Term paper

On

Analyse Porter five forces model of HP Compaq

Submitted to Submitted by

Mr. Ajay Chandel Manjit Paul

Reg.no: 10902965

Roll no.R1903A23
ACKNOWLEDGEMENT

Through my gratitude towards my supporters yet I like to add a few hearts full for the people
who were part of this case study in numerous ways. People who gave understanding support
right project ideas were conceived.

I want to thank Mr. Ajay Chandel, lecturer of LSB, LPU, Phagwara for assigning this term paper
& I also want to give hands full gratitude to him for their help & guidance, for having faith inme,
& for their kind inspiration and helping me whenever asked.

Last but not least, I expand my heartiest gratefulness all people who have given me best wishes
& all help that I needed for the completion of the term paper.

MANJEET PAUL
CONTENTS

• Executive summary

• Introduction of HP

• Introduction to Compaq

• HP-Compaq merger

• Review of literature

• Objective of study

• Scope

• Need

• Methodology

• Business strategy of HP

• Pricing strategy of HP

• Introduction to Porter five forces model

• Porter five forces model of HP-Compaq

• Interpretation

• Recommendations

• Suggestions

• Conclusion

• References
 • Annexure

EXECUTIVE SUMMARY

This term paper is based on analysis of Porter five forces model of HP- Compaq. In this first of
all introduction of HP- Compaq is provided. Which give insight into how HP Company is
formed it mission, competitive advantage, pricing strategy, business strategy. Then brief
information is provided about Compaq Company, its merger with HP. Porter five forces model is
discussed. For the additional information review of literature of twenty articles is given. Based
on these articles and porter five forces model, findings are extracted, based on these findings,
recommendations are provided.

INTRODUCTION

Hewlett-Packard Company commonly referred to as HP, is an American

multinational information technology corporation headquartered in Palo Alto, California, USA.
The company was founded in a one-car garage in Palo Alto by Bill Hewlett and Dave Packard, and
is now one of the world's largest information technology companies, operating in nearly every
country. HP specializes in developing and manufacturing computing, data storage, and networking
hardware, designing software and delivering services. Major product lines include personal
computing devices, enterprise servers, related storage devices, as well as a diverse range of printers
and other imaging products. HP markets its products to households, small- to medium-sized
businesses and enterprises directly as well as via online distribution, consumer-electronics and
office-supply retailers, software partners and major technology vendors

Stanford University classmates Bill Hewlett and Dave Packard founded HP in 1939. The
company's first product, built in a Palo Alto garage, was an audio oscillator—an electronic test
instrument used by sound engineers. One of HP's first customers was Walt Disney Studios, which
purchased eight oscillators to develop and test an innovative sound system for the movie Fantasia.

Company objective

HP is committed to developing products, services and information that are accessible to everyone,
including people with disabilities or age-related limitations. This commitment supports our
company's diversity and "Total Customer Experience" objectives and helps ensure that the benefits
of technology are available to all.

“It is necessary that people work together in unison toward common objectives and avoid working
at cross purposes at all levels if the ultimate in efficiency and achievement is to be obtained.”1

– Dave Packard

vision and strategy

At HP, we believe diversity is a key driver of our success. Putting all our differences to work
across the world is a continuous journey fueled by personal leadership from everyone in our
company. Our aspiration is that the behaviors and actions that support diversity and inclusion will
come from the conviction of every HP employee - making diversity and inclusion a conscious part
of how we run our business throughout the world 2.
Competitive Advantage

HP leaders have an advantage that enables them to learn and adjust as few others can. The depth,
breadth, and vitality that come alive daily through the firm's values – the HP Way – are asset from
which most of the Silicon Valley continues to learn. HP general managers regularly discuss and
assess the vitality of the HP Way, a process, which inevitably results in corrective actions to ensure
1
http://alignment.wordpress.com/2007/09/17/management-without-walking-around/,viewed
on 26oct, 2010
2
http://foi.becta.org.uk/content_files/corporate/resources/policy_and_strategy/board/hp_abo
ut.pdf, viewed on 26 Oct, 2010.
its continued viability.

