Three Year Strategic Plan for Hewlett-Packard

BUS:402 Strategic Management & Business Policy

Three Year Strategic Plan

Executive Summary

Company History

When someone hears the name Hewlett-Packard, they automatically think computers, but initially, they did not start out making computers. Hewlett-Packard started “in 1939 when two classmates from Stanford University, Bill Hewlett and Dave Packard built a resistance-capacitance audio oscillator (HP 200A), an electronic instrument used to test sound equipment” (MarketLine, 2015, p. 7). Hewlett-Packard produced microwaves in 1943 and “entered the computer market in 1966 with the HP 2116A, which was designed to control HP’s product line of test and measurement equipment” (MarketLine, 2015, p. 7)., and the scientific calculator in 1970, but did not produce their first personal computer until the 1980s.Hewlett-Packard is headquartered in Palo Alto, California, and is a globalized organization with companies throughout the world. Their first customer for the purchase of the HP 200A was Walt Disney, who used it to test the sound system for the movie Fantasia. Hewlett-Packard “is a global provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses (SMBs) and large enterprises, including customers in the government, health and education sectors” (MarketLine, 2015, p. 3). Hewlett-Packard is a name that is recognized worldwide and used by many. Packard’s products consist of:ProductsSoftwareServicesEnterprise ServicesDesktopsApplication lifecycle managementAnalytics and data management servicesLaptopsBig data analyticsApplications servicesTabletsBusiness service managementBusiness process servicesPoint of sale desktopsEnterprise securityDatacenter, workload and cloud servicesDigital signageHybrid cloud managementEnterprise security servicesThin clientsIT services managementMobility and workplace servicesWorkstationsMobile solutionsOther industry solutionsPrintersSoftware-defined data centersMonitorsSupport servicesRoutersConsulting services:Datacenter care servicesBlade switchesInfrastructure consulting servicesProactive care servicesTransceiversCloud consulting servicesFoundation care servicesStorage devicesWorkplace and mobility consulting servicesLifecycle event servicesServersBig data consulting servicesFlexible capacity servicesOther accessoriesSecurity and assurance consulting servicesEducation and training servicesMarketLine (2015, p. 25-26)The 4Ps of Hewlett-Packard’s products list includes a variety of printers and computers. Their price “has a very in-depth product portfolio and hence, a very diverse pricing range in its marketing mix and follows fair pricing strategies. Newer products with the latest innovative technologies are priced at a premium, and as the competition enters, the prices are reduced gradually” (MBASkool, n.d., para. 2). Hewlett-Packard’s presence is worldwide, with services in more than 170 countries and sell their products directly and indirectly. Hewlett-Packard promotes its products using “different media like TV, newspapers, magazines, websites, billboards, etc. HP has a campaign called One Voice; this campaign was designed to resonate the image of HP as a one-stop solution to hardware and software needs” (HP Marketing Mix, .n.d., para. 7). Hewlett-Packard remains competitive, and by promoting their products and services worldwide, they remain in the top ranks of their competitors.

Mission Statement

Hewlett-Packard chooses to be unconventional when it comes to having a vision statement. Hewlett-Packard prefers “contributions from individuals at all levels of the organization— certainly in products and services, but also in policies, processes, and infrastructure.” Also, Hewlett-Packard decided that “backing people – often mavericks and gave them enormous power to succeed if they could demonstrate positive results. This unusual approach built an immensely loyal, dedicated, energized cadre of people, alert to new, paradigm-shifting opportunity. Furthermore, for a remarkably long time, the corporate structure allowed such creativity to get to the marketplace” (House & Price, 2009, p. 33).

Situational Analysis

Current Situation

The current situation of Hewlett-Packard is that they are one of the world’s leaders in the industry of computer hardware, computer software, IT services, and IT consulting. Hewlett-Packard’s revenue analysis states that the organization “generates revenues through seven business segments: Personal Systems (29.9% of the total revenues in FY2014), Enterprise Group (24.1%), Printing (20.4%), Enterprise Services (19.1%), Software (3.2%), HP Financial Services (3.1%), and Corporate Investments (0.3%)” (MarketLine, 2015, p. 27). Hewlett-Packard is doing well, and the general environmental analysis shows that Hewlett-Packard may lose their leading position in the market because of the threat of supplier power. “Suppliers can influence the price of Hewlett-Packard; therefore, Hewlett-Packard even can lose mark share. Recommendations founded to ensure a successful business are: Hewlett-Packard needs to be aware of the current exchange rate, so when the exchange rate is of favorable impact, this will result in a lower price abroad” (Senseofskin, 2019, para. 5).

