HP strategy Analysis
Ansoffs Matrix will be used for the development strategy of Hewlett Packard ( hp).By this tool one can think about the potential risks of each option, developing new products or opening up new markets other than your home place.In other way,it’s quick and simple way to think about the risks of growth in attaining development goals.The figure below shows the basic idea of Ansoff’s Matrix.Its also called the product/Market Expansion Grid. The Ansoff matrix considers whether the marketing strategy is targeted at existing customers or new customers and if existing products should be used or as an alternative, new product should be developed. The matrix below shows that a business wishing to grow has four options (strategies).
With reference to Ansoff’s growth strategies, HP used “product development” strategy in acquiring Palm.
Suitability: HP had already acquired the iPaq line of smartphones in 2001 when it bought Compaq Computer although there had been a decline in profits. Before the acquisition, HP had no legitimate play in the vital smartphone space, so this strategy is suitable. The deal would give HP access to Palm’s homegrown software that could run phones, as well as other types of devices like computer-tablets. It was an opportunity not to be missed.
Feasibility: HP has all it takes in terms of finance, technology and skills, to make the acquisition profitable. This came at the right time as both companies were struggling and therefore needed a big fix. Palm’s innovative operating system provides an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices. Product development is therefore a feasible strategy.
Acceptability: The strategy is acceptable but with some risks of “new strategic capabilities” and “project management risk”. Both companies were failing in the smartphone industry therefore there was no guarantee that when the two companies come together, there will be any improvement, especially since Palm chief executive was to stay on. Product development also involves heavy investments which could be a risk in case the project fails.
In order to deal with its key strategic issues HP could possibly have adopted “market penetration” strategy.
Suitability: This was going to be a suitable strategy, as in the case of compaq, market penetration would have meant hq would gain compaq’s customers. It would have worked well also for the smartphone industry. All that HP was going to do is attracting non-users of HP products and convincing current clients to use more of their products through promotions and advertising.
Feasibility: Market penetration is the least risky way for any company to grow, also, penetration pricing involves the setting of lower rather than higher prices in order to achieve a large, if not dominant market share so this makes it a feasible strategy.
Acceptability: It is however not such an acceptable option as there might be a likelihood of competing suppliers following suit by reducing their prices also, thus nullifying any advantage of reduced prices. The other potential disadvantage is the impact of reduced price on the image of offering, particularly where buyers associate price with quality.
ANALYSIS OF THE PC AND LAPTOP INDUSTRY
The laptop industry has been through a situation of decline during the past five or six years. The number of shipments and sales of laptops and desktops have kept declining. In 2016, the signs of growth in the industry were visible for the first time. However, since then the rate of growth has remained relatively flat in the industry. The most important reason that has affected the growth of the laptop industry is the rise of mobile computing. In 2016, HP returned to the first position in the laptop market with the highest number of shipments followed by Lenovo, Dell, Apple and Acer. After 2016, market again saw a decline in 2017 when the number of total shipments according to research by Gartner was around 262.5 million units. This was around 2.8% less than the previous year. HP and Lenovo were at the top with 55.2 and 54.7 thousand shipments.
HP’s three pillars of success are —CORE
Their philosophy based on In-no-vate (verb): to make changes in something established, especially by introducing new methods, ideas, or products. For instance — The new HP is a textbook example of innovation. Established 77 years ago and reinvented one year ago with the separation of Hewlett-Packard into two companies, the new HP Inc. began a journey to reinvent everything.
The reinvention journey started with a vision to create amazing technologies that make life better for everyone, everywhere. To do this HP needed to embrace new ideas, methods and products and market changes in order to turn change into opportunities.
First a powerful new board of directors was assembled, the most diverse board in the industry. Together, with the company’s experienced management team they crafted a new, highly focused business strategy based on three pillars: Core, Growth, and Future. And the foundation of those three pillars is constant innovation.
Protecting the core
HP has been a global leader in Personal Systems and Printing for decades, and is aggressively protecting and defending our Core business. Constant innovation keeps products and solutions fresh, highly relevant and drives customer demand.
In office printing, HP rolled out an entirely new line of ink, laser and Page Wide devices—delivering the world’s most secure print experience, as well as a comprehensive range of Managed Print Services. In consumer printing, the pocket-sized Sprocket is a huge hit with smartphone-toting millennials.
In Personal Systems, HP took profitable share with innovative new commercial products including Elitebook Folio G1 and new ZBook workstations. On the consumer end, HP delivered beautifully designed, high performance solutions for premium consumer categories like gaming and entertainment. This included the introduction of Spectre 13, the world’s thinnest laptop and the Omen X gaming system.
Profits from the Core enable HP to pursue profitable growth in naturally adjacent markets. To that end, HP began to reinvent the A3 copier market—an industry that is ripe for disruption by introducing the A3 portfolio, including 16 new next-generation HP PageWide and LaserJet printers. Then to accelerate innovation, HP reached a $1.05 billion agreement to acquire Samsung’s printer business. Expected to close mid-2017, this acquisiton will not only impact innovation but significantly strengthen HP’s intellectual property portfolio.
