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Hewlett Packard has the tradition to introduce the innovative products in IT and technological solution to their customer. Hp headquarter is situated in Palo Alto, California with large number of workforce of 156,000 employees. It is the one of the world's largest firm with great revenue of 91,658 million at the end of 2006 with increase of 5.7 percent as compare to 2005. Hp formed by the two people Bill Hewlett and Dave Packard in a garage with the investment of 538$. They use participative decision making management system in their organization, which gives them an edge in the industry. In 1957 the company went public and went for the other markets of the world for the expansion. In 1960 they launch their first computer HP2116A, at the end of 1990's they spin off its some operations and they try to reinvent the company by some acquisitions of some large companies the market. In 2002 the Hp completes its merger with Compaq computers and provides the great solutions of IT in the market and earns the revenue of 91.6 billion at the end of 2006. HP is the one of the largest company which is providing products like different technologies, software, solutions and different services to the consumers or to small and medium size business.
Dell was founded in 1983 by Michael Dell, an 18 year old college freshman from Texas who started out upgrading hard drives for IBM compatibles on nights and weekends. Within a year, his service business had grown to an incredible $6 million from performing computer upgrades for local area businesses and he dropped out of school to concentrate on the business. When Dell changed his strategy and started offering custom built-to-order machines, the business exploded, with $70 million in sales by the end of 1985. Evolving into an assembler company, Dell was able to exploit certain events occurring in the industry and swiftly adapted to meet market conditions. Five years later, total sales had grown to an unbelievable $500 million and Dell became nationally known as a supplier of state-of-the art desktop and portable computers. Dell continually achieved phenomenal records in sales and profit growth, eventually making it the most successful company ever in the PC industry, surpassing $25 billion in 2000. As one of the world's premier providers of computer products and services, Dell was the US market leader in its core products, the desktop and laptop markets by 2001
Dell Vision And Mission Statement
Michael Dell is the founder of Dell Inc. He started his business by simple built-to-order concept selling directly to customers. Later on he started direct sales by mail and phone. Dell is the first company to list a website. The profits dramatically increased when Dell started to sell its products through the website. collective commitment to our customers, directâ-ŠDell Effect relationships, global citizenship, team success and winning.
Dell's aim is to create loyal customers by providing superior experience at a great value. They are committed to direct relationships, providing best products with standard based technology outperforming the competition with value and a superior customer experience.
provide customers with superb value technology
high quality, relevant technology, customized systems
superior service and support, easy to buy, easy to use
Its the way we do business. It's the way we interact with the community. It's the way we interpret the world around us-- our
customers needs, the future of technology, and the global business climate. Whatever changes the future may bring our vision -- Dell Vision -- will be our guiding force.
So Dell needs full customer satisfaction. In order to become the most successful computer company, they need the newest technology and loyal customers.
. It's the way we interact with the community. It's the way we interpret the world around us- our customers needs, the future of technology, and the global business climate. Whatever changes the future may bring our vision - Dell Vision - will be our guiding force.
So Dell needs full customer satisfaction. In order to become the most successful computer company, they need the newest technology and loyal customers.
Dell's mission is to be the most successful Computer Company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of:
â€¢ Highest quality
â€¢ Leading technology
â€¢ Competitive pricing
â€¢ Individual and company accountability
â€¢ Best-in-class service and supportâ€¢ Flexible customization capability
â€¢ Superior corporate citizenshipâ€¢ Financial stability
Compare it with the HP:
Hewlett Packard has the tradition to introduce the innovative products in IT and technological solution to their customer. Hp headquarter is situated in Palo Alto, California with large number of workforce of 156,000 employees. It is the one of the world's largest firm with great revenue of 91,658 million at the end of 2006 with increase of 5.7 percent as compare to 2005.
Hp formed by the two people Bill Hewlett and Dave Packard in a garage with the investment of 538$. They use participative decision making management system in their organization, which gives them an edge in the industry. In 1957 the company went public and went for the other markets of the world for the expansion. In 1960 they launch their first computer HP2116A, at the end of 1990's they spin off its some operations and they try to reinvent the company by some acquisitions of some large companies the market.
In 2002 the Hp completes its merger with Compaq computers and provides the great solutions of IT in the market and earns the revenue of 91.6 billion at the end of 2006.
