airplane use.

Strengths:HP greatest strength is their position as the largest computer company in the world. They have reached markets in 160 countries. The HP management style has been regarded as one of the best in the world. This management structure has been with HP since its historical beginnings and has facilitated HP's phenomenal growth. HP's concern with employee well-being has created a corporate culture that promotes productivity, growth, and loyalty from their employees. HP's in-house research and development, called HP Labs is a valuable asset that has kept HP at the forefront of technology. HP has been exceptional at lowering costs while maintaining excellent quality. HP has a great strength in their name recognition. HP has been able to maintain the number one position in the personal printers industry since they revolutionized the market in the early 80's.

Weaknesses: There was some resistance by the Compaq Corporation's employees when it merged with HP. Rather than changing the entire culture Compaq was expected to adapt to the existing HP culture. HP's vision statement is very lacking. It doesn't offer any real future objectives nor does it communicate all of the accomplishments of HP in its past. HP's inventory turnover is below average and puts HP at risk of falling behind the competition. HP's ability to identify weaknesses is poor. It took a lot of searching to find weaknesses in the company. Most companies will publicly address their weaknesses and present a plan to compensate for them. This may be related to the style of management HP uses. Perhaps its too focused on what needs to be done to accomplish goals and not concerned enough on what needs to be done differently now.

Opportunities:Hewlett-Packard has a tremendous amount of opportunities in which to take advantage. First and foremost the merger between Compaq and HP is the largest of its kind, making the new HP the largest computer company in the world. HP's research and development facilities and technologies are state of the art. The company annually invests $4 billion on R&D of products, solutions and technologies alone. HP Labs' is a division or segment in HP's organizational structure in which all R&D activities take place. HP Labs' function is to deliver breakthrough technologies and to create business opportunities that go beyond HP's current strategies.

Hewlett-Packard has implemented a cost cutting strategy since the merger and in doing so the company forecasted a cost savings of $3 billion. That year the company had cost saving of $3.5 billion. HP's CEO, Carly Fiorina, says that the company is expected to cut an additional $1 billion from its supply chain. HP's business is gaining strength because of cost savings that exceeded expectations and large deals, including the sale of a Superdome server to the Chinese government, and a $3 billion, 10-year outsourcing agreement with Procter & Gamble. HP has also had a long working relationship with the U.S. armed forces.

Threats:HP's number one threat is its competitors. The technology and computer industry is characterized by fast market growth and short product life cycles and is plagued with products becoming obsolete over night. Among the strongest competitors in the industry are Dell Computer, IBM, Apple Computer, and Gateway, and all of them are looking for weaknesses in the new HP. These competitors are using price cutting, shortened product life cycles, and mass advertising and promotions to cut into HP's overwhelming market share. With this comes the threat of substitution and an intensifying rivalry among competitors.

Resistance from some top executives, manager and employees is a major concern for HP. Some of which never wanted to merger between the two giant computer companies to ever take place. The merger was opposed by the founding families of Hewlett-Packard, who argue that buying Compaq would dilute the HP brand and leave it with a large personal computer division. This created controversy within the company and led to some resistance from employees

Updated Financial Analysis

The financial outlook for Hp at the end of their 2001 fiscal year looked bleak; overall, revenues had fallen to $45,226,000. This was a lose in sales of over 3 million dollars predominately focused around their Product sector. At this time, HP's financial statements clearly illustrated a company that was battling a major economic recession as well as the fierce competition from its major competitors.

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Income Statement

Year ended October 31

In millions, except per share amounts

2003 2002 2001 2000

Net revenue:

Products $ 58,939 $ 45,969 $ 38,059 $ 41,653

Services 13,657 10,165 6,765 6,848

Financing income 465 454 402 369

Total net revenue 73,061 56,588 45,226 48,870

Costs and expenses:

Cost of products 43,689 34,189 28,824 30,343

Cost of services 9,959 7,414 4,688 4,470

Financing interest 209 189 236 233

Research and development 3,652 3,369 2,753 2,627

Selling, general and administrative 11,012 8,763 6,668 6,984

Amort. of purchased intangible assets 563 402 174 102

Restructuring charges 800 1,780 384 -

Acquisition-related charges 280 701 25 -

In-process research and development 1 793 35 86

Total costs and expenses 70,165 57,600 43,787 44,845

Earnings (loss) from operations 2,896 (1,012) 1,439 4,025

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Historical Results for Division

Dollars in millions 2003 2002 2001

Imaging and Printing Group

Net Revenue $22,623 $20,406 $19,492

Earnings $3,570 $3,346 $2,091

Personal Systems Group

Net Revenue $21,228 $14,706 $10,094

Earnings $19 ($241) ($157)

Enterprise Systems Group

Net Revenue $ 15,379 $ 11,146 $ 8,081

Earnings $ (54) $ (656) $ 78

HP Services

Net Revenue $ 12,305 $ 9,010 $ 6,114

Earnings $ 1,372 $ 891 $ 609

HP Financial Services

Net Revenue $ 1,921 $ 1,707 $ 1,453

Earnings $ 79 $ (134) $ (169)

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Top Competitors

Fiscal Year 2003

HP Cannon Dell IBM

Key Numbers

Net Revenue (in Millions of dollars) $73,061.00 $29,888.50 $41,444.00 $ 89,131.00

Sales Growth (one Year) 29% 22% 17.10% 9.80%

Net Income (In Millions of dollars) $ 2,896.00 $ 2,576.90 $ 2,645.00 $ 7,583.00

Employees 142,000 102,567 46,000 255,157

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES

Borrowings

Fiscal Year End 2003 2002 2001

Notes payable and short-term borrowings $ 1,080 $ 1,793 $ 9,121

Long-term debt 6,494 6,035 3,128

Total short- and long-term debt $ 7,574 $ 7,828 $ 12,249