Professional Documents
Culture Documents
Semester: 5th
TABLE OF CONTENTS
HISTORY OF HP Page 08 – 10
IE – MATRIX Page 28
CONCLUSION Page 33
REFRENCES Page 34
Page 02
Page 03
Page 04
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Page 06
Page 07
VISION STATEMENT OF HP
“To view change in the market as an opportunity to grow; to use our profits and our ability to develop and
produce innovative products, services and solutions that satisfy emerging customer needs.”
MISSION STATEMENT OF HP
“To provide products, services and solutions of the highest quality and deliver more value
to our customers that earns their respect and loyalty.”
MISSION STATEMENT
"HP's mission can be the most successful computer company in the world at delivering the best
customer experience in markets we serve”.
VISION STATEMENT
Its the way we do business. It's the way we interact with the community. It's the way we interpret
the world around us-- our customers needs, the future of technology, and the global business
climate. Whatever changes the future may bring our vision -- HP Vision -- will be our guiding
force.
So HP needs full customer satisfaction. In order to become the most successful computer
company.
Page 08
The 30s
Following graduation as electrical engineers from Stanford University in 1934, Bill Hewlett and Dave Packard
go on a two-week camping and fishing trip in the Colorado Mountains during which they become close
friends. Bill continues graduate studies at MIT and Stanford while Dave takes a job with General Electric.
With the encouragement of Stanford professor and mentor Fred Terman, the two decide to start a business “and
make a run for it” themselves. Hewlett-Packard Company is founded January 1, 1939.
The 40s
Products from the fledgling company win excellent acceptance among engineers and scientists. The start of
World War II turns a trickle of U.S. government orders for electronic instruments into a stream and then a
flood. HP builds the first of its own buildings and adds several new products.
As HP grows, Bill Hewlett and Dave Packard create a management style that forms the basis of HP’s famously
open corporate culture and influences how scores of later technology companies will do business. Dave
practices a management technique — eventually dubbed “management by walking around” — which is marked
by personal involvement, good listening skills and the recognition that “everyone in an organization wants to do
a good job.” As managers, Bill and Dave run the company according to the principle later called management
by objective — communicating overall objectives clearly and giving employees the flexibility to work toward
those goals in ways that they determine are best for their own areas of responsibility.
HP also establishes its open door policy — opens cubicles and executive offices without doors — to create an
atmosphere of trust and mutual understanding. The open door policy encourages employees to discuss problems
with a manager without reprisals or adverse consequences.
Bill and Dave make other important management decisions: providing catastrophic medical insurance, using
first names to address employees (including themselves), and throwing regular employee parties and picnics.
The 50s
Hewlett-Packard goes through a growing and maturing process in the 1950s, learning much about the “new”
technology of electronics and about the internal effects of growth. “How” the company should grow is as hotly
debated as “how much” the company should grow. HP hammers out its corporate objectives — the basis of its
special management philosophy and the core of the HP Way.
The company goes public in 1957. In keeping with Bill Hewlett and Dave Packard’s respect for
workers, HP takes the then-unusual step of giving stock grants to employees.
The growing company begins building on the site that will become its corporate headquarters in Palo Alto,
California. HP also embarks on a path toward globalization, establishing manufacturing and marketing
operations in Europe.
Page 09
The 60s
HP continues its steady growth in the test-and-measurement marketplace and branches out into related fields
like medical electronics and analytical instrumentation. It also develops its first computer (the HP 2116A),
making its entry into that business in 1966.
The company continues its expansion overseas, forming several subsidiary companies. Early in the decade it
expands into Asia with a Japanese joint venture. In the U.S., HP opens its first manufacturing plants outside
Palo Alto.
HP begins to be noticed as a progressive, well-managed company — and a great place to work.
The 70s
HP continues its tradition of innovation with the introduction of a new array of computing products. Foremost
among them is the HP-35, the first scientific handheld calculator, which ushers in a new era of portable,
powerful computing.
HP continues to look for new opportunities around the globe, laying the groundwork for an eventual joint
venture with China over the course of several trips by HP representatives to that country.
The decade is marked by significant growth in earnings and employment, with HP passing the $1 billion mark
in sales in 1976. The company will pass the $2 billion mark three years later in 1979. Toward the end of the
decade, Bill Hewlett and Dave Packard delegate day-to-day operating management of the company to John
Young.
The 80s
HP becomes a major player in the computer industry in the 1980s with a full range of computers, from desktop
machines to portables to powerful minicomputers. HP also links computers with its electronic instruments and
medical and analytical products, making them faster and more powerful.
HP makes its entry into the printer market with the launch of inkjet printers and laser printers that connect to
personal computers. HP's high-quality, inexpensive inkjet printers spell the end of dot-matrix printers. The HP
LaserJet printer line, which debuts in 1984, goes on to become the company's most successful single product
line ever. The quality and reliability of HP's printers make HP a highly recognizable brand by both consumers
and businesses.
Near the end of the decade, HP is recognized for its rich past as well as for its technological advances and
products. The garage where the company started is declared a California historical landmark, and HP celebrates
its 50th anniversary.
Page 10
The 90s
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.
Page 12
EXTERNAL ANALYSIS
OF
OPPORTUNITIES & THREATS
Some of very important External Opportunities are as below:
• The biggest advantage to HP by the merger with Compaq it became world's biggest computer
hardware and Peripherals Company in the world, ranking 20 in the Fortune 500 list.
• Another advantage is that, Company is doing business in more then 170 countries including the ones
that are developing and under-developed. Being a large company gives HP many advantages like
dominating the market for printers, both laser and inkjet, and both for consumers and companies
using the economies of scale.
• The company is also taking an active role in developing the capacity of new markets all around the
world, engaging with other multinational corporations, non-governmental organizations and other
world governing bodies to reignite the competitiveness at home and abroad through policies and
strategies that can support free-market economies. This is one of the reasons that makes HP a
leading technology company in the growing IT markets (HP Annual Report, 2003).
• Another advantage to HP is e-commerce expansion.
• One of the most important advantages to HP is, day by day development of imaging and printing
business.
Some External Threats to HP are as follows:
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The purpose of an external audit is to develop a finite list of opportunities that could benefit a firm and threats
that should be avoided.
EFE MATRIX
FOR
HEWLETT PACKARD
Key External Forces
OPPORTUNITIES Weight Rating Weighted
Score
HP merger with Compaq 0.15 4 0.60
Business in Global Markets 0.10 4 0.40
Developing capacity of new markets 0.10 4 0.40
e-commerce expansion 0.10 3 0.30
Day by day development of imaging & printing 0.08 3 0.24
business
THREATS
Intense competition from other PC manufacturers 0.07 3 0.21
Slowdown in economic condition 0.05 3 0.15
Increasing competition on imaging and printing 0.05 3 0.15
Product recalls and supply chain disruptions 0.07 3 0.21
The past acquisition of Peregrine 0.05 2 0.12
other competitors including Dell are entering the printer 0.04 3
business
The global economic recession 0.08 4 0.32
many competitors 0.06 3 0.18
1.00 3.28
Page 14
INTERNAL ANALYSIS
FOR
HEWLETT PACKARD\
All organization has strengths and weaknesses in the functional areas of businesses. No enterprise is equally
strong or weak in all areas. Internal strengths/weaknesses coupled with external opportunities/threats and clear
statement of mission, provide the basis for establishing objectives and strategies. Strategies are established with
intention of capitalizing upon internal strengths and overcoming weaknesses.
1. The company was in a long term debt for many years which kept it from investing in different growth
opportunities.
2. A major problem and complaint about the hardware supplies of HP is its touch pads. These touch pads
are either finicky, unreliable, or are difficult to use because of friction.
3. When it comes to Software that HP provides there are also some weaknesses. Some heavy software’s
were paired with slow hardware like Touch Smart.