Top business priorities of HP are its lower costs, IT systems/technology improvements, Increase
business growth, Improve efficiency, Customer service improvements.

Processes

HP is organized around two groups: the Business Customer Organization and the Consumer
Business Organization (Wagonfeld, Rubenstein, and Block, 2001). Supplying both groups are the
four product divisions: computing systems, imaging and printing systems, and embedded personal
systems. HP also has a group, HP Services, which works between the customer, and product
groups; and HP Labs, which supplies the product groups with new technologies and ideas. HP's
computing systems provides a broad range of computing systems, ranging from mission-critical
systems and software to personal computers for the business and home. Major product lines
include UNIX-r and personal computer (PC) servers, desktop and mobile personal computers,
workstations, software solutions and storage solutions. HP's imaging and printing systems provides
laser and inkjet printers (both monochrome and color), copiers, scanners, all-in-one devices,
personal color copiers and faxes, digital senders, wide- and large-format printers, print servers,
network-management software, networking solutions, digital photography products, imaging and
printing supplies, imaging and software solutions, and related professional and consulting services.
HP's IT Services provides consulting, education, design and installation services, ongoing support
and maintenance, proactive services like mission-critical support, outsourcing and utility-
computing capabilities, including financing capabilities such as leasing, automatic technology-
refreshment services, solution financing and venture financing.

Compaq computers

Headquartered in Houston, Texas, Compaq was founded in 1982 by Rod Canion, Jim Harris and
Bill Murto, three senior managers who left Texas Instruments and invested $1,000 each to form
their own company. Sketched on a paper place mat in a Houston pie shop, the first product was a
portable personal computer able to run all the software then being developed for the IBM PC. In
1986, after four years of operation, the company moved to the Fortune 500 more rapidly than any
company previous.
Process

Compaq develops its products through three groups: The Enterprise Computing Group, the
Commercial PC Group, and the Consumer PC Group. The Enterprise Computing Group designs
and develops mainframes, servers, workstations, fault tolerant business-critical solutions,
enterprise options, enterprise solutions, Internet products, and networking products. The
Commercial PC Group designs and develops commercial desktops, portables, options, and small
and medium business solutions. The Consumer PC Group designs and develops consumer
products, including desktops, minitowers, portables, printers, and options. Compaq markets its
products and services primarily to customers from the business, home, government, and education
sectors.3

HP Compaq merger

In 2001, Compaq engaged in a merger with Hewlett-Packard. The new HP will become the second
largest global technology provider with about $87B in revenues (combined revenue for the last
four reported quarters) and many opportunities to create competitive advantages with their
resources. Having the capability to provide multiple solutions (servers, access devices, imaging
and printing, storage and IT services), the new HP will be in a position of significant competitive
advantage - comparable to leader IBM. Before the merger, Compaq's ticker symbol was CPQ. This
was melded with Hewlett-Packard's previous symbol (HWP) to create the current symbol of HPQ.4

REVIEW OF LITERATURE

Aaron, Shari (2010): Increasingly, companies understand that they can strengthen
their competitive advantage and reach new heights through innovation and sustainability.
Increased collaboration and cooperation among all sectors will accelerate the pace by which
companies can achieve sustainability. The time is now to empower more employees who work
inside corporations to champion sustainability. Companies such as HP and Wal-Mart have
3
http://proquest.umi.com/pqdweb?
index=1&did=653882411&SrchMode=1&sid=4&Fmt=4&VInst=PROD&VType=PQD&RQT=3
09&VName=PQD&TS=1287155610&clientId=129893, viewed on 7 nov,2010
4
http://proquest.umi.com/pqdweb?
index=1&did=653882411&SrchMode=1&sid=4&Fmt=4&VInst=PROD&VType=PQD&RQT=3
09&VName=PQD&TS=1287155610&clientId=129893, viewed on 7nov, 2010
active, well-branded employee-engagement programs where they work to bring education and
awareness about sustainability to their employees. The theory is to train employees to think like
sustainability champions and empower them to find practical, business-building solutions for
their workplaces. HR departments, focused on employee career development, can champion
employee training on sustainability and harness the collective innovation of their employees.

