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Hewlett Packard
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Presented by:01 Hassan Sajjad 062116
02 Muhammad Faisal 06315626 Muhammad Ali Qureshi 081126
33 Imran Ali 081502 36 Shahbaz Noshahi 081434
Presented To: Mr. Aly Raza SyedCourse Name: Business PolicyDate: 19-10-2009Group NO: 4
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Introduction Industry: Information Technology Case time: 2007 Key players: Bill Hewlett, Dave Packard &
Todd Brodley Initial Capital: $538 Important dates: 1938, 1939, 1940, 1950,
1957 Operations: USA, Europe, China, India,
Russia, Japan Market Share: 12.3% in 2007
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Mission Statement
“”
Vision
“”
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HP Corporate Objectives Customer loyalty
We earn customer respect and loyalty by consistently providing the highest quality and value. Profit We achieve sufficient profit to finance growth, create value for our shareholders and achieve our corporate objectives.Growth We recognize and seize opportunities for growth that builds upon our strengths and competencies. Market leadership We lead in the marketplace by developing and delivering useful and innovative products, services and solutions. Commitment to employees We demonstrate our commitment to employees by promoting and rewarding based on performance and by creating a work environment that reflects our values. Leadership capability We develop leaders at all levels who achieve business results, exemplify our values and lead us to grow and win.Global citizenship We fulfill our responsibility to society by being an economic, intellectual and social asset to each country and community where we do business.
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HP Shared Values Passion for customers
We put our customers first in everything we do.
Trust and respect for individuals We work together to create a culture of inclusion built on trust, respect and dignity for all.
Achievement and contribution We strive for excellence in all we do; each person's contribution is critical to our success.
Results through teamwork We effectively collaborate, always looking for more efficient ways to serve our customers.
Speed and agility We are resourceful and adaptable, and we achieve results faster than our competitors.
Meaningful innovation We are the technology company that invents the useful and the significant.
Uncompromising integrity We are open, honest and direct in our dealings.
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Main Goals
“Selling and marketing its products and services through programs designed to improve profit margins.”
Situation Analysis
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External Environment AnalysisDemographic:
Economic:HP and other brand name companies are reducing
the selling price of their ink cartridges.
Political:
Legal:
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Informational: HP provides information technology services.
Social:
Technologic:HP has huge technology research laboratory in
Banglore.
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External Environment Analysis
Porter’s Five Forces Model
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Bargaining power of suppliers
Potential development of substitute products
Bargaining power of consumers
Potential entry of new competitors
Rivalry among competing firms
+
_N/A
+
Equal number of negatives and positives make the industry moderate.
(-)
Strategic OrientationCorporate Level:
GLOBAL EXPANSIONBusiness Level:
RELATED DIVERSIFICATIONFunctional Level
DISTRIBUTION
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Segmentation
HP has various segments:
Technology solution group (TSG)Personal system group (PSG)Imaging and printing group (IPG)
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Target Market
.INSTITUTIONS.INDIVIDUALS.BUSINESS CUSTOMER
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Marketing Mix
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Products
Important P’s
Price:N/A
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Important P’sPromotion:
o HP promotes directly to consumers, businesses and through a variety of business partners
o Direct sales campaign
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Important P’s
Place (Distribution Channel):Retail stores ConsumersResellers Small to Mid-size Business
Distribution Partners Value Added Reseller(Independent Software Vendors, Corporate Investment) Business and Institution
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Important P’s
People:N/A
Process:N/A
Physical Evidence:Retailers, resellers, distribution partners, independent distributors, etc
Life Cycles (PLC,CLC,ILC)
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I T (ILC)
HP (CLC)
HP (PLC)
1 2 3 4
Key Success Factors
There is potential in the industry.As knowledge management evolves from fad
to business imperative, many organizations are discovering the limited ability of information technology to capture and share ideas, insights, and know-how.
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Unique Selling Preposition
N/A
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External Factor Evaluation Matrix Analysis
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External Factor Evaluation Matrix
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Factors Weight Rating Score
Opportunities
Emerging markets, particularly BRIC countries 0.173
0..51
Imaging and printing businesses 0.15 4 060
e-Commerce expansion .15 3 0.45
Diversification Related/Unrelated 0.10 3 0.30
Threats
Apple computers (Macs) significant growth in overall PC shipments 0.12 3 0.36
Dell direct-sale marketing 0.11 3 0..33
Intense competition from other PC manufacturers 0.10 2 0.20
Slowdown in economic conditions in US, Europe 0.10 3 0.30
Total 1.00 3..05
Internal Factor Evaluation Matrix
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Key Factors Weight Rating Score
STRENGTHS
Strong brand equity world’ largest it firm. 0.12 3 0.36
World’s biggest computer hardware and peripherals company in the world.
