The introduction of HP Hewlett-Packard Company (NYSE: HPQ), commonly referred to as HP, is an American multinational information technology corporation headquartered in Palo Alto of California. Stanford University classmates Bill Hewlett and Dave Packard founded HP in 1939. It is a technology company that operates in more than 170 countries around the world. The HP Company explores how technology and services can help people, and companies address their problems and challenges, and realize their possibilities, aspirations and dreams (Wikipedia, 2011).
Nature of product a. Existing products The company’s first product, built in a Palo Alto garage, was an audio oscillator- an electronic test instrument used by sound engineers. One of HP’s first customers was Walt Disney Studios, which purchased eight oscillators to develop and test an innovative sound system for the movie Fantasia. HP has successful lines of printers, scanners, digital cameras, calculators, PDAs, servers, workstation computers, and computers for home and small business use; many of the computers came from the 2002 merger with Compaq.
HP today promotes itself as supplying not just hardware and software, but also a full range of services to design, implement, and support IT infrastructure. No other company offers as complete a technology product portfolio as HP. It provided infrastructure and business offerings that span from handheld devices to some of the world’s most powerful supercomputer installations. HP offer consumers a wide range of products and services from digital photography to digital entertainment and from computing to home printing.
This comprehensive portfolio helps us match the right products, services and solutions to our customers’ specific needs (Wikipedia, 2011).
While, for this research report, I will focus on the area of computers to do the research. b. Product life cycle Today’s customers expect fast delivery of quality products with innovative features and affordable prices. To stay with competitive, manufacturers must share intellectual assets in a collaborative and secure environment throughout an entire product life cycle (HP).
According to Raymond, there are four stages in a product’s life cycle: introduction, growth, maturity and decline.
For the stage of introduction, for example, the HP’s computers were produced in the US and spread quickly throughout the industrialized countries. The stage of growth, it means that a copy product is produced elsewhere and introduced in the home country to capture growth in the home market. The stage of maturity said that the industry contrast and concentrates the lowest-cost producer wins here. Such as many clones of the computers are made almost entirely in lowest-cost locations. The last stage is declined. For instance, there is weak demand for computers in low demand countries. c.
Role of technology Hewlett-Packard CTO Phil McKinney said that the technology of touch not only can completely replace the existing keyboard and mouse, but also can overcome the problems by the illiterate to use computers. 3. Market Trends For the consumer behavior, the figure 1 can illustrate it. According to the IDC data, it has shown the global market on the whole year of 2010. Hewlett-Packard is still ranked first, accounting for 18. 5 percent market share, sold 64. 21 million computers. Dell accounted for 18. 5 percent market share and sold 43. 4 million computers;
Acer accounted for 12.3 percent market share and sold 42. 43 million computers; Lenovo accounted for 9. 9% of the market share, sold 34. 18 million computers. Toshiba ranked fifth, accounting for 5. 5% market share and sold 19. 09 million computers. Figure 1: Worldwide PC shipments, 2010(Preliminary) [pic] Source: IDC Worldwide Quarterly PC Tracker, January 12, 2011 Units Shipments are in thousands From the figure 1, we can know that in 2010, Hewlett-Packard was ranked first and also illustrate the Hewlett- Packard was very popular among consumers. The market share of Hewlett- Packard was till ranked first.
Figure 2: Worldwide PC revenue ($US Billion), 2003-2010 [pic]Source: IT Candor, March 2011 From figure 2, we can know that HP has benefited from an expansionist strategy into emerging country markets and a long-term focus on consumer as well as business customers. It overtook Dell at the beginning of 2007 and has maintained a clear lead, despite experiencing substantial declines in 2009 as a result of the credit crunch (Martin, 2011).
4. Production process & costs The raw material costs of computers including hardware and software. The software is Microsoft’s operating system.
The hardware costs including TFT display, hard drive, power, enclosure, motherboard, CPU, optical drive, graphics card, memory, keyboard, etc. For the retail products, HP’s POS machines are undoubtedly the most powerful. Help retailers reduce the cost of a product is the most fundamental problem. Hewlett-Packard said the integration costs are very important. If you want to do more software and hardware integration, your costs will be reduced a lot. Integrated platform for equipment can enhance the management of security to adapt to more platforms. This is the key to reducing costs.
Another is the multi-purpose hardware. To buy a single device that you can add more applications only need to put the initial investment (Nuo, 2012).
5. Structure of the industry & business strategies Over the past years HP has developed high-performance technology with a diverse product portfolio, offered strong customer service, and has decreased its prices. HP uses both fixed and dynamic price strategies in order to offer its consumers the best customer service and products. In terms of fixed pricing, HP utilizes the promotional and bundling pricing strategies.
Used as an incentive for consumers to buy more than one product, promotional pricing is used by many computer companies. One example of HP utilizing these strategies is the New HP Pavilion dvgz laptop. Priced at $599. 99, if you buy this laptop you receive other services as well as several discounts which include: a free memory upgrade to 3GB memory as well as a 320GB hard drive, $100 rebate, free color customization (stated as a $25 value), $30 off Microsoft Office Small Businesses 2007, $50 off on Blu-ray drive, and free shipping.
HP also uses the segmenting pricing strategy to offer its customers a variety of options to pay for its services or technology (Pricing Strategies: Hewlett-Packard, 2009).
6. Government role The former CEO of Hewlett- Packard Fiorina said the Obama administration’s economic stimulus policies have failed. She believed that Obama launched by the government of $86. 2 billion U. S. dollars economic stimulus plan has failed, and that the government needed to work harder to deal with California’ unemployment rate (Multidimensional News, 2010).
As a global company, HP is dedicated to free trade and the reduction of barriers across borders. HP is committed to ensuring that foreign markets are open to IT goods and services, and that governments commit to maintaining such openness. The U. S. federal government helps to eliminate tariffs and enables HP to increase business opportunities and maintain America’s competitiveness in the global marketplace. Some free trade agreements (FTA), such as the EU-Mercosur FTA, do not include the U. S. , but are equally important to HP’s business interests because they support greater market access worldwide (HP).
Business Environment a. The challenge of HP According to my research, there are two challenges that HP will face. The first one is with Lenovo surging in the PC maker market; Hewlett-Packard (HP) is facing a serious challenge to its long-standing first-place position. The fact that the overall PC market only view by 5. 5% in in 2011, Lenovo came on strong, showing 14. 5% growth and going from 10. 9 million shipments in the previous quarter to 12. 5 million in the third. Lenovo now accounts for 13. 9% of all global PC shipments — just 4.2 percentage points below market-leader HP. HP may be ripe for a challenge with the turmoil it stirred up this fall (Gaudin, 2011).
The second challenge is HP will face the quality of the product, especially for the computer. Hewlett-Packard admit that part of laptops that sold in China have problems of quality. Firstly, some laptops have the problems of graphics. The problem notebook computers involved HP Pavilion DV2000 and Compaq Presario v3000. Failure of the main form is the problem of black screen, crash, overheating and cannot detect the wireless network.
Secondly, part of the HP notebook computers has the quality problems with display. The problem notebook computers including the HP 541 and other models. Fault manifestations appear on the line (splash screen) (General Administration of Quality Supervision, 2010).
b. The development of HP HP is committed to being an industry leader in global citizenship by working to create a sustainable future for all. For HP, sustainability means integrating long term economic, environmental and social dimensions into the way we operate our business.
Our environmental commitment is to reduce the environmental impact of our products, services and operations, thereby enabling both HP and our customers to operate more sustainably. For the following several aspects that HP sustainable development: designing for the environment, driving environment performance of global operations, delivering climate change and energy solutions and future directions (HP).
8. Firm Locationn In 2008, HP built a 20,000 square meters’ factory in Chongqing. This was the second PC factory in China.
According to the introductionon, HP’s CChongqing computer factory area is about 20000 square meters and it was already been completed in early 2010. It will introduce advanced production line production desktops and laptops. The factory’s capacity for 5 million to 10 million units and the annual production value is expected to up to 30 billion RMB to 50 billion RMB. If this is true digital production capacity, the plant is expected to become the HP in the Asia Pacific region important manufacturing plant. Although HP’s global market share comfortably in the first.
But in the Chinese market and the Asia-pacific market still remain after Lenovo. China is the biggest PC market. As a result, HP will be the No. 1 in the world after take the Chinese market. 9. Entrepreneurial ability of managers a. Firm culture From the beginning the two founders have developed a management style which had never occurred in a large company before. They coined a new type of organizational culture which was to be called “the HP way”. “The HP way” contains two aspect about excellent business management and people-oriented management.
Based on this view, the HP created five core values as follows: •We have trust and respect for individuals. •We focus on a high level of achievement and contribution. •We conduct our business with uncompromising integrity. •We achieve our common objectives through teamwork. •We encourage flexibility and innovation. At the end of the 1950s Bill and Dave decided to write down the company’s objectives, which were to serve as guidelines for “all decision-making by HP people,”) since the company had grown ever larger. With some changes, those objectives are still valid today.
They cover as follows: • Profit: employees achieve sufficient profit to finance growth create value for their shareholders and achieve their corporate objectives. • Customers: employees earn customer respect and loyalty by consistently providing the highest quality and values. • Market leadership: company lead in marketplace by developing and delivering useful and innovative products, services, and solutions. • Commitment to employees: demonstrate their commitment to employees by promoting and rewarding based on performance and by creating a work environment that reflects values.
Leadership capability: develop leaders at all levels who achieve business results, exemplify values and lead them to grow and win. • Global citizenship: fulfill their responsibility to society by being an economic, intellectual and social asset to each country and community where we do business. • Growth: they recognize and seize opportunities for growth that builds upon their strengths and competencies. And these objectives are to be achieved through teamwork. “The HP way” is seen as model for organizational culture in many countries. b.
Leadership & Management style of HP Organizational Performance Management HP used four indicators to measure organizational performance management. These are the staff indicators, process indicators, financial indicators and customers indicators. The employees’ satisfaction survey is an important one in the staff indicators. After summarize the various effects of staff performance, HP has put forward a treatment adaptation degree (OFI OfferFitIndex,,), satisfaction (SAT, Satisfactory) and the importance of employee satisfaction analysis method (IMT Importance).
Salary is not the staff only needs. The work of the staff also depends on the boss’s quality positions adaptation, capacity growth, job challenges and leave the length and quality of other factors. Another indicator of organizational performance is customer indicators, which includes market share, the old customer retention rates, new customers to expand the rate of customer satisfaction and customer loyalty, and several other factors. Employee Performance Management HP’s employee performance management consists of four steps.
After the evaluation of these four steps, the HP employee performance management achieve the objectives are: the atmosphere made (cultivate a performance culture), a plan (logistics winning performance), leading the team (efficient team), maintain advanced (to maintain stimulate advanced) and performance of excellence(the pursuit of excellence results)(Human resources, 2011).
10. Conclusion According to this analysis, we can figure out that a successful enterprise should have a correct business management strategy, and this kind of strategy should fix the nature of this company.
An excellent business management strategy would with ordinal position process, like in the HP company, founders determine the nature of company is technology product first; then created its own culture named the HP ways to share values with employees and members, so that lead them working in a right way; based on those two aspects, the company should design product, environment, and the quality system to let processes working well. With the government’s encouragement and support, the company will achieve their own goal that is maximization profit Reference Financial Network.