SWOT Analysis

	SWOT Analysis
		Environment
		Opportunity	Threat
Company	Strength	Strong market positionStrong brand equityResearch and development	Product challengesChallenging competitorsEnvironment.Structural downturns.

	Weakness	“Strategic acquisition of Aruba Networks to strengthen HP’s position in the enterprise mobility market.Increasing adoption of cloud computing and big data servicesStrengthening AI PortfolioLaunch of smart devices to strengthen the company’s presence in mobile hardwareIndustry”	Declining revenues in significant markets.
		(MarketLine, 2015, p. 28)

The strengths of the swot analysis state that “HP is one of the largest technology companies in the world. The company serves close to one billion customers across 170 countries in the world. The company addresses more than 13 billion credit card transactions and 2.4 billion healthcare transactions per year” (MarketLine, 2015, p. 28). Because HP has such a formidable market position, this provides a reliable platform for continuous improvements, and the company presents an extensive portfolio of products and services that “include Personal Systems, Enterprise Group, Printing, Enterprise Services, and Software” (MarketLine, 2015, p. 29). Hewlett Packard also has an equitable stream of revenue across its segments and increase focus on research and development to strengthen its products and services portfolio.Weaknesses that Hewlett Packard suffer are a decline in revenue across the different segments; opportunities is that Hewlett Packard has a chance to strengthen their AI portfolio, launch smart devices in the mobile hardware industry as well as strengthen their presence in the mobility market. Acknowledging that Hewlett Packard can do well in other markets, some threats are being faced with the growing need to improve their business model, challenging competitors, the environment, and structural downturns.Areas of Hewlett Packard that has a specific need for change would be to increase their presence in the mobile market. Increasing their mobile presence can reach a broader market, as most everyone has a smartphone or tablet, and they are cheaper, smaller, portable, and Hewlett Packard can reach their target market as well extend their reach. Artificial Intelligence which is “the theory and development of computer systems able to perform tasks that normally require human intelligence, such as visual perception, speech recognition, decision-making, and translation between language” (Dictionary.com, n.d.) which is why Hewlett Packard has purchased the supercomputing pioneer Cray and “this portfolio will be further strengthened by leveraging Cray’s foundational technologies and adding complementary solutions” (Robinson, 2019, p. 29).

Environmental Scan and Porter’s 5 Forces

Utilizing Porter’s 5 Forces consist of :1). Rivalry among existing firms shows that rivalry continues, but H-P knows how to win, and “there is nothing new on the horizon from key competitors Dell or Lenovo that will change the dynamics of the rivalry. This force does not appear to drive the strategy.”2). The threat of new entrants shows that barriers are high, and “new entrants will receive huge investments in product design, inventory, marketing, and sales.”3). The threat of substitutes such as “smartphones and the number of “apps” available for them provides much of the functionality of a PC in a small, portable package.”4). Bargaining power of buyers make the industry prices fall when it is strong, so with “H-P’s ability to provide a complete, integrated system to businesses has weakened the bargaining power of its customers.”5). Bargaining power of suppliers when active makes industry cost rise and “H-P has been able to leverage the combined demand for electronic components of its PC, enterprise server and printer to push back on suppliers” (Randall, 2011, p. 13).

International Performance

Hewlett Packard is an organization that operates in the international marketplace. Cultural barriers exist in China as “one of the criticisms of HP China’s Knowledge Management (KM) practices is that these practices were not closely aligned with job-related activities” (Lu & Leung, 2006, p. 22) and some employees who knew information was not willing to share the information for fear of losing their jobs.Cultural barriers can affect the strategic considerations of HP’s organization by failing to adapt quickly and have a solid strategic plan in place. In order to succeed HP must “turn change into opportunity, live their values daily as it is not hard to make the right decisions if you live them daily, articulate a clear strategy, but the strategy itself should remain constant, a “north star” that guides all decisions, drive diversity and attract and energize good employees” (Weisler, 2016, para. 3).