HP also is aggressively pursuing growth opportunities in Graphics printing as the industry accelerates from analog to digital printing. Already holding a No. 1 position with powerful and versatile new commercial printers and presses, and just delivered the 13th consecutive quarter of revenue growth.
In Personal Systems, HP is delivering innovative new commercial mobility solutions like the Elite x3, a versatile all-in-one device that won 24 industry awards at Mobile World Congress, and created a new standard for commercial mobility.
Creating the future
HP has a rich heritage of innovation and category creation. To build on this, the company continues to redefine industries by investing in the third strategic pillar: The Future.
HP Labs, one of the eminent private research laboratories in the world, celebrated its 50th anniversary in 2016. Because the world around us is changing at an exponential rate, HP takes a long-term perspective on the Megatrends that are shaping the world and then creates products and technologies based on those insights.
The world is on the cusp of the Fourth Industrial Revolution, one that will change the world even more than the ones that came before: steam powered machines, electricity and mass production, and networked digital computers. This revolution will be characterized by the blending of the digital and physical worlds into what HP calls “Blended Reality.”
The new HP Jet Fusion 3D Solution, a highly innovative commercial 3D printing system, is poised to disrupt the $12 trillion manufacturing industry.
HP is also investing in immersive computing, including virtual and augmented reality. The new Sprout Pro has the potential to bring immersive computing to schools and offices worldwide.
Built on a foundation of strength
Across all three pillars is the foundation of services and solutions, an incredibly important and growing area given the changing world.
The company’s strategy and innovations are driven by four key factors: market and customer trends, competitive dynamics, investor perspective, and practical capabilities.
Innovation decisions are measured carefully against our capabilities to ensure that HP can deliver both innovation and execution. The scale and power of HP’s supply chain and go-to-market operations are immense; its sales channel orientation and partner relationships are strong; and the HP brand is one of the most respected in the world. All these things provide a strong foundation for advancing the company’s strategy to keep reinventing.
Diversification helps HP to expand its brand presence.It has become the global leaders in the laptop and PC Industry and now it’s expanding its horizon to new ventures like in cloud computing and other technology related areas for its growth in businesses.due to dynamic and rapid growth in technology industry still there are several opportunities opened for Hp to explore. As they are potential global leader and strongly believe in innovation will revolutionise the future technology industry and keep the pace with trends .
HP is a technology giant and has well diversified operation. It has the strength to offset the shrinking growth in one particular segment through the growth in another segment. The Personal Systems business revenue of HP is shrinking but we believe that the shift to ESSN and Services will direct HP towards growth once again. The company has a plethora of opportunities in cloud computing and data centers. The recent project wins are an indication of HP’s focus on the services segment. Moreover, the server launches will assist the company in maintaining its dominating position in the servers market. All in all, diverse companies like HP do not crumble just because one segment is not showing growth. Given the strong cash generation ability of HP, we believe that the company will excel in cloud computing, data centers and IT services and will be a leading IT player in the future. HPQ is a buy, given our price target of $40.
By analyzing all the five competitive forces HP Inc. strategists can gain a complete picture of what impacts the profitability of the organization in Diversified Computer Systems industry. They can identify game changing trends early on and can swiftly respond to exploit the emerging opportunity. By understanding the Porter Five Forces in great detail HP Inc. ‘s managers can shape those forces in their favor.
3.1 Implementation issue
3.1.1 R&D on Computing product and Enterprise and Services Business
It is recommended that HP change it business strategy from cost-leadership strategy to differentiation strategy as to maintain its comparative advantage in long-term business. To differentiate both its computing product and cloud technology etc, HP needs to invest huge amount of capital and resource in R&D. For the capital source, HP can allocate from business internal or the bank, if it is hard for HP to meet the budget objective, HP can cooperate with other brands to develop R&D (Detail see 126.96.36.199). Employ profession to lead the R&D can speed-up the process. The specialist can be employed through headhunter companies with a comprehensive employment interview.
3.1.2 Corporate restructure and reorganization
For raising simplicity and efficiency of the organization structure, restructure HP is very important. Before implementing restructure action, it is better that conduct a detailed research to figure out the productivities of each department. HP can find some profession research company to conduct the research for it, the research company would analysis the performance of HP department and concluded a list of department should be cut down.
3.1.3 Worldwide campaign
As HP does not have lots of worldwide marketing experience, HP can find some global marketing companies to develop the campaign. The campaign should include several aspects like TV ad., events, social media marketing and so on. The large campaign can be more effective for HP to rebuild its brand name.
3.1.4 Branch store
Before developing branch store, HP need to conduct a full research based on their sales report, choose the best places to implement the strategy. HP must have a long-term plan for branch store development. As an example, choose 5-10 places for testing market, after achieving some objectives, choose 10 more places for implementation.