Anon (2010): Risks, uncertainties and assumptions include macroeconomic and geopolitical
trends and events; the execution and performance of contracts by HP and its customers, suppliers
and partners; the achievement of expected operational and financial results; and other risks that
are described in HP's Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2010
and HP's other filings with the Securities and Exchange Commission, including but not limited
to HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2009.

Roy, Preeta, Roy, Probir (2004): investigate the ongoing challenges faced by consolidation in
the technology industry. Their focus is on analyzing the potential of technology mergers by
focusing mainly on the merger of HP and Compaq. The HP-Compaq merger presents an
interesting case in which two of the most significant complexities are the blend of different
organizational cultures and the integration abilities of leadership. Compaq could be too big for
HP to digest and many are wary of HP management's attempts to aggressively reinvent the
organizational culture overnight. As Compaq rose quickly through innovation and acquisitions,
unlike HP, to become an industry leader, many argue that the clash of cultures is imminent
between HP's conservative corporate culture and Compaq's more maverick corporate culture. But
leadership skills of top management helped a lot in blending the two different cultures of both
companies so that synergy can b e induced for better productivity and profitability of
organization

Brown, Meredith, Kubek, Gary (2002): The Delaware Chancery Court has rejected challenges
to the vote at which Hewlett-Packard (HP) shareholders approved issuing shares to carry out the
company's proposed merger with Compaq Computer. The challenges came from Walter Hewlett,
a dissident director of HP, who questioned the validity of the vote on two grounds: vote buying
and improper disclosure. Although the court did not uphold either claim, the decision depended
heavily on the evidence presented and the credibility of the witnesses. The legal significance of
the case lies not in its ultimate decision, but in its elaboration of legal principles, especially with
respect to vote buying. This could lead to successful challenges to voting in other cases if
participants in a proxy contest are not careful.

Anon (2002): When institutional shareholders famously opposed the HP/Compaq merger, the
power of the investor in today's organization was seen. Shareholders have the ability to block
mergers, replace board members, and influence directors. However, if it comes to light that an
organization has behaved unethically, investors are rarely held accountable.

Davidson, Alistair (2002): An interview is presented of Robert I. Sutton, author of Weird Ideas
That Work: 11 1/2 Practices for Promoting, Managing and Sustaining Innovation. Sutton
discusses his diverse hiring approach. One way to think about whether to hire qualified
specialists or smart generalists is to look at the professional demographics of Silicon Valley.
Sutton also looks at HP and its merger with Compaq. He suggests that the HP/Compaq merger
controversy between management and key board members is, in many ways, about power.
Sutton suggests that the successful visionaries only hold one constant.

Business line (2002): Post merger with Compaq, HP, is the only company delivering
virtualisation that facilitates customers to scale their storage, upgrade functions and add services
as required. Banking and financial services industry and the growing telecom business and e-
governance applications in the country offer a great scope for growth of network storage
business, Mr [Avijit Basu] said. The HP' vision is based on ENSA or enterprise network storage
architecture that unites HP and Compaq to help customers optimise their IT resources with
greater efficiency, flexibility and continuity. The US Corporation, which has over 750
virtualisation installations globally, sees this as new technology that will be useful in
the Indian context as this extends end to end storage solutions that provide a seamless interface.

Bray, Hiawatha (2002): discussed that how two competitors HP and Compaq carrying
consolidation plans. This has forced the two companies to assign their consolidation teams to a
"clean room" -- an office separated from the normal business functions of both companies. HP
and Compaq workers in the clean room can't use information learned about each other to gain a
competitive advantage in the market. But they have the confidential information on both
companies that they need to manage the transition. HP already has its own version of UNIX,
called HPUX, with a bigger share of the market than Compaq's Tru64. Nobody expects HP-
Compaq to keep selling both. "For Tru64, there have already been some indications that it's
going to get folded into HPUX in some form," said [Jim Becker]. That means HP-Compaq will
have to provide a migration path to keep the customers happy as they're switched to the other
version of UNIX.

