1hewlett Packard Presentation

Hewlett Packard

1

Presented by: 01 Hassan Sajjad 02 Muhammad Faisal 26 Muhammad Ali Qureshi 33 Imran Ali 081502 36 Shahbaz Noshahi

062116 063156 081126 081434

Presented To: Mr. Aly Raza Syed Course Name: Business Policy Date: 19-10-2009 Group NO: 4 2

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

3

Mission Statement “”

Vision “”

4

Main Goals “Selling and marketing its products and services through programs designed to improve profit margins.”

Situation Analysis

6

Macro Environment Analysis Demographic: Economic: HP and other brand name companies are reducing the selling price of their ink cartridges.

Political: Legal:

7

Macro Environment Analysis Informational:  HP provides information technology services.

Social: Technologic: HP has huge technology research laboratory in Banglore.

8

Porter’s Five Forces Model Potential development of substitute products

Bargaining power of suppliers

(-)

Rivalry among competing firms

N/A

+

Bargaining power of consumers

_

+

Potential entry of new competitors

Equal number of negatives and positives make the industry moderate. 9

Strategic Orientation  Corporate Level: GLOBAL EXPANSION  Business Level: RELATED DIVERSIFICATION  Functional Level DISTRIBUTION

10

Segmentation HP has various segments: Technology solution group (TSG) Personal system group (PSG) Imaging and printing group (IPG)

11

Target Market  .INSTITUTIONS  .INDIVIDUALS  .BUSINESS CUSTOMER

12

Marketing Mix

13

Products

Important P’s  Price: N/A

15

Important P’s  Promotion: o HP promotes directly to consumers, businesses and through a variety of business partners o Direct sales campaign

16

Important P’s  Place (Distribution Channel): Retail stores Consumers Resellers Small to Mid-size Business Distribution Partners Value Added Reseller (Independent Software Vendors, Corporate Investment) Business and Institution

17

Important P’s  People: N/A  Process: N/A

 Physical Evidence: Retailers, resellers, distribution partners, independent distributors, etc

Life Cycles (PLC,CLC,ILC) HP (CLC) I T (ILC) HP (PLC)

1

2

3

4

19

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.

20

Unique Selling Preposition  N/A

21

External Factor Evaluation Matrix Analysis

22

External Factor Evaluation Matrix Factors Opportunities

Weight

Rating

Score

Emerging markets, particularly BRIC countries

0.17

3

0..51

0.15

4

060

e-Commerce expansion

.15

3

0.45

Diversification Related/Unrelated

0.10

3

0.30

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

Imaging and printing businesses

Threats

3..05

23

Internal Factor Evaluation Matrix Key Factors

Weight

Rating

Score

0.12 010

3 4

0.36 0.40

0.09

3

0.27

0.10 0.08 0.12 0.10

3 3 4 4

0.30 0.24 0.48 0.40

0.07

3

0.21

0.36 0.20

STRENGTHS

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 portfolio Solid market position in key segments. Strong financial Position. The company has a long history of inventions and innovations until it came to this stage Product diversity of the company is another big advantage that enables the company to hold its position even in the times of recession. WEAKNESS

Price is high in China as compared to other

0.12

3

Product line management problems

0.10

2

Total

1.00

3.22

24

Competitive Profile Matrix hp Success Factors

Weight

IBM

dell

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 25

Strengths

SWOT Analysis

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 portfolio Solid market position in key segments. Strong financial Position. The company has a long history of inventions and innovations until it came to this stage Product diversity of the company is another big advantage that enables the company to hold its position even in the times of recession.

Weaknesses Price is high in China as compared to other Product line management problems

26

SWOT Analysis Opportunities Emerging markets, particularly BRIC countries Imaging and printing businesses e-Commerce expansion Diversification Related/Unrelated

Threats  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

27

THE Space Matrix .

FS +6

Aggressive +1

IS

CA -6

-1

-1

-6

ES

+1 +6

BCG MATRIX 1.0 +20 hp

0

-20

.50

0.0 0.0

IE Matrix IFE total Weighted Scores Strong 4.0

1

3.0

Average

2.0

2

3

5

6

8

9

High 3.0

3.02 3.22

EFE Wighted scores

4

Medium

2.0 Low 1.0

7

Weak

1.0

Grand Strategy Matrix Rapid Market Growth

Q2

Q1 Strong

Weak Competitive Position

Competitive Position

Q3

Slow market Growth

Q4

QSPM Matrix StrategicAlternative Key Factors

Weight

AS 1

TAS 1 AS 2

TAS 2

0.08 0.07 0.06 .03

4

.36

3

.24

3

.24

2

.14

3

.21

2

.12

3

.09

3

.09

Apple computers (Macs) significant growth in overall PC shipments

0.05

3

.15

3

.15

Dell direct-sale marketing Intense competition from other PC manufacturers

0.05

3

.15

2

.1

Opetunities: Emerging markets, particularly BRIC countries Imaging and printing businesses Diversification Related/Unrelated

E-Commerce expansion Threats:

Slowdown in economic

32 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 0.07 the world.

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 0.07 it came to this stage

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

WEAKNESS

0.05

4

.20

4

.20

0.05

3

.15

3

.15

In Asia Other Competitor's prices are low Product line management problems

Total

1.0

3.39

2.41

Market Analysis

34

Important Figures  Sales The HP company sales are increasing in 2006 as compare to 2004.  Growth rate The company growth rate is 12.3%.

35

Market Share  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. 36

Competitor Analysis

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Competitors  Demand 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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Comparison Company Revenue Number ofGross EBIT Name employees margin

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

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

N/A

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Financial Analysis

Ratio Analysis Liquidity Ratios Ratio

2005

2006

Result

Current ratio Quick ratio

1.37 1.15

1.34 1.13

moderate moderate

Leverage Ratios 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

41

Ratio Analysis Activity Ratios Ratio

2005

2006

Result

Inventory turnover 12.60

11.82

negative

Fixed asset 2.55 turnover Total asset turnover 1.12

2.71

Positive

1.11

Moderate

Growth Ratios Ratio

2005

2006

Result

Growth in sale

8.49%

5.72%

Negative

Growth in net income

(31%)

More than 100%

positive

42

Ratio Analysis Profitability Ratios Ratio 2005 Gross profit margin 23.61%

2006 24.52%

Result Positive

Operating profit 4.00% margin Net profit margin 2.76% Return on total 3.10% assets Return on 0.06 shareholders' equity

7.15%

Positive

6.76% 7.56%

Positive Positive

0.16

positive

43

Statement Analysis Income Statement 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%

Positive

Net income per share

(28.69%)

More than 100%

positive

44

Statement Analysis Balance Sheet (Debit Side) Ratio

2005-06

Result

Current assets

11.37%

Positive

Plant & equipment

6.83%

Positive

Total assets

6.03%

positive

Balance Sheet (Credit Side) Ratio

2005-06

Result

Current liability

13.95%

negative

Long-term debts

(26.59%)

Positive

Total liabilities

9.20%

Negative

Shareholders' equity

2.60%

positive 45

Main Problems and Opportunities

46

Main Opportunity Demand increasing in the Asia Pacific (mainly in India and China)

47

Sub Problems and Opportunities  Need for diversification  High prices  Product line management problems

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Alternatives  Open a new manufacturing plant in Asia Pacific  Start new imports to Asia Pacific  Start 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

51

Alternative Three: Start selling old brands with decreased price in the Asia Pacific Pros • 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 52

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. 53

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. 55

The End Thank you

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