Hewlett Packard: Porters Five Forces, SWOT and PEST

Hewlett Packard: Porters Five Forces, SWOT and PEST 1.0 Background The organization being chosen to carry out such change process analysis is the computer industry and the organization company in focus is amicably regarding HP Computers. Thus, change processes in business organizations involves the reality behind every process and is considered as a daily cycle in dealing to various issues and concerns of the organization as it depends on the managements actions and its respected change of nature in dealing with effective change management as directed at overcoming anger and resentment evolving into a program that supports acceptance and internalization. As a consultant commenting on the organizational change process choosing HP organization as the focal point for discussion and analysis for this presentation, role to the organization is to have a clear emphasis dealing to the external and internal change drivers and other essential points needed for the realization of purpose for this report presentation for the senior management of the HP in provi ding factual information that will be able to give a better substantive spontaneity of understanding of such organizational state needed for selection and the application of the appropriate management models as well as concepts per se. This essay utilized HP Corporation as the model organization to review its present visions for renewed organization and how they dealt with critical situations. From the analysis, key trends in the change strategies of HP Corporation were then identified, how they worked and their effectiveness in dealing with critical situations was ascertained. The paper then moved on to assess these change strategies with regard to their suitability to critical situations, during which the internal capabilities of these change strategies in relation to the strategy being followed by HP Corporation was determined also. An overall analysis of the performance and effectiveness of the change strategies was also conducted to assess and compare the capabilities of these change strategies with those of others. Gaps in the change capabilities and environment were then identified. Finally, several choices of strategies to improve the change strategies of HP Corporation as effective means in critical situations were recommended and evaluated in terms of appropriateness to the issues reviewed, feasibility in carrying out the options and acceptability within the key stakeholders and decision makers. Several key implementation issues related to managing strategic change were also addressed as well. 2.0 Introduction: Typically, the concept of organizational change is in regard to organization-wide change, as opposed to smaller changes such as adding a new person, modifying a program, etc. Examples of organization-wide change might include a change in mission, restructuring operations (e.g., restructuring to self-managed teams, layoffs, etc.), new technologies, mergers, major collaborations, rightsizing, new programs such as Total Quality Management, re-engineering, etc. Some experts refer to organizational transformation. Often this term designates a fundamental and radical reorientation in the way the organization operates. Change can be defined as the efficient and effective implementation of the policies and tasks necessary after takeover or merging of one or more companies or organizations. Change management focuses on the careful management of the processes involved in the gradual adjustment of the new management and its workforce. More often than not, the newly merged or acquired business entities dont really have an easy time adjusting to the changes brought about by the acquisition or take-over. As a result, these entities engage in activities that are somehow resisting to changes. Therefore, the major activities of the company such as the manufacturing of products, product development, production and distribution become severely hampered. However, change deals with all operations done within companies and organizations. Activities such as the management of purchases, the control of inventories, logistics and evaluations are often the focus of change. A great deal of emphasis lies on the efficiency and effectiveness of processes. Therefore, change includes the analysis and management of internal processes. 3.0 Hewlett-Packard (HP) SWOT Analysis: 3.1 Strengths: The new product offering New innovation for RD Competitive Price After sales service 3.2 Weaknesses: Internal control issues Lack of in-house management consulting division No aggressive investments in RD compared to historical spending Unrest among internal employees due to pay cuts and lack of people care Intellectual Capital is under estimated No Good People retention policy or HR practices to ensure IC is protected 3.3 Opportunities: Emerging markets, particularly countries e-Commerce expansion Restructuring of internal IT structure Imaging and printing businesses 3.4 Threats: Intense competition from other PC manufacturers Increasing competition on imaging and printing Slowdown in economic conditions Product recalls and supply chain disruptions 4.0 Hewlett-Packard (HP) Porters five forces Analysis: 4.1 Rivalry within the Industry: The centre area represents the rivalry in the industry. On the left are the main traditional players in the industry, with an indication that there is a large amount of consolidation occurring between these companies. On the right are the areas in which the market is being fought. In the basic access/basic services arena, many companies are offering the same deal access and basic services, and so those that are doing it more cheaply than others will attract customers. Otherwise, ISPs will have to offer something special to differentiate them from others. 4.2 Threat of Substitute Products: There is a tremendous attraction for companies other than offer computer accessories and services, especially if they know they can enter the market at a high level. Competitors have the resources and computer accessories know-how to be successful in this industry. They are also aware of the threats of not being a part of this industry, and are entering at a tremendous rate, either by acquisition, merging, or simply. 4.3 Threat of New Entrants: Due to the nature of the computer market, the threat of new entrants is reasonably strong. There are low barriers to entry all that is needed to become is a small amount of capital and some technical know-how. Much of the activity can be outsourced, which can reduce initial costs. 