Ahles, Andrea (2002): discussed that merger made HP the largest PC maker in the world,
Austin-based Dell Computer is looking to reclaim its top position. Recent announcements that
Dell was entering the unbranded PC resale market and the printer business, which HP dominates,
have increased the competitive pressure on HP. The company's reduction in work force is
expected to be completed next year. About

Durant, Bon, R, William (1992): The professional staffs of the Hewlett-Packard Co. (HP)
Market Research & Information Centre is trained to be expert in research strategy and technique
as applied to marketing decision making. The organization is divided into 3 elements: 1. Market
Information Centre, 2. decision support teams, and 3. regional satellites. The goal of research
as HP practices it is to improve the bottom-line impact of marketing decision making. The
company's practice of research is built around a 3-stage concept: intelligence, testing, and
tracking. It is important to differentiate between each of the phases in the process because each
activity has a different purpose and nature. Most of the research it conducts fits into 3 categories:
1. product definition, 2. price elasticity, and 3. advertising and communications. Of all the issues
in research implementation, the ongoing challenges include sampling, reducing the time
necessary to conduct research, and determining the validity of the research methods used.

$200 million in facilities have been closed, and HP has achieved $419 million in savings.

OBJECTIVE OF STUDY

• Analyse the porter five forces model of HP-Compaq.

• Analyse business and pricing strategies of HP-Compaq

• Give suggestions to HP-Compaq Company for the betterment of its future.

SCOPE OF STUDY
This term paper is based on analysis of Porter five forces model of HP- Compaq. This will
helpful in gaining insight into the industry position of HP Compaq. This analysis provides
knowledge on what kind of strategies HP-Compaq should adopt in order to make it competitively
strong.

NEED OF STUDY

In the current scenario, it is very essential for an organization to understand its position in the
industry. There are many players in the computer industry like Dell, IBM, Toshiba, Sony vaio
etc. so it becomes essential for an organization to understand which factors are having greater
effect on me like customers, suppliers, competitors etc. these factors will help the industry to
know how to sustain in this particular marketplace to gain win-win situation.

METHODOLOGY

Research methodology comprises of two words research and methodology. Research is a process
of defining and redefining problems formulating the different hypothesis with suggested
solutions by collecting, summarizing, organizing and evaluating different data’s by thus reaching
on solutions with careful testing. Research is common means which refer to search for
knowledge and methodology is defined as a particular procedure or set of procedures used in
finding the answers of problem or problems. This research is based on second hand data.

Secondary data: secondary literature is also being used which studies are made by others for
their own purposes. For this we have used articles from www.proquest.com, www.ssrn.com and
also from times of India, books, journal.

PRICING STRATEGY OF HP-COMPAQ

There is at least one clear benefit that resulted from the HP and Compaq merger. Both Compaq
and HP were in an unwinnable price war with Dell. By merging, at least Compaq and HP
stopped competing with each other. In February 2001, Dell biggest competitor of HP-Compaq
launched a campaign to become the largest competitor in the PC industry. It announced that it
was intentionally undercutting competitors' prices by 10% to quickly grab market share. That
announcement, along with the well-known fact that Dell has a cost advantage over its
competitors, was a signal to the rest of the PC industry that if others tried to match Dell's prices
they would be playing a game they couldn't win.

From a game theory perspective, each party has the same to lose but, in this game, Dell knows
that HP with Compaq has more to lose. A threat by HP and Compaq to match Dell's prices isn't
credible because HP and Compaq can't sustain losses forever. From a game theoretic perspective,
HP's and Compaq's dilemma can be represented as a 2 x 2 matrix as described in diagram 2 of
annexure. From the matrix it is cleared that there is greater impact of pricing decision taken by
both companies on each other (marker share and profit).

BUSINESS STRATEGