Table of Contents
Current HP Strategic Position
HP Strategic Implementation
Exhibits……………………………………………………………………………………………………15 Works Cited…………………………………………………………………………………………….19
Hewlett-Packard’s personal computer (PC) division operates in a hyper-competitive, highly-commoditized industry subject to dynamic shifts. The PC industry is driven by technological advancements requiring continuing commitment to research and development to capture the ever-changing PC market. For most of the past five years, Hewlett-Packard led the PC industry in terms of market share. However, Hewlett-Packard’s market share is currently declining and recent industry reports indicate that a Chinese low cost PC manufacturer, Lenovo, is now the market share leader.
Over four primary sections, we performed an analysis of Hewlett-Packard’s strategy in the PC industry. First, we performed an external industry examination to obtain information on the current conditions of the market, including industry trends, buyer and supplier marketplace power, and emerging market concerns, such as the threat of PC substitutes. Second, we conducted an internal analysis to determine Hewlett-Packard’s top resources, assets and liabilities, and potential capabilities from its value chain. Third, we documented Hewlett-Packard’s current strategic position within the PC industry. Fourth, we examined and scrutinize Hewlett-Packard’s current industry strategy of returning to its core competencies while consolidating aspects of its PC manufacturing and sales.
From the information in these sections, we conclude that if Hewlett-Packard is to sustain (or regain) its place as the market leader in the PC industry, it must leverage its brand recognition, economies of scale advantages, and product integration features to capture market value while producing technologically competitive products.
This analysis is focused on the personal computer (PC) segment of Hewlett-Packard (HP). For clarification, HP’s PCs segment includes desktop, laptop, and notebook / netbook computers. Hardware devices falling outside of the PC category are mobile personal computing devices, such as tablets and cellular phones. HP’s PC sales for fiscal year 2012 were $41.5 billion, which represents 26.5% of HP’s $120 billion total revenue from all products and services. HP’s PC sales captured a 16% share of the total PC market (Trefis, 2012). From an analytical standpoint, HP has made many significant moves over the past three to four years, including numerous changes in company leadership and distinct shifts in business strategy. As a result, the ultimate effectiveness and success of HP’s strategies discussed has yet to be seen. Therefore, some of the conclusions we draw regarding HP’s forward strategy will be measured by whether HP’s strategic decisions align with its competitive advantages and obligations to stakeholders.
The global PC industry is led by a small number of large scale manufacturers who are homogenizing products and looking to capitalize on low cost labor resources. Industry demand is driven by technological developments, disposable consumer spending, and corporate spending cycles (First Research, 2012). Although global demand for PCs has increased, profit margins are decreasing, creating an industry focused on price rivalry and little differentiation (MarketLine, 2012). In addition, PC substitutes are a major threat to the PC industry (Indigo, 2012). The traditional PC industry, with its focus on desktops and laptops, is in the mature or declining stage of its life cycle. Our external analysis examines the significant factors influencing the current PC environment, including potential market threats and opportunities during the next five years, and how HP is performing relative to its...
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