Compare Dell with HP
HP had a 28 percent increase in unit sale worldwide and 26 percent in U.S. whereas Dell had 6.2 percent worldwide and 14 percent in U.S market.
Now days china is one of the fastest computer markets. In recent years shipment of computers for china has increased by 10 percent and in china it is 21%. Recently Dell Inc. announce that they are offering a new computer with the price 335$, and they start it selling from china and after they expand their business to India and Brazil. In China's market the market leader is Lenovo, then Founder Technology Group Corporation and then Dell inc. so to cover the market of Asia HP is aggressively targeting these markets for their products, they reported that they earn 60% of it profit outside of U.S. they are also operating in the Europe but restructured their operations their twice they face failure in Germany and they are struggling in France and U.K.
HP vision Statement
"Our vision is to become the most recognized and leading computer company in the world."
HP Mission Statement
2. Products or services
5. Concern for survival, profitability, growth
8. Concern for public image
9. Concern for employees
Hewlett-Packard mission is to being the best in technology, software and solutions provider to consumers, small and medium businesses and public education sectors globally by providing superior products and services for businesses and personal consumers (1, 2, 8). We provide information technology systems to serve our customers more efficiently(4). We are dedicated to quality domestically and globally and consistency to maintain and gain customer loyalty (6, 3).We are dedicated to growth and profitability(5) by treating employees(9) in ways that create value to them.
Dell is the World's largest PC maker. Profits for the 3 months to July 2005 were in excess of $1 billion US, representing a growth of around 28%. For the last couple of years it has held its position as market leader (it took it from rivals Hewlett-Packard). The Dell brand is one of the best known and renowned computer brands in the World.
Dell cuts out the retailer and supplies directly to the customers. It uses information technology, and Customer Relationship Management (CRM) approaches to capture data on its loyal consumers. So a customer selects a generic PC model, and then adds items and upgrades until the PC is kitted out to the customer's own specification. Components are made by suppliers, never by Dell. PC's are assembled using relatively cheap labour. You can even keep track of your delivery by contacting customer services, based in India. The finished goods are then dropped off with the customer by courier. Dell has total command of the supply chain.
The company has such a huge range of products and components from many suppliers from a plethora of countries, that there is the occasional product recall that can cause Dell some embarrassment. In 2004 Dell had to recall 4.4 million laptop adapters because of a fear that they could overheat, causing electric shocks or fires.
Dell is a computer maker, not a compute manufacturer. It buys from a group of concentrated hi-tech component manufacturers. Whilst this is a tremendous advantage in terms of business operations, allowing Dell to focus on marketing and logistics, the company is reliant on a few large suppliers, and to an extent is locked in for periods of time (i.e. unable to switch supply dues to the lack of large suppliers in the World).
Kevin Rollins replaced Michael Dell in 2004 as Dell's Chief Executive Officer. Dell remained the company's Chairman. Despite founder Dell's massive success, new blood and a change in management thinking could lead the company into a new, even more profitable period. Dell was born in 1965, and founded Dell in 1984 with $1000 whilst studying at the University of Texas. He became the youngest Fortune 500 CEO in 1992, and will be a tough act to follow.
Dell is pursuing a diversification strategy by introducing many new products to its range. This initially has meant good such as peripherals including printers and toners, but now also included LCD televisions and other non-computing goods. So Dell compete against iPod and other consumer electronics brands.
Dell is making and selling low-cost, low-price computers to PC retailers in the United States. The PC's are unbranded and should not be recognised as being Dell when the consumer makes a purchase. Rebranding and rebadging for retailers, although a departure for Dell, gives the company new market segments to attack with the associated marketing costs.
The single biggest problem for Dell is the competitive rivalry that exists in the PC market globally. As with all profitable brands, retaliation from competitors and new entrants to the market pose potential threats. Dell sources from Far Eastern nations where labour costs remain low, but there is nothing stopping competitors doing the same - even sourcing the same or similar components from the same or similar suppliers. Remember, Dell is a PC maker, not a PC manufacturer.
Dell, being global in its marketing and operations, is exposed to fluctuations in the World currency markets. Although it is a very lean organization, orders do have to be placed some time ahead due to their size or value. Changes in exchange rates could leave the company exposed to potential loses in parts of its supply chain.