4.4 Bargaining Power of Suppliers: The suppliers are those that own the networks. These tend and backbone providers. Backbone providers generally own what is the absolute backbone of the Internet, and control routing and switching of traffic. Own the local loop copper pairs, which most customers use to connect and the lines that lease to connect to the Internet, and much of the Internet backbone. 4.5 Bargaining Power of Buyers: Although an individual consumer has little or no say about how much an ISP charges, due to the rivalry within the market, ISPs generally have to offer their services at reasonable prices. They will lose their customer base if they charge more for a service someone else provides more cheaply. Switching costs are low, and so churn rates are high. 5.0 The External Environment A PEST Analysis of Hewlett-Packard (HP): A PEST (Political, Economic, Sociological and Technological) analysis is a scan of the outside environment to try to spot changes that might impact upon business. These changes might be seen as opportunities or threats. 5.1 P Political: HP operates as a global business within 145 countries world wide. It is organized into three global business groups which roughly correspond. HP is subject to various regional regulations and policies within the associated trading blocks. The key factors at play include trade regulations and tariffs, legal framework for Intellectual property and contract enforcement. The advent of globalization has mitigated against the more adverse impacts of such policies, Europe to America and Visa Versa. In addition, Japan and China and Korea are large important markets for HP and general movement to free markets has encouraged expanding trade here. 5.2 E Economic: HP is directly impacted by general economic trends. The Server, PC and storage business are barometers of general business economic climate, for example the 2001 technology crash impacted various areas of these business units. Also the mobile PC business, printer and ink business are directly tied to consumer spending and sentiment. The back to school consumer market is a very large component of the HP sales in summer months. HP is a mature company and with lower than average employee attrition rates, particularly within the United States, this aging workforce has negative financial implications for pension and downstream Medicare costs. 5.3 S Sociological: HP is subject to a number of macro social trends. One key trend is the market and political focus on green issues. HP as a large ink and printer manufacturer, people use a lot of paper and ink with HP products so its indirect carbon footprint is large. Also as the worlds largest PC and laptop manufacturer, HP will have to address potentially stricter environmental policies in the coming years. We already have seen recent European legislation concerning end of life disposal for consumer white goods. There is a large change in social interaction with technology, wireless and mobility are now key product and user demanded attributes. Peoples expectations relating to technology are accelerating. People are also using technology in new ways, HP must map and maintain coherence with these social trends to be successful. 5.4 T Technological: As HP is a technology enterprise, there are many macro factors at play in this category. The most salient are discussed here: Emergence of Linux This impacts HPs core enterprise platform business, HP has invested and developed over many years its own enterprise version of Unix called HP-UX. Convergence of standards and technologies Computing infrastructure is now viewed as a utility by many large enterprise customers, an intel based platform running windows is practically identical in terms of price /performance from any vendor. Scale of Technological Advancement The price /performance scalar for computing platforms is well documented but this rapid advancement has large impacts on how enterprises configure supply chains and routes to markets. Lower Cost Computing Improvements in technology have led to rapid advances in mobile technologies and lower cost have yielded large price /performance gains for consumers. Service revenues mix changing The advent of new technologies such as virtualization, standardization of the platforms and lower cost of hardware / software is changing the way customers now purchase value added services from HP. 6.0 Vision for Renewed Organization: It all started in 1939 when Bill Hewlett and Dave Packard created HP when they worked on an audio oscillator in a garage in Palo Alto, California. After Walt Disney bought several of these oscillators for their latest movie, Fantasia, the company was off and running. While HP began as a company that produced all sorts of electronic products, their first focus was on test products like counters and voltmeters. Later on in the sixties, HP ended up becoming the founder of Silicon Valley. They got into semiconductors in the early sixties and by 1966, they entered the computer market with the HP 2100and the HP1000. These were sturdy models that lasted for a good twenty years before more advancements saw screen keys and the HP 2640 rise to the occasion. HP is one of the few companies in the world to successfully marry the technologies of measurement, computing and communication. The company makes new advances in portable computing, enters the home-computing market and continues to invent new printing and imaging solutions. For most of the decade, HP enjoys growth rates of 20 percent. Early in the 90s, John Young retires and is replaced by Lew Platt, under whose leadership HP continues to grow. HP becomes recognized as a company whose policies on work-life balance, diversity and community involvement help attract and retain top employees. At the end of the decade, HP spins off its measurement and components businesses to form a new company, Agilent Technologies. It also brings on board a new CEO, Carleton (Carly) Fiorina, who focuses the company on reinventing itself for growth and leadership in the 21st century. HP has approximately 39,000 employees around the globe and has a large and diverse corporate organization. HP company has lot of computer systems in many locations such as Austin, Texas and Nashville that could be of high staffing cost and value that has contributed in maintaining sales to over thirty four offices around and then serve as the front line in terms of selling its products and services worldwide. In human resource side, HP conducts