4. Internal control issues.
5. Lack of in-house management consulting division.
6. No aggressive investments in R&D compared to historical spending.
7. No Good People retention policy or HR practices to ensure employee is protected.
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RATIO ANALYSIS
OF
HEWLETT PAKCARD
Note : All Figures Are Rounded off to Two Decimal points.
a. LIQUIDITY RATIOS:
a.i) Current Ratio = Current Assets / Current Liabilities
INTERPRETATION:
• This ratio shows the extent to which a firm can meet its short term obligations.
• 2 : 1 shows good position according financial analysts. If this ratio increase by 2 : 1 ( e.g. 3:1 )
this is also moment to worry as extra cash is held by business or staked in current assets.
• If we horizontally analyze this ratio, the results of 2006 shows decrease in firm’s power of
meeting short term obligation by “0.03.”
• This decrease might be due to the reason that, firm has invested extra cash any where else.
• Current Liabilities of 2006 are also increased by 13.95%.
a.ii) Quick Ratio or Acid test ratio = Current Assets – Inventory / Current Liabilities
Quick Ratio = 48264 – 7750 / 35850 Quick Ratio = 43334 – 6877 / 31460
= 1.13 : 1 = 1.16 : 1
INTERPRETATION:
• The extent to which a firm can meet its short term obligations without relying upon the sales of
its inventories.
• Inventories are minus because; inventories of one firm cannot be sold very quickly, but at lower
price.
• The difference of same “0.03” is also shown here, the reasons of this difference are discussed
above.
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b. LEVERAGE RATIOS:
b.i) Asset to Debt Ratio = Total Debt / Total Assets
Asset to Debt Ratio = 43837/ 81981 Asset to Deb Ratio = 40141 / 77317
INTERPRETATION:
• The percentage of total funds that are provided by the creditors.
• This ratio shows the relationship between debts obtained by an entity’s assets.
b.ii) Long term Debt to Equity Ratio = Long term Debt / Total stock holders equity
For 2006 For 2005
Long term Debt to Equity Ratio = 2490 / 38144 Long term Debt to Equity Ratio = 3392 / 37176
= 0.06 or 6% =0.09 or 9%
INTERPRETATION:
• The percentage of total funds provided by creditors versus by owners.
• The ratio indicates how much of capital backing is available against debt.
• If the ratio is higher it means that the entity is depending more on debt than its own capital.
• The difference of 3% between 2006 & 2005, is a good sign that a firm has lack its dependence on
debt.
b.iii) Time Interest Ratio = Profit before Interest and Taxes / Total Interest charges
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c. ACTIVITY RATIOS:
c.i) Inventory Turnover Ratio = Sales / Inventory of finished goods
For 2006 For 2005
Inventory Turnover Ratio = 91658 / 7750 Inventory Turnover Ratio = 86696 / 6877
= 11.83 times = 12.61 times
INTERPRETATION:
• Whether a firm holds excessive stocks of inventories and whether a firm is slowly selling its
inventories compared to the industry slowly.
• This ratio indicates that for how many days the inventory remained before it is sold.
• The higher the day the more the inventory is kept before sale.
• If compare both years results, there is difference of “0.78” time.
• Although this number is not so greater but, the firm should take care that this decrease should not
become consistent in future too.
INTERPRETATION:
• This ratio shows that averagely in how much day’s credit sale are being converted in to cash.
• The increase in 2006 might be the done to increase the sale.
c.iv) Average Payment Period = Accounts Payable / Average Purchas per day
For 2006 For 2005
Average Payment Period = 12102 / (7750/360) Average Payment Period = 10233 / (6877/360)
INTERPRETAION:
• This ratio shows the result, that after how long credit purchases are been paid.
• Higher the result shows the company having full advantage of credit available.
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INTERPRETATION:
• This shows how many $ are generated by each $ of assets.
• The decline in the ratio shows that although capital is increased, sales have not increased vice
versa.
• There is no growth shown in total Asset turn over.
d. PROFITABILITY RATIOS:
d.ii) Operating Profit Margin = Earnings before interest and taxes / Sales
For 2006 For 2005
Operating Profit Margin = 6560 / 91658 Operating Profit Margin = 3473 / 86696
= 0.07 or 7% = 0.04 or 4%
INTERPRETATION:
• Profitability without concern for taxes and interest.
• This ratio shows the percentage increase / decrease in the operating profit.
• It indicates the operational efficiency of management.
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d.v) Return on Stock holder Equity = Net Income / Total Stock holders Equity
Return on Stock holder Equity = 6198 / 38144 Return on Stock holder Equity = 2398 / 37176
= 0.16 : 1 = 0.06 :1
INTERPRETATION:
• This ratio show after tax profit per $ of Stock holder’s Equity in the firm.
• Higher ratio shows firms best utilizing policy of Stock holder’s Equity.
d.vi) Earnings Per Share = Net Income / No. of Shares of Common Stock Outstanding
Earnings Per Share = 6198 / 2782 Earning Per Share = 2398 / 2879
INTERPRETATION:
• This ratio shows earnings available to the owner of stock holder’s equity.
• The EPS is a good measure of profitability and when compared with EPS of similar companies,
it gives a view of the comparative earning or earning power of the firm.
• This result clearly indicates the increase in EPS of fir.
e. GROWTH RATIOS:
e.i) Sales growth = Annual % Growth in Sales
For 2006 For 2005
Sales growth = 5% increase from 2005 Sales growth = 8% increase from 2004
INTERPRETATION:
• This ratios result shows how much a company has grown in respect of sales from previous year.
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Net Income growth = 158% increase from 2005 Net Income growth = (31.43%) decrease from 2004
INTERPRETATION:
• This ratios result shows how much a company has grown in respect of Net Income from previous
year.
EPS growth = 168% increase from 2005 EPS growth = (28.45%) decrease from 2004
INTERPRETATION:
• This ratios result shows how much a company has grown in respect of EPS from previous year.
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Inbound logistics
Manufacturing
Outbound logistics
Services (maintenance)
WEAKNESSES
Advertisement 0.03 2 0.08
Internal control issues 0.04 2 0.08
Unrest among internal 0.05 2 0.10
employees
No Good People retention 0.06 1 0.06
policy
IE-MARTIX
HEWLETT
PACKARD
3.0
Medium
2.0 to 2.99
2.00
Low
10 to 1.99
1.00
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Weaknesses
• Internal control issues
Strengths • Lack of in-house
• Strong brand equity management consulting
• Diversified product portfolio division
• (offerings spans personal computing and • No aggressive investments
• other access devices; imaging and printing-related in R&D compared to
• products and services; enterprise historical spending
• information technology infrastructure, • Unrest among internal
• multi-vendor customer services, consulting and integration and employees due to pay cuts
outsourcing services) and lack of "people care"
• Solid market position in key segments • Intellectual Capital is under
• Strong financial condition estimated
• No Good People retention
policy or HR practices to
ensure IC is protected
Threats
Opportunities • Intense competition from
• Emerging markets, particularly BRIC countries other PC manufacturers
• e-Commerce expansion • Increasing competition on
• Restructuring of internal IT structure imaging and printing
• Imaging and printing businesses • Slowdown in economic
conditions in US, Europe
• Product recalls and supply
chain disruptions
Page 33
CONCLUSION
HP and dell are in a dogfight with Hp having just overtaken Dell in total revenues, market share,
and financial condition. But Dell still has by far the dominant position in the Internet and phone
sales of PCs.
Dell computers are now available in Wal-Mart stores and Sam’s Clubs in a break from their
historical absence in retail stores.
Page 34
REFERENCES:
• www.google.com
• www.hp.com
• www.answers.com
• www.opapers.com
• www.crn.com
• www.wsj.com
• www.investor.reuters.com
• Finance.yahoo.com
• “ Strategic Management Concepts and Cases” by “Fred R. David”