Harvard Case - Hewlett-Packard: Creating, Running, and Growing an Enduring Company
"Hewlett-Packard: Creating, Running, and Growing an Enduring Company" Harvard business case study is written by H. Kent Bowen, Courtney Purrington. It deals with the challenges in the field of Entrepreneurship. The case study is 14 page(s) long and it was first published on : Dec 17, 1997
At Fern Fort University, we recommend that Hewlett-Packard (HP) pursue a strategic growth path focused on leveraging its core competencies in technology and analytics to capitalize on emerging markets and the growing demand for digital transformation solutions. This strategy involves a combination of organic growth, strategic acquisitions, and strategic partnerships to expand into new markets and develop innovative products and services.
2. Background
This case study focuses on Hewlett-Packard?s journey from its founding in 1939 to its evolution into a global technology giant. The case highlights the company?s strategic decisions, including mergers and acquisitions, international expansion, and product diversification, which shaped its growth and profitability. The case also explores the challenges HP faced, such as market competition, economic downturns, and changing consumer preferences.
The main protagonists of the case study are:
- David Packard and Bill Hewlett: The founders of HP, who established a strong culture of innovation and customer focus.
- Carly Fiorina: The CEO of HP from 1999 to 2005, who spearheaded the merger with Compaq and implemented a strategy of organizational restructuring.
- Mark Hurd: The CEO of HP from 2005 to 2010, who focused on cost-cutting and operational efficiency.
- Meg Whitman: The CEO of HP from 2011 to 2015, who led the company through a period of transformation and restructuring.
3. Analysis of the Case Study
This case study can be analyzed through the lens of Porter?s Five Forces framework, which helps assess the competitive landscape and identify opportunities for growth.
- Threat of new entrants: The technology industry is characterized by rapid innovation and low barriers to entry, posing a constant threat from new entrants.
- Bargaining power of buyers: Customers have a high bargaining power due to the availability of numerous alternatives and the increasing commoditization of certain products.
- Bargaining power of suppliers: The bargaining power of suppliers is moderate, as HP relies on a diverse supply chain.
- Threat of substitute products: The threat of substitutes is high, as technology is constantly evolving, leading to new products and services that can replace existing ones.
- Competitive rivalry: The competitive rivalry in the technology industry is intense, with major players like IBM, Dell, and Cisco vying for market share.
Financial analysis reveals that HP has historically been a profitable company with strong cash flow. However, the company has faced challenges in recent years due to declining PC sales and the rise of cloud computing.
Key financial metrics to consider:
- Revenue growth: HP?s revenue growth has been inconsistent, with periods of strong growth followed by periods of decline.
- Profitability: HP?s profitability has been impacted by factors such as competition, economic downturns, and the need to invest in new technologies.
- Cash flow: HP has consistently generated strong cash flow, which has been used to fund acquisitions, dividends, and share buybacks.
4. Recommendations
HP should implement the following recommendations to achieve sustainable growth:
- Focus on Emerging Markets: HP should capitalize on the rapid growth of emerging markets, particularly in Asia and Africa, by tailoring its products and services to meet the specific needs of these markets. This includes developing localized solutions, building strong partnerships, and investing in local talent.
- Invest in Digital Transformation Solutions: HP should invest in developing and acquiring innovative digital transformation solutions, such as cloud computing, data analytics, and cybersecurity. This will enable HP to cater to the growing demand for digital solutions across various industries.
- Strategic Acquisitions: HP should selectively pursue strategic acquisitions to expand its product portfolio, enter new markets, and acquire critical technologies. Acquisitions should be carefully evaluated based on their strategic fit, potential for synergies, and return on investment.
- Strategic Partnerships: HP should forge strategic partnerships with leading technology companies, startups, and research institutions to access cutting-edge technologies, expand its reach, and develop joint solutions.
- Optimize Operations and Cost Structure: HP should continue to optimize its operations and cost structure to improve efficiency and profitability. This includes streamlining processes, reducing redundancies, and leveraging technology to automate tasks.
- Enhance Customer Experience: HP should focus on enhancing the customer experience by providing personalized solutions, improving customer service, and building strong relationships.
5. Basis of Recommendations
These recommendations are based on the following factors:
- Core Competencies and Consistency with Mission: HP?s core competencies in technology and analytics align with the growing demand for digital transformation solutions. This strategy is consistent with HP?s mission to deliver innovative technology solutions that empower customers.
- External Customers and Internal Clients: The recommendations cater to the evolving needs of external customers, who are increasingly seeking digital solutions, while also empowering internal clients by providing them with the tools and resources they need to succeed.
- Competitors: The recommendations aim to differentiate HP from its competitors by focusing on emerging markets, investing in cutting-edge technologies, and building strong partnerships.
- Attractiveness ? Quantitative Measures: The recommendations are expected to generate positive returns on investment by expanding HP?s market reach, increasing revenue, and improving profitability.
Assumptions:
- The global economy will continue to grow, albeit at a slower pace than in the past.
- The demand for digital transformation solutions will continue to increase.
- HP will be able to successfully execute its strategic initiatives.
6. Conclusion
By focusing on emerging markets, investing in digital transformation solutions, and pursuing strategic acquisitions and partnerships, HP can position itself for sustainable growth and maintain its position as a leading technology company. This strategy will enable HP to capitalize on the evolving needs of its customers and thrive in the dynamic and competitive technology landscape.
7. Discussion
Alternatives not selected:
- Divesting non-core businesses: HP could have chosen to divest non-core businesses to focus on its core competencies. However, this could have resulted in a loss of revenue and market share.
- Focusing solely on organic growth: HP could have focused solely on organic growth, but this would have been a slower and less aggressive approach.
- Merging with another large technology company: HP could have considered merging with another large technology company to create a more powerful entity. However, this could have been a complex and risky undertaking.
Risks and Key Assumptions:
- Economic downturn: A global economic downturn could significantly impact HP?s growth prospects.
- Competition: Intense competition from other technology companies could erode HP?s market share.
- Technological disruption: Rapid technological advancements could render HP?s products and services obsolete.
Options Grid:
| Option | Pros | Cons |
|---|---|---|
| Focus on Emerging Markets | High growth potential, untapped market | Political instability, cultural differences |
| Invest in Digital Transformation Solutions | High demand, competitive advantage | High investment costs, rapid technological change |
| Strategic Acquisitions | Rapid market entry, access to new technologies | Integration challenges, potential for overpaying |
| Strategic Partnerships | Access to new technologies, shared resources | Dependence on partners, potential for conflicts |
| Optimize Operations and Cost Structure | Improved efficiency, increased profitability | Job losses, potential for reduced innovation |
| Enhance Customer Experience | Increased customer loyalty, improved brand reputation | High investment costs, potential for customer dissatisfaction |
8. Next Steps
HP should implement the recommendations outlined above through a phased approach:
Phase 1 (Year 1):
- Develop a detailed strategic plan outlining the specific initiatives to be undertaken.
- Allocate resources and establish key performance indicators (KPIs) to track progress.
- Begin exploring potential acquisition targets and strategic partnership opportunities.
Phase 2 (Year 2-3):
- Implement strategic acquisitions and partnerships.
- Develop and launch new digital transformation solutions.
- Expand into emerging markets through localized product offerings and partnerships.
Phase 3 (Year 4-5):
- Continuously monitor progress and adjust the strategy as needed.
- Focus on optimizing operations and enhancing customer experience.
- Leverage data analytics and insights to drive decision-making and improve performance.
By following these recommendations and taking a proactive approach to managing risks, HP can continue to create, run, and grow an enduring company in the ever-evolving technology landscape.
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Case Description
Traces the development of Hewlett-Packard Co. from a small start-up company in 1938 to a world-class manufacturer of electronic instruments and computer products. Examines the challenges of starting and running a small company, including financing, human resources management, product strategy, human relations, and management succession. The creation of a unique and enduring set of values and a philosophy of running and growing a company, known as the "HP Way," is emphasized.
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