training for all employees in order to reduce absenteeism and human errors as well because the high-quality staff is required in enhancing the best quality performance of the company. HP Corporation aims for change in order to pursue sustainable growth as a broad market leader in mobile computing as well as for segment leadership. In both cases, the HP brands will play a crucial part. HP Corporation is able to establish its broad leadership usually by acquiring other strong mobile computing companies and their products, which are then combined into a new, larger company. Offering training to its employees, improving the company operations, and the introduction of new technologies then reinforces the positions of the various HP products. This practically results in economies of scale that is able to create a distribution network for both the local and international HP products. If a market is already in the control of other mobile computing companies, HP Corporation devotes its attention towards the development of a premium segment with its various HP products. The vision of HP Corporation for renewed organization is to secure the growth of the business in a sustainable manner, while at the same time constantly improving the companys profitability. The strategy to achieve this involves four elements: Striving in order to reach a leading position in attractive markets Focusing on securing a competitive share of the mobile computing market segments. Working in order to improve the companys efficiency and cut costs in operations. Continuous growth through selective acquisitions for as long as they are able to create shareholder value. 7.0 Scope of Change: 7.1 The Change for Staff: Human resources are an organizations most important asset. Ultimately an organizations distinctive competences lie in the skills and abilities of its employees. Because these skills and abilities give an organization a competitive advantage, organizations must continually monitor their structures to find the most effective way of motivating and organizing human resources to acquire and use their skills. Employees basically refer to people who work for another in return for wages or salary. Legally, an employee is referred to a person hired to provide services to a company on a regular basis in exchange for compensation, and who does not provide these services as part of an independent business. However, stated that employees are more than any of those definitions. Employees are the lifeblood of the organization because they are the ones who provide products and services that define corporations, organizations and government entities. They are referred to as the most precious assets of the organization because without them, the organization is crippled and cannot function effectively. Because of the important role of employees, HP Corporation has the responsibility to motivate them so as they can function more effectively. Theories of motivation such as Maslows theory, Alfelders theory, McClellands theory, and Herzbergs theory explain why employees and staff should be motivated and why organizations should take this concept into consideration. But what really constitutes effective employee motivation? Building a positive communication with employees is important because they are the organizations best ambassadors or loudest critics, depending on how fast they get relevant information and the context in which it is received. Information consistency affects the success of the company and if it fails to communicate information internally and externally, the reputation of the company may fall. Communication basically uplifts the morale of an employee as it makes them feel that they are valued by the organization. This also builds employee loyalty and satisfaction. 7.2 The Change for System: Organizational function needs to develop procedures that allow it to manage the particular environment it faces. As the environment changes. Organizations often transfer resources to the functions where the most value can be created. Crucial functions grow in importance, while those whose usefulness is declining shrink. An organization can improve the value that its functions create by changing its structure, culture, and technology. The change from a functional to a product team structure, for example, may speed the new product development process. Alterations in functional structure can help provide a selling in which people are motivated to perform. The change from traditional mass production to a manufacturing operation based on self-managed work teams often allows companies to increase product quality and productivity if employees can share in the gains from the new work system. There was a period when HP Corporation was generating its first surplus which was the effect of the cost-cutting activities imposed by their management. This was the time when HP Corporation had also realized that the organization needs to pay attention on it customer service so as to ensure that the industry will continue to earn profit. In order to initiate such change, HP Corporation hired Consultants to gather data about staff and customer attitudes. The result of such evaluation shows that there is a significant gap between what the staff is providing and what the customer actually needed. Hence, another management initiative was the change of the system from staff- oriented to customer oriented industry through the creation of customer is king culture within the organization. 7.3 The Change for Strategy: The organizational structure of HP Corporation also changed to a much flatter and slimmer structure. Five sections of the industry are directly reporting to the CEO and eleven profit centers were created. This structural alternation aims to enhance the staff integration and communication, within HP Corporation. The performance-related pay was also introduced by the management based on an appraisal system which values the significance of customer service and organizational cohesion. This change also includes major investments in ground facilities and IT in order to adhere to the needs of its customers. 