Hewlett-Packard's primary strength is its business position. The enterprise has a large amount of cash in hand about $10 billion.
Hewlett-Packard is a global enterprise and especially after its merger with Compaq, the company became world's biggest computer hardware and peripherals consort in the world and has ranked 20th in the Fortune 500 list.
Hewlett Packard is operating in more than 170 countries including both developed as well as under-developed.
Being a global dealer of computer hardware, it gives HP many advantages like dominating printers market, both laser and inkjet. The company attracts and focuses on consumers from even newly found markets all around the world, multinational corporations, non-governmental organizations etc.
The company compete both at local and international level. It has increased its competitiveness through policies and strategies that supports free-market economies. This is one of the reasons that make HP a leading supplier in the growing IT markets.
Hewlett Packard is said to have a complete product portfolio.
The company was in a long term debt for many years which kept it from investing in different growth opportunities.
A major problem and complaint about the hardware supplies of HP is its touch pads. The touch pads of the notebooks of Hewlett Packard like the dv series, dm3, and Envy lines needs improvement. These touch pads are either finicky, unreliable, or are difficult to use because of friction.
The mouse buttons on various HP supplied machines are said to be clumsy to use, too.Â Poor shelling life of HP products plagued some mainstream systems and net books.
When it comes to Software that HP provides there are also some weaknesses. Some heavy software's were paired with slow hardware like Touch Smart.
The past acquisition of Peregrine made the HP's portfolio even more diverse and complete but HP Open View's lack of mainframe management capabilities created several problems. Another weakness was that it did not yet hit a CMDB product that includes discovery and mapping. This cause many customers to switch the brand.
î€€Globalization in (PC's)
î€€Customized (Solution provider)
î€€Covering Major Market Sectors (public, education, Busiuness)
î€€Innovation (more towards mobile device)
î€€Related Diversification (software, web securities, printing)
î€€B2B selling (to Dell)
Intense competition from other PC manufacturers
î€€Short Product life Cycle
î€€High Switching Cost
î€€Frequent changing customer Demand and Behaviors
î€€Price war (ink cartridges)
î€€New viable competitors
î€€Increasing competition on imaging and printing
INTERNAL & External audit
Purpose of External Audit - DELL:
1. Customers value convenience and one stop shopping.
2. Customers know what they want and need to purchase.
3. Marketing on the Internet.
4. Need for replacement equipment from World Trade Center Attack.
5. US PC households with Internet access will increase 25% by 2002.
6. Some rivals weak in PCs in all the world's major markets.
7. Servers market can be tapped better.
1. Global economic recession.
2. Aggressive pricing wars.
3. Continuously changing consumer demands.
4. Strong brand name of competitors (IBM, Hewlett-Packard).
5. Rapid technological advancement.
6. A long-term slow down in global sales of PC's and servers.
7. Corporate customers and other large buyers decide to rely more and more heavily on the systems and service capabilities that IBM and Hewlett-Packard can provide and that Dell cannot
We got weight of 2.87 of External Factor Evaluation which show that performance of Hewlett Packard. It's clear that Hewlett Packard needs more focus on its performance for becoming real market leader.
Porter Five Forces: HP
Threat of entry of new competitors:
Companies like android are trying to beat Hp. So to remain in the market Hp will have to be continuously innovative. Android can be the potential competitor for Hp ipad.
î€€The threat of substitutes:
Hp has very few competitors. But they are the strongest companies of all. Apple is one of them. It has all together different products,efficient teams for every department.
î€€Bargaining power of buyers
Hp has a wide range of products. Also it has occupied a very large no. of people. So, there are not only few buyers who can dominate Hp prices.
î€€Bargaining power of sellers:
As explained above Hp has wide range of products and it is selling its products in nearly every part of the world there is not the dominance of sellers.
î€€The degree of rivalry between existing competitors :
Hp has a strong competition from all of its competitors. So, there exists some amount of rivalry.
Porter's Five Forces Model of DELL
Why do some businesses fail even though they have competent people and a great business plan? Porter suggests that the key to success in business is to be in the right industry. There are 5 forces that determine whether or not a certain industry is favourable and they are listed as follows:-
1) Threat of New Entrants:
Some industries are harder to enter than others.E.g. The Pharmaceutical industry, with all of its risks and high-price patents, is almost impossible for new firms to get in on the huge profit margins. A pizza shop has a very low barrier to entry - almost anyone with an oven and some pepperoni can start one.
