This research proposal focuses on Hewlett-Packard Company, one of the biggest information technology corporations of the world and comes second after IBM. With a global presence in various fields such as computing, digital imaging, printing, the corporation also offers software programs and other related services. Hewlett-Packard Corporation (HP) is a principal seller of peripherals, desktop computers, servers, and various support services. Malone, through his article states that since 1983, the company has grown to incorporate 86,000 employees who contributed to sales of over $48 billion in 2009. The company also manufactures measurement, testing and medical equipment under a current manufacturing company, Agilent Technologies since 2000. Most of the company’s sales, over 50%, are made outside the United States of America and comprise of over 85% sales in computers and interrelated products. The culture, vision, and environment created by the co-founders are exceptionally much alive today and continually define Hewlett-Packard uniquely from the pack (Malone, pg. 40).
The Hewlett-Packard Company mission and vision statement is; “To provide products, services and solutions of the highest quality and deliver more value to our customers that earn their respect and loyalty, to achieve sufficient profit to finance our company growth, to grow by continually providing useful and significant products, to view change in the market as an opportunity to grow and to help HP employees share in the company’s success that they make possible and to provide people with employment opportunities based on performance” (Malone, 2007, pg. 40). Hewlett-Packard Company (HP) is a provider of technological solutions to consumers, businesses and institutions globally. The company’s products and services are evident in information technology equipments, personal computing and access devices, tablet personal computers, global services, imaging and printing. Product and service grouping comprise of notebooks, printing and multifunction, desktops and workstations, monitors and projectors, handheld devices, copiers and scanners, fax, digital photography, storage, servers, entertainment, networking, supplies and accessories and software products (Malone, pg. 40).
HP’s Macro Environment: PEST Analysis
Private ownership of corporations is a dominant system in the United States market, private and home businesses. These corporations are also allowed to decentralize decision making. Fortune on CNNMoney.com on March 22, 2010 reported that the free business system of the United States is made evident by the output and production of various private businesses. Statistics have it that approximately two-thirds of the largely American economic productivity is made possible by private businesses and individuals. It is only a third of the production that goes to the government. A critical look on a political platform, statistical division point out that consumers and private businesses have a more critical role in the business sector. Still, the government takes part in an important part of the country’s economy as well as the business sector by developing and enforcing various business-related laws which comprise of business and property right security as well as the ruling out of business practices that are alleged as unwarranted. The government also ensures that proper safety standards are put into place (Fortune on CNNMoney.com).
The United States economy is well thought-out as one of the leading in the globe. The businesses in the country are mainly market-oriented where most decisions and activities are developed by the people. This is evident from the annual acquisitions of the American consumers, which totals to over 5 trillion dollars on average every year. According to Fortune on CNNMoney.com, it states that approximately 80% of the total services and goods produced in the United States businesses are supported and purchased locally. The vigor of the United States economy is mostly accredited to its diverse and rich business segments. One of the most significant segments in the country is the industrialized industry. HP is essentially under the industrial machinery segment where computers, engines and other paraphernalia are created. This sector in fact accounts for 10.7% of the yearly total value from manufacturers (Fortune, 2010). This puts forward the capacity of the American to subsist high-quality standard of living. There are economic-related problems in the United States that could hinder the growth and strategic planning in the economy. One of the hindrances is the noteworthy level of joblessness rate in the country. In addition, it has been reported that that a sizeable proportion of young Americans do not graduate even after joining various institutions (FORTUNE on CNNMoney.com).
United States of America is the third most populated country and is estimated to have 296 million people (Fortune on CNNMoney.com) which entail a pluralistic society. This shows that the inhabitants of the country are extremely varied in terms of races, religions and nationalities. In addition to the existence of various minority groups, the multiplicity in the country can also be owed to influx of immigrant workers and open trade. The increase of immigrant employees puts forward the growing working segment of the country, which augments the need for technology and computers. Certain problems are evident in the employment sector. For instance, the wages paid to workers in some states have been found not to meet the minimum criterion. Sixteen states in the US offer wages higher than the minimum which is at least $5.15 per every hour. There are other 26 states that offer minimum wages founded on the national level. Kansas and Ohio on the other hand provide wages lower than the minimum, whereas six other states have not affected any state laws (Fortune on CNNMoney.com). The setback on gender-bias is also an incidence as female workers on average earn a smaller amount than 10 percent than their male counter-parts, undertaking same tasks and with similar level of education and training. (Microsoft Encarta Online Encyclopedia, 2005).