010 4 0.40
An advantage HP has over its competition it is a total solutions provider.
0.09 3 0.27
Diversified product portfolio 0.10 3 0.30
Solid market position in key segments. 0.08 3 0.24
Strong financial Position. 0.12 4 0.48
The company has a long history of inventions and innovations until it came to this stage
0.10 4 0.40
Product diversity of the company is another big advantage that enables the company to hold its
position even in the times of recession.
0.07 3 0.21
WEAKNESS 0.36
Price is high in China as compared to other 0.12 3 0.20
Product line management problems 0.10 2
Total 1.00 3.22
Competitive Profile Matrix
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hp dell IBMSuccess Factors Weight Rating Score Rating Score Rating Score
Quality 0.13 3 0.39 3 0.39 3 0.39
Financial Position 0.15 4 0.60 3 0.45 3 0.45
Market Share 0.16 3 0.48 3 0.39 3 0.48
Technology/innovation 0.12 3 0.36 3 0.36 4 0.48
Global Market 0.10 3 0.30 3 0.30 2 0.20
Price Competitiveness 0.10 2 0.20 4 0.40 2 0.20
R&D 0.14 3 0.42 3 0.42 4 0.56
Customer Loyalty 0..10 3 0.30 2 0.20 3 0.30
Total 1.00 3.53 2.84 3.06
SWOT AnalysisStrengths
Weaknesses
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Strong brand equity world’ largest it firm.World’s biggest computer hardware and peripherals company in the world.An advantage HP has over its competition it is a total solutions provider.Diversified product portfolioSolid market position in key segments.Strong financial Position.The company has a long history of inventions and innovations until it came to this stageProduct diversity of the company is another big advantage that enables the company to hold its position even in the times of recession.
Price is high in China as compared to other
Product line management problems
SWOT Analysis
Opportunities Threats
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Emerging markets, particularly BRIC countriesImaging and printing businesses e-Commerce expansion Diversification Related/Unrelated
Apple computers (Macs) significant growth in overall PC shipments Dell direct-sale marketing Intense competition from other PC manufacturers Slowdown in economic conditions in US, Europe
THE Space Matrix
.+6
-6
ES
+6-6+1-1
Aggressive
FS
ISCA+1
-1
BCG MATRIX
0.0.501.0
+20
0
-20
0.0
hp
IE Matrix
1 2 3
4 5 6
7 8 9
1.02.03.0
4.0Weak
AverageStrong
High
Medium
Low
1.0
2.0
3.0
IFE total Weighted Scores
EF
EW
ightedscores
3.223.02
Grand Strategy Matrix
Rapid Market Growth
Slow market Growth
Strong
Competitive
Position
Weak CompetitivePosition
Q1Q2
Q3 Q4
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QSPM Matrix StrategicAlternativeKey Factors Weight AS 1 TAS 1 AS 2 TAS 2
Oportunities:
Emerging markets, particularly BRIC countries 0.08 4 .36 3 .24
Imaging and printing businesses 0.07 3 .24 2 .14
Diversification Related/Unrelated 0.06 3 .21 2 .12
E-Commerce expansion .03 3 .09 3 .09
Threats:
Apple computers (Macs) significant growth in overall PC shipments 0.05 3 .15 3 .15
Dell direct-sale marketingIntense competition from other PC
manufacturers
0.05 3 .15 2 .1
Slowdown in economic conditions in US, Europe 0.04 3 .12 2 .08
STRENGTHS
Strong brand equity world’ largest it firm. 0.09 3 .27 3 .27
World’s biggest computer hardware and peripherals company in the world. 0.07 3 .27 2 .14
An advantage HP has over its competition it is a total solutions provider. 0.06 3 .18 2 .12
Solid market position in key segments. 0.08 3 .24 2 .16
Strong financial Position 0.10 4 .40 3 .30
The company has a long history of inventions and innovations until it came to this stage
0.07 3 .21 2 .14
Product diversity of the company is another big advantage that enables the company to hold its position even in the times of recession.
0.05 3 .15 2 .10
WEAKNESSIn Asia Other Competitor's prices are low
0.05 4 .20 4 .20
Product line management problems 0.05 3 .15 3 .15
Total 1.0 3.39 2.41
Market Analysis
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Important Figures
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SalesThe HP company sales are increasing in 2006 as compare to 2004.
Growth rateThe company growth rate is 12.3%.
Market Share
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HP announced that it is the worldwide market share leader in distributed system management software for 2004.
HP led the worldwide distributed system management software market category in 2004 with 13.3% revenue share. HP's revenue grew 14.9% in this market for 2004, outpacing the overall one-year growth of 8% for the category and nearly doubling the revenue growth of each of the next three closest competitors.
Competitor Analysis
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CompetitorsDemand is tied to consumer and business income.
The profitability of individual computer companies depends on purchasing and production efficiencies, and on technological expertise.
HP competitors are primarily in the Personal Computers industry. Hewlett-Packard also competes in the Computer Networking Equipment, Computer Peripherals, and Handheld Computers & Accessories sectors.
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ComparisonCompany Name
Revenue Number of employees
Gross margin
EBIT EPS Net income
HP 97.06B 156,000 24.46%
10.72B 2.295 6.39B
Canon 34.63B 118,499 49.74%
8.29B 2.92 3.88B
Dell N/A 65,200 N/A N/A N/A N/A
IBM 92.79B 366,486 42.33%
19.20B 6.262 9.55B
Industry 456.28M 1.74K 36.03%
17.29M N/A (218.03)K
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Financial Analysis
Ratio Analysis
Ratio 2005 2006 ResultCurrent ratio 1.37 1.34 moderateQuick ratio 1.15 1.13 moderate
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Ratio 2005 2006 Result
Debt-to-total-assets 0.45 0.46 moderate
Debt-to-equity 0.93 1.0051 negative
Long term-debt-to-equity 0.091 0.065 positive
Liquidity Ratios
Leverage Ratios
Ratio Analysis
Ratio 2005 2006 Result
Inventory turnover 12.60 11.82 negativeFixed asset turnover 2.55 2.71 Positive
Total asset turnover 1.12 1.11 Moderate
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Activity Ratios
Growth Ratios
Ratio 2005 2006 Result
Growth in sale 8.49% 5.72% NegativeGrowth in net income (31%) More than 100% positive
Ratio Analysis
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Ratio 2005 2006 Result
Gross profit margin 23.61% 24.52% PositiveOperating profit margin 4.00% 7.15% PositiveNet profit margin 2.76% 6.76% PositiveReturn on total assets 3.10% 7.56% Positive
Return on shareholders' equity0.06 0.16 positive
Profitability Ratios
Statement Analysis
Ratio 2004-05 2005-06 Result
Revenue 8.49% 5.72% negative
Cost of goods sold 9.30% 4.46% Positive
Gross profit 76% (0.78%) Negative
Operating Profit (17%) 88% Positive
Net income (31%) More than 100% PositiveNet income per share (28.69%) More than 100% positive
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Income Statement
Statement Analysis
Ratio 2005-06 Result
Current assets 11.37% Positive
Plant & equipment 6.83% Positive
Total assets 6.03% positive
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Ratio 2005-06 Result
Current liability 13.95% negative
Long-term debts (26.59%) Positive
Total liabilities 9.20% NegativeShareholders' equity 2.60% positive
Balance Sheet (Debit Side)
Balance Sheet (Credit Side)
Main Problems and Opportunities
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Main Opportunity
Demand increasing in the Asia Pacific (mainly in India and China)
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Sub Problems and Opportunities
Need for diversificationHigh pricesProduct line management problems
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Alternatives
Open a new manufacturing plant in Asia Pacific
Start new imports to Asia PacificStart selling old brands with decreased price in
the Asia Pacific
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Alternative One:Open a new manufacturing plant in Asia Pacific
Pros• Cheap labor• Low other manufacturing
costs• Low transportation cost• No import charges• Opportunity for R&D
expenses, because of low manufacturing cost
Cons• Heavy investment required
in start
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Alternative Two: Start new imports to Asia Pacific
Pros• Brands already familiar to
people
Cons• High transportation cost• High import charges• Customers are looking for
new technologies and new features, not exactly for older brands
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Alternative Three: Start selling old brands with decreased price in
the Asia PacificPros• Directly target Lenovo’s
fast-growing low-priced products
• Developing and/or poor areas of the region would be able to afford information technology products
Cons• No margin for R&D due to
low price of products• Refurbished products would
be unreliable, and would have a short life cycle, as customers want new technologies and new features
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Best Alternative
Open a new manufacturing plant in Asia Pacific, as we find that this alternative has maximum pros and minimum cons. In addition, due to the strong financial position of the company, it would be able to afford the high investment costs involved in this alternative.
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Implementation
HP will set its target to capture Asia Pacific market by moving along the following road map:
Start aggressive marketing in China and India by bringing all products with minimum possible price.
Start building manufacturing plan parallel with new marketing. Cost is approximated to be USD 500 Million.
Start exporting products from new production plant in other Asian countries, which will help in reducing exporting cost.
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Recommendations
HP is currently spending approximately 4% of their net revenues on R & D. We suggest that for related dive6rsification it should be increased to 10%.
When marketing any product to Asia, price should be very minimum or special offers should be introduced to attach the customers.
Hp should introduce new product line immediately for those lines which are suffering or have become uncertain.
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The End
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Thank you