For DELL Threat of New Entrants: MODERATE
Low capital investment for independent stores
Low product differentiation
Low economies of scale
No legal or governmental barriers
Decreasing profitability shows that there is a threat of new entrants
2)Bargaining Power of Suppliers:
Suppliers with low bargaining power are good for business.E.g. In the coffee industry, the growers have very low bargaining power. They are poor, fiercely competitive and usually rely heavily on their buyers.
For DELL Bargaining Power of Suppliers: HIGH
Large number of suppliers for components like hardware, keyboards, etc.
But two major inputs are monopolized
Microsoft standard for all PC's
Intel standard for most PC's
High switching costs
.3) Bargaining Power of Buyers:
Buyers with weak bargaining power are favorable. If you sell super-computers and you
have very few customers, those customers wield a lot of power. Sometimes losing one
sale can make or break the business. Another factor that affects buyer power is
differentiation. Commodities like oats or pulp for paper have strong buyers because it
makes no difference which supplier they choose.
For DELL Bargaining Power of Buyer: HIGH
Highly price sensitive
Reliability and customer service become important factors.Dell's products are
very reliable and customer service is outstanding.
4)Threat of Substitute Products:
A substitute product for butter is margarine. A substitute for sugar is aspartame.
This is a product that is not quite the same, but the customer can get the same
value from it.
For DELL Threat of Substitutes: LOW
Strong presence of PC's throughout society:
One computer for every three people in the U.S.
Only substitute for PC: Apple Computer.
However, high price, and lack of software support prevent people from switching
to Apple system.
5) Intensity of Rivalry among Competitors:
It is pretty obvious that it is unwise to enter an industry that is already hugely competitive. E.g. As a North American firm, is it smart to enter the running shoe manufacturing industry when you know that there are already many developing countries that can drive down their costs by paying their workers 26c an hour?
For DELL Rivalry: HIGH
Price War: Low Margin
However, in the midst of sever competition, Dell can still gain market share from other competitors. That proves Dell's business strategies have been successfu
Generate & Evaluate Strategies
Political : The political environment in the US has been changing abruptly in the previous year. Dell being anin t e g r a l part of this economy has also been greatly affected by these changes and has not been able to counter them. Changes in the legislation and laws of the US govt. have tried to revive the PC business but the reciprocations have been less then what was expected. The company has been able to beat the expectations of Wall street who predicted more dip by posting less losses by cutting costs. The conservatism that exists in the consumer spending has been increasing which has adversely affected Dell's performance. Issues of environment policies has also affected Dell as Dell came under significant pressure from environmental groups across the US to assume responsibility for its old products and this experience sensitized company officials to the risks and opportunities of state and federal e-waste regulations and the need to take proactive steps against them.
Economic : high tarrifs on IT products makes Dell difficult to enter other markets apart from USA. since most of the population of the world is young and adaptive to change in technology, dell aimed to manufacture its products which are more user friendly and can be afforded by young professionals, because purchasing power of working population saw an increase over the past few decades. Since the economy saw a change due to the meltdown and recession, dell also had to modify some of its policies to cope up with the changing scenario.The change in the US economy also effected Dell with it bring change in its core policies of inventory and credit management of receivables and inventory conversion days to decrease its operating cycle and thus reduce cost.
Social : Increase of younger population and working population have led to the increase of the use of computers.A technological revolution has been around the corner, people have become tech- savy ,that have resulted in the increase in the demand for computers .These days people have time constrains and as a result of it they prefer to buy the product online ,which has given Dell an advantage over others because of dell.com.
Technological : Tecnological changes are happening at a very fast rate due to which Dell is able to provide advanced technology products to the customers.As a result of technological changes Dell has also increased their product line.It is adopting to the technological changes as he old technology is becoming obsolete.One of the most important affets of technological changes that have led to the increase of the demand of Dell computers is their Direct Business Model.They have excellent e- commerce capabilities, which can be seen with the success of the dell.com . The recent technological changes can be seen in their recent products like New PowerEdge Servers, New Enterprise Computing Portfolio, Innovation Aids Recovery, Ultra-Thin Laptop, Adamo,which will be in the market very soon. Dell could exploit the network-internet,extranet to reach the corners of the world.