United States was the first country to use computer and internet in the world, therefore the society is highly adapted to the technology. Statistics have suggested that the employment sector is incessantly employing computers and related tools in their employment activities; this to a great extent contributed to the development of the computer industry. In addition, job opportunities for computer experts have doubled from 1996 until 2009. People have also got accustomed in employing the internet to pay bills, work, shop and reserve airline tickets. Recent statistics have showed that over 84 million Americans have access to the internet either at work or at home (Microsoft Encarta Online Encyclopedia, 2005).
From the information of the company’s large-scale environment, a number of strengths can be identified. One of which is the stability, both economically and politically, of the United States. With a first-class political situation, HP and other related companies’ policies will be supported and regulated by well-established business laws; this will encourage reasonable competition in the industry. In addition, as the country utilizes a decentralized process of decision-making between businesses, HP has the authorization to come up with policies that suits its available resources and needs. Apart from these, the result of the policies and production of HP will be concerted on the company bearing in mind that only a little part of its financial gains will be taken by the government (Fortune on CNNMoney.com ).This will enable HP to achieve fast returns on investments and get sufficient funds for development of other strategies. The data from the macro environment shows that potential success and growth are very probable. One suggestion is the presence of a great target market for HP, bearing in mind the United States high population.
Taking SWOT analysis as in Christensen, 2005 Hewlett-Packard’s analysis breaks down into the following:
In the computer and printer manufacturing industry, Hewlett-Packard has got a strong and a well established brand name. This strength is predominantly helpful in gaining new buyers, market positioning, and in growing profit margins.
HP has taken a majority of printer and computer market as compared to the competition. By use of the large market, the company can continue gaining profits and also acquire the capital to hold up its business strategies and project plans.
HP has made it in establishing key channels of distribution which enables it to promote its goods in the most successful way.
The company has got capital that enables it to preserve a large and professional workforce. Besides, it also has the competence to subdivide its workforce into functional departments where extremely skilled and talented professionals can be assigned. With such a workforce, HP can make sure that there is quality and speed in its production.
The company has been in business for many years. The many years of triumphant business processes has strengthened its ability to conquer past and also fresh challenges with tested and tried strategies. This competence has also allowed HP to bring in its new products and put into practice policies at the right place and time.
The company has got the capability of acquiring helpful customer information. However, because of the volume, the corporation is not able to evaluate all the important information. It is a must for Hp to put in place a team that will be responsible of sorting market details and constructing them into usable policies.
The company has experienced some times when it was unable to carry on steady growth.
The corporation can employ other means of distribution such as retailing on the internet, which can possibly augment its market access as well as its sales.
The continued use of computers and printers by home owners and workers in various offices, suggest that these devices will continue being in demand for many more years.
The capability of the corporation to get important consumer information enables it to come up with products based on the present consumer needs and preferences. This enables the corporation to come up with new products and also establish customer loyalty and satisfaction.
The printer and computer industries are both exceedingly competitive industries. In the computer manufacturing industry, key companies such as Dell, Compaq and IBM are some of the key companies manufacturing related products. On the other hand, Canon and Epson are examples of the key rivals of HP in the printer manufacturing.
A variety of marketing threats are also well thought-out as threats for the corporation. Although HP can employ any possible marketing approach, its consequence on the market can differ. These effects must be scrutinized comprehensively as it could to a great extent have an effect on the business upshot (Christensen, 2003).
HP’s Micro Environment: Porter’s Five Forces
Christensen, 2005 states the following porter’s five forces of micro environment which comprise of:
In porter’s model, rivalry is most significant and the strongest force. It provides the number and presence of other companies competing for each other’s economic benefits. There is a high level of rivalry in the HP’s environment due to the presence of many competing companies of almost equal sizes. Rivalry increases because of the insufficiency in service and product differentiation. HP competitors are also endeavoring to make moves that will enable them to increase market share hence sales. For example, in terms of retailing on the internet, IBM, Dell, and Compaq are some of the key companies putting in place similar business strategies while their target is the same market segments.
Threat of entrants depends highly on the there being factors referred to as barriers of entry. Mainly, barriers to entry could lead to an increase or a decrease of innovative businesses providing products that could compete with those being produced by the already existing companies. If the entrance barriers are high, threat on many entrants will be low because of the decreased probabilities of market share potential. Examples of barriers to entry comprise of trade restriction, government regulations, and inaccessibility of most important channels of distribution. For HP, entrant factor is quite low because operating such a business requires a substantial amount of capital to put up business, acquire the best professionals and technology for product development and marketing. Moreover, a new company will require time for it to flourish; Hp commenced business in 1939 and took many years before it could be a multibillion dollar company. Apart from time and capital, venturing in a competing business with HP can be an uphill task because of the strong brand preference and customer loyalty factors.
This aspect pertains to the power of buyers over the company. In HP, buyer’s power is reasonable. This evaluation is founded on the nature of buyer power sources of the company. For example, the buyer power for the company can be low down because the buyer concentration is low and product demand is high. These factors allow the company to control production levels and the prices of its products in the market. The available buyer sources are however off set by availability of many substitutes. Because of many competitors, services and products taken to consumers are not differentiated and this makes buyer power neither low down nor elevated for the HP customers.
The power of suppliers with HP is also reasonable. This is so for the reason that concentration of supplier for electronic components and parts is low. For production, the company can deal with other suppliers. Bearing in mind that HP is a key company, this will attract suppliers to supply goods to it. However, the management should bear in mind that healthy relationship with its suppliers is as important as the customers. So as not to have an effect on the superiority of its products, it is very important that the HP refrains from switching from one supplier to the next.
Computer and printer business is very competitive; HP is running in a business environment that has many key companies producing and offering the same services or products and so is their target markets. The consumers are therefore presented with many product options hence the high level of substitutes for HP (Christensen, 2005).
This environment clearly presents HP’s difficulty, which is powerful competition. In addition to HP’s competitors, its competitors are key companies who are also able to put in place similar marketing strategies. Resemblance of the companies’ intended markets worsens the competition further and also the level of substitute. This problem makes it difficult for HP to be unique in the market and even if it so does, the constructive impact may not be so great. Again, the intensity of competition for HP can enable it to come up with unique and improved products to make better its marketing position. However, running of an IT company calls for pertinent resources such as capital, loyalty, time and brand inclination that cannot come so easily to potential rivals. Another suggestion by the micro environment of the company makes a suggestion that the company should be supported by good relationship with stakeholders. In choosing a marketing strategy for instance, the company should come up with strategies that will encourage ease amongst the consumers; its message should mainly be about products’ benefits and use. Excellent working relationships with the suppliers should also be sustained so as to guarantee excellence in production. In this case, HP will be at a position to develop quality products and advance it successfully to involved consumers.
SWOT analysis indicates that HP’s strengths are fundamentally consequential of two major sources: experience and human/financial resources. It is through these strengths, that the corporation is able to produce quality products that can be taken to the market effectively. The corporation’s long presence and experience in the printer and computer industry have enabled it to acquire a strong hold of these products market. The access to these sources makes a suggestion that the corporation is able to bring onboard successfully most of the marketing strategies.
However, there are still hindrances. The greater than before competition between companies and the likelihood of bringing on board similar approaches decrease HP’s chance of distributing its products efficiently to the market. While policies such as retailing on the internet can be of help to HP, it is most likely that returns on investment will take some time since other corporations will be employing the same tactics. In order to concentrate on this, it is possibly very important that HP employs a strategy that is not only cost effective but also unique.
Issues and problems
Based on various tools of analysis, certain issues and problems of the corporation have been highlighted. One of the key problems is the presence of several competitors in the industry. Although the corporation has access to innumerable marketing strategies, corporations employing parallel strategies can reduce their constructive effects.
The corporation should then put in place a marketing policy that will lead to the best results. So as to conquer these problems, HP then strategizes on dispensing its products and services online. While at the present, the corporation is by now doing business with major online retailers, there is also an opportunity to come up with a company’s direct online service. The corporation is then torn between whether this option merits the risk or must it just maximize on its current approach. In this case, the main question is whether the alteration of strategy is cost-effective one for the corporation. Regardless of the fact that the corporation has all it takes to support this approach, it is important that the corporation will attain the projected results from this venture. It is imperative that the capacity of the approach to surmount HP’s business interests is considered. In the format of questions by Christensen, 2003, is this strategy going to help HP dole out its products efficiently to the market? Will this triumph over competitors? Will it upshot to a quick return of investment? (Christensen, 2003).
Alternative Proposition and Evaluation
The basic aim of the company’s current approach is to advance its products and services distributing means. This approach will enable the company to defeat competition and increase profits. For this reason there are two potential alternatives. The company could either go on with its plan to distribute its products through the internet or it could just boost its present channels of distribution. In the first option, HP will come up with a company’s website where its products and services can be put on the market. In the site customers can be able to access various features of the products as well as their prices. Discounts and special offers can also are distributed in the website together with inquiries by means of an electronic mail which can be a feature in the website.
The second option is to focus on the accessible channels of distribution. Apart from key direct dealers of the company, HP has established rapport with mass merchants such Wal-Mart and Sears. All of these merchants have corporation website where they display products for those consumers who prefer to shop online. In such a case, rather than coming up with a completely new website for the company, HP can contract either of the distribution channels to display its products and services on the sites.
However, all these alternatives have their merits and demerits. Retailing on the internet in a customized website can be beneficial for the company as many people all over the world can access online shops with ease and websites wherever and at any time. Since the companies products are produced and with a popular brand, promotion of products online may not be difficult. Generally, businesses with more established and popular brand names stand greater chances of gaining from advantages of marketing in the internet. Apart from extended market access, the internet allows merchants to achieve direct contact with their consumers. This enables retailers to avoid many intermediaries before getting to the final consumers hence transactions are made quicker. Additionally, this technique helps in avoidance of particular go-between costs like delivery inventories and the maintenance of expensive retail shops. Constructing a new website may be disadvantageous. This is because of the expenditure needed for its development and maintenance. Furthermore, problems like consumer protection and internet security may hinder the success of such a strategy.
According to Christensen, 1997, carrying on retailing through many retailers is of added advantage because, fewer company resources are allocated. The company doesn’t have the responsibility of allotting time, workforce and energy towards developing and maintaining the site. The unenthusiastic characteristic of this alternative however, is that it restricts the company’s direct access to the consumers. Buying of products is not between the company and the customer. Additionally, nearly all competitors have by now adopted this strategy. While this may be an experienced strategy, application of the strategy, may not tackle the endeavor of the company to prevail over competition (Christensen, 1997).
Recommendation and Implementation
Putting into consideration the scrutiny of the company’s string points and options, the first option appears to be the most recommendable. There are two main reasons for this decision: the company has got resources and abilities to design its own website, with the availability of capital, loyal customers, talented workforce and strong brand name, HP can access major elements for retailing in the internet through a website that is customized. The second explanation is that the corporation will gain from the alternative. As per the argument of Christensen, 2005, by putting into consideration the probable risks, implicated in coming up with a company website, it can be appropriate for HP to employ an approach that is dissimilar from its key rivals; therefore, this option will help the corporation its objectives of conquering business rivalry. As the company’s main markets are able to access the internet, the corporation will be able to perk up its means of product delivery as well as augment its market growth. The micro environment, macro environment, and the company analysis for HP have indicated that in order for it to conquer its key sources of threats, distinctive and cost effective business strategies should be put in place. The first option is then suggested as it responds to these needs (Christensen, 2005).
To conclude, these capabilities, resources and the business environment of the corporation, can all contribute towards effectiveness of putting into practice internet vending by the corporation. The corporation should come up with a project design for this approach. Significant wherewithal’s that will serve up as the structure of the approach should be organized. It is also recommended that the corporation comes up with an examination system, which will frequently appraise the strategy’s advancement. This will be supportive for identifying troubles ahead of time as well as in putting into practice policy improvements or changes.
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