Operational Planning

Financial Performance

Abraham (2012) acknowledges that “to assess the recent financial performance and current financial condition of the company, you need three to five years of historical financial data—income statements and balance sheets” (Ch. 5.1). Financial performance for Hewlett-Packard is with a spin-off company called Agilent lost revenue sales by 44%, but as of August 2018, “Agilent booked fiscal third-quarter revenues of $1.9 billion, 25% above last years. It also reported net income of 30 cents a share, or $100 million, vs. a loss of $1.6 billion in the same year-ago period — two cents ahead of the Street’s expectations” (Kharif, 2004, para. 2). Although Agilent had an increase in revenue, HP’s sales were not impressive, with only 9% year-over-year to 18.9 billion.

Operational Budget and Assessment

The operational budget for Hewlett-Packard is shown below:[Prior Quarter]Budget Projection Next Q Var +/- Var % RevenueSales Revenue 7,217,000,000 7,267,519,000-0.217%Interest Income-144,000,000-145,008,000 -0.217%Investment Income2,346,000,0002,362,422,000-0.217%Other Income-70,000-70,490 -0.217% TOTAL INCOME7,218,930,0007,269,462,510-0.217%[Prior Quarter]Budget Projection Next QVar +/-Var %Costs and ExpensesAdvertising 1,253,000,0001,261,771,000 -0.217%Health Insurance–Installation/Repair of Equipment 2.157.000,0002,172,099,000 -0.217%Inventory Purchases 2,216,000,0002,231,512,000 -0.217%Salaries–Supplies 2,624,000,0002,624,368,000 -0.217%Insurance–Rent/Lease Payments 293,000.000295.051,000 -0.217%Other Expenses– TOTAL EXPENSES NET PROFIT/LOSSNet Earnings Before Taxes (Gain or Loss) -265,000,000 -266,855,000-0.217%Income Tax Expense -238,000,000 -239,666,000-0.217%Net Earnings After Taxes -27,000,000 -27,189,000-0.217%[Prior Q]Proj. Q.ChangeRatio Analysis (Choose a minimum of two)Profitability Ratio (0.21)(0.10)(0.11)Liquidity Ratio 0.650.50 0.15Solvency Ratio Valuation Ratio Leverage Ratio

Strategic Goals: Core Strategies and Tactics

Strategic Goals

Abraham (2012) states that the “strategic-planning process and elaborates on the importance of involving the right people in the process” (Ch. 1.7). The strategic goals will consist of growing shareholder’s “value, grow earnings per share, increase revenue, manage cost, and maintain financial debt”, which can be achieved within the next 3-5 years.

Prioritized Core Strategies

The core strategies of Hewlett-Packard consist of protecting the core, capturing growth, and creating the future, which are HP’s three pillars of success. Hewlett-Packard protects and defends its core business by innovated products and solutions, which keeps HP relevant and drives customers’ demand. Growth “will not only impact innovation but significantly strengthen HP’s intellectual property portfolio” (HP, 2015, para. 7). Strategies are typically done within 3-5 years, which is what Hewlett-Packard is going to achieve.

Recommended Organizational Structure

Hewlett-Packard’s organizational structure starts a redesign, and this starts with a commitment to a total redesign, a clear strategic vision and supporting structural form which states an “Effective strategies combine an understanding of both the forces shaping the firm’s market and the unique resources and capabilities the firm has or can put together to create and maintain an effective market response” (Miles, 1995, p. 131) and organizational structure should include a managerial philosophy that facilitates redesign. Most redesigns fail because organizations to do not follow through or remain committed to the organizational redesign.