8.0 Speed of Change: The speed of change can be two types_ Evolutionary Change is described as incremental, gradual and narrowly focused. This change is constant. Evolutionary change may be a carefully developed, long-term goal that an organization is moving toward. One tool that can promote and direct evolutionary change is strategic planning. Revolutionary Change Revolutionary change is dramatic, rapid and broadly focused. This radical shift may mean new ways of doing things, new goals or a new organizational structure. The three important components of revolutionary change are reengineering, restructuring, and innovation, as described by Jones and George. Revolutionary change is appropriate within the technology industry, where swift advancements often happen. Although an organization cannot plan for every situation, scenario planning may be most appropriate to predict potential revolutionary change. In scenario planning, a business envisions possible future outcomes and creates a plan to deal with each one. Reengineering involves rethinking and redesigning business processes to increase organizational effectiveness. Instead of focusing on an organizations functions, the managers of a reengineered organization focus on business processes Although the management change had been able to enhance the competitiveness of HP Corporation, this does not mean that the company felt the changes immediately and became free from any other problems and issues. Definitely, the employees and staff took time before they became fully adjusted with the changes as HP Corporation imposed a more comprehensive human resources management through its Staff Development Initiative. However, not all employees had been able to meet the objective of such initiative. Hence, the problem encountered by HP Corporation during and after the management change is a concrete evidence of the lengthy time that the company experienced getting accustomed with the changes. 9.0 Proposed Action: Strategy 1: Product Development The retailers represent HP Corporations largest sales and marketing channel which encompass national and regional office supply stores and mass merchants. Distributors represent HP Corporations second largest channel and generally sell to both traditional and Internet resellers and retailers. In Europe and Asia, HP Corporations market share is still relatively high. HP Corporation has more than 100 international distributors located worldwide. Strategy 2: Product Penetration The company uses the online store as a venue to sell its products. This is accomplished through the use of e-marketing campaigns and product bundles. The company is able to build awareness of its products and brands through mass media advertising, public relations efforts and branded Internet properties. The company also makes it a point to receive feedback from its customers through market research. The company then uses these feedbacks to refine its product development efforts and marketing strategies. The company also initiated an e-commerce strategy to increase online sales and provide new innovations in business class which increases customer satisfaction. Strategy 3: Enhancement of Operations / Efficiency and Effectiveness HP Corporations direct to customer model solve the problem for additional capital for marketing and sales. By selling directly to consumer it eliminated retailers along the way. One advantage of this kind of system is that the firm is continuously in contact with its customers and they are benefiting in two areas concerning sales and marketing, seeing sales trends and learning about unmet costumer demands. Strategy 4: Technology Improvement Technology is an important source of competitive advantage. And this is considered a strength of HP because the firm enjoys better access to technology. HP introduces the latest relevant technology much more quickly than companies with slow-moving indirect distribution channels. 10.0 Leadership: The existing style of leadership HP uses is the transformational leadership style as the CEO Michael HP applies this particular style of leadership that involves inspiring employees to transcend their own self interests and work for the larger good of HP company. HP articulates a vision that convinces subordinates to make important and positive changes in business process and management and relates to profound belief on beliefs and values that goes beyond its changes and achieving ways to transcend proper decision making engaging through such utilization factors as HP utilizes the IT as a factor for the successful running of its business. The acquisition by means of using some of the leadership styles as HP will make sure to value their customers and business partners in a form of interpersonal style of expressing to a level of virtually integrated as if theyre inside the company and by having customer information as used for analyzing and forecasting customer demand and achieving th e mass customization. HP expect that the success would be forever and they expect that other companies might implement such leadership models and believed that Information Technology would play a vital role in the success of the business as well as the centerpiece of the business per se. 11.0 Communication Change: Communication is important in HP Corporation because its business environment is the place where many interactions are needed, and where much information is acquired. It always involves openly competitive activity, in which working professionals in HP Corporation debate issues, defend positions, and evaluate the arguments of others. Most working professionals in HP Corporation, particularly those in middle and upper management, routinely produce a variety of messages, many of which are in the written form of memoranda, electronic mail, letters, reports, performance reviews, instructions, procedures, and proposals. It is also argued that a fuller understanding of organizations is a vital ingredient at every forward step of the career process, and that communication is a primary element for understanding how organizations function and how members of the organization should, even must, behave in organizations if they are to advance their careers. The practice of effective communication within HP Corporation is also linked with the development of a healthy corporate culture, job satisfaction of employees, and the happiness and productivity of employees. Communication skills are also important to the leaders of HP Corporation because it helps them manage the company more effectively. 12.0 Conclusion: It seems that the major cause of the problems encountered by HP Corporation is due to the unplanned management changes imposed. In addition, the problems also arise because of the inadequate knowledge of its management about the use of strategic management and other management systems. This way, the empire of HP Corporation will remain unscathed amidst the advent of consolidation and globalization.