In case study there are no political issues available which affect the industry positively or negatively.
Economic Economic conditions of the country will defiantly threat for the industry like the lowering power of dollar and the global recession also influence the buying power of consumer so it will also affect the introduction and launching of new innovative products.
Social/Ecological Recycling of unwanted computers and printing supplies are have the positive affect on the industry because this act will reduce the wastage of raw material consumption and have the positive impact on the Environment.
Donation of used computers to National Christiana Foundation by HP is also crating the positive effect on the organization and this act shows that HP is also focusing on the corporate social responsibility. Financial services pays (FSP) companies for qualified computer equipment that no longer is need or wanted is also affect the HP socially and have positive impact on the organization.
Technology Technology is the most dynamic thing in the today's business Environment, these products have very short life cycle and need continuous improvement so HP should have intense research and development department to remain in the market and for the improvement.
Suggested Strategies for HP:
Based from the tools used for analysis, certain issues and problems of HP have been stressed. One of the major problems of the company is the presence of several competitors within the industry. Though the company has access to a myriad of marketing strategies, companies applying similar strategies can limit their positive effects. The company should then apply a marketing strategy that will give the best results. In order to overcome these problems, HP then plans to distribute its products online. While at resent, the company is already connected to major online retailers, there is also the opportunity to create a company direct online service. The company is then caught between whether this alternative is worth the risk or should it just optimize its current strategy. In this aspect, the main issue is whether the change of strategy is a cost- effective move for HP. Despite the fact that HP has the resources to support this strategy, it is essential that the company will gain the expected results from this investment. It is important that the ability of the strategy to overcome HP's business concerns is considered. Will the strategy help HP distribute its products effectively to the market? Will this overcome competitors? Will it result to fast return of investment?
â€¢HP should focus on Market development strategy and cover other geographical
area as well
â€¢HP should use Cost leadership strategy for Selling existing brands with decrease price in Asia pacific region because Hp has major market share in this region 21 percent market share in India and in China which is the becoming the world fastest growing market with growth rate of 21% .So by this strategy HP can create huge competition.
â€¢ HP should also use Forward integration by selling their product on web and minimize distribution channel to save profit.
â€¢ Start production in Asia with innovation
Suggest for Dell
Dell's Current Strategies:
â€¢ Dell currently pursues a cost leadership strategy by producing low-cost computers and selling them directly to the end user, thereby bypassing distributors and retailers and improving their profit margins.
â€¢ Dell is also now entering in the complimentary markets such as printers and servers in order to dent the competitors' market share in such markets?
It also uses built-to-order manufacturing to achieve rapid inventory turn over and reduce inventory levels.
â€¢ Dell uses different marketing and sales strategies according to the needs of specific customer groups
â€¢ Should look for Alliance-mergers and acquisitions that would bring synergic benefits for the company Reduce the attrition rate by Converting visitors into customers (people who visit the Dell site)
â€¢ Focus on developing nations
â€¢ Physical presence of Service centers would add value to their customer service
â€¢ Invest more in Research and Development.
â€¢ Reduce errors in Dell's direct Internet ordering system and create a "Clearance" area on its website
â€¢ Enhance customer support services
â€¢ Increase Company recognition through a national advertising campaign.
â€¢ Should not only depend on the internet sales, should give equal importance to retail stores. Though they have started with the retail selling but they should give equal importance to it as they give to online selling
â€¢ Build a variety of competencies (build core competencies into diverse product lines)
â€¢ Should focus on developing nations like India, China etc..
â€¢ Demand for laptops will increase in the coming future therefore they should try to exploit this situation
Financial Highlights for fiscal year 2010
Revenue - $52'902 million
Operating income - $2'172 million
Net income - $1'433 million
(Dell Inc., Form 10-K, 2010, p: 51)
Five years on, Dell Inc. is no more the global leader in PC market.
Dell's PC market share shrank from 12.7 percent to 12.1 percent in fiscal year ending
Hewlett-Packard is now the biggest PC seller in a global market with an 18.2 percent
No. 2 Acer saw its market share grow from 11.7 percent last year to 14.2 percent this year