Recommended Marketing Positions

Marketing positions and opportunities for growth recommended for Hewlett-Packard will begin with “leadership development early as mindset must change along with a newly developed mission and culture— and engage the very top in this, taking advantage of pre-close energy and through a cleanroom environment, invest in culture due diligence to inform operations integration decisions early on, and employee engagement can begin right away even within anti-trust constraints” (Allen, 2012, 54). Hewlett Packard takes into account all relevant factors related to cost, and “it first undertakes thorough market research and estimates the amount that a consumer is willing to pay for the commodity. Then it makes that product in that price frame to suit its personal needs as well as the needs of the customers” (Bhasin, 2019, para. 12).

Measuring Success

When measuring the success of your organization, look at your business’s financial statements. When measuring the business’ success, there should be information showing how much money is being generated, check customer satisfaction, average how many new customers there are, conduct performance reviews, stay current on the market and assess the organization’s expectations.

References

Abraham, S. (2012). Strategic management for organizations. Retrieved from https://content.ashford.edu/

Allen, A. M. (2012). Culture Integration in a “Clean Room.” OD Practitioner, 44(3), 50–54. Retrieved from http://search.ebscohost.com.proxy-library.ashford.edu/login.aspx?direct=true&db=a9h&AN=77415373&site=eds-live&scope=site

Bhasin, H. (2019, Jan 14). Marketing mix of Hewlett Packard – HP marketing mix. Marketing91, Retrieved from https://www.marketing91.com/marketing-mix-of-hewlett-packard/

Dictionary.com (n.d.). Retrieved from: https://www.dictionary.com/browse/artificial-intelligence?s=t

Hewlett-Packard (2016). Core, growth, future: HP’s three pillars of success. Innovation journal. Retrieved from: https://www8.hp.com/us/en/hp-labs/innovation-journal-issue5/three-pillars.html

House, C. H., & Price, R. L. (2009). The HP Phenomenon : Innovation and Business Transformation. Stanford, Calif: Stanford Business Books. Retrieved from http://search.ebscohost.com.proxy-library.ashford.edu/login.aspx?direct=true&db=edsebk&AN=395788&site=eds-live&scope=site

Kharif, O. (2004). HP’s Problem Child Makes Good. BusinessWeek Online, N.PAG. Retrieved from http://search.ebscohost.com.proxy-library.ashford.edu/login.aspx?direct=true&db=bsh&AN=14195233&site=eds-live&scope=site

Lu, L., & Leung, K. (2006). Challenges to km at Hewlett Packard China. Knowledge management review, 9(1), 20-23. Retrieved from https://search-proquest-com.proxy-library.ashford.edu/docview/217500727?accountid=32521

MarketLine Company Profile: Hewlett-Packard Company. (2015). Hewlett-Packard Company MarketLine Company Profile (pp. 1–41). Retrieved from http://search.ebscohost.com.proxy-library.ashford.edu/login.aspx?direct=true&db=bsh&AN=110913891&site=eds-live&scope=site

MBASkool.com, (n.d.). HP marketing mix (4ps) strategy. Retrieved from: https://www.mbaskool.com/marketing-mix/products/17114-hp.html

Miles, R. E., Coleman Jr., H. J., & Creed, W. E. D. (1995). Keys to success in the corporate redesign. California management review, 37(3), 128–145. https://doi-org.proxy-library.ashford.edu/10.2307/41165802

Randall, R. (2011). Understand H-P investor concerns with the Five Forces model. Central Penn Business Journal, 27(36), 13. Retrieved from http://search.ebscohost.com.proxy-library.ashford.edu/login.aspx?direct=true&db=bwh&AN=66626387&site=eds-live&scope=site

Robinson, D. (2019). Enterprise Hpc: Why Hpe is buying Cray. Computer Weekly, p. 26-30. Retrieved from http://search.ebscohost.com.proxy-library.ashford.edu/login.aspx?direct=true&db=edb&AN=137416051&site=eds-live&scope=site

Senseofskin (2019, Mar 19). Environmental scan-HP. Retrieved from: https://senseofskin.com/environmental-scan-hp-15473/

Weisler, D. (2016). 5 Lessons from the first-time CEO of a tech giant. Forbes. Retrieved from: https://www.forbes.com/sites/hp/2016/11/01/5-lessons-from-the-first-time-ceo-of-a-tech-giant/#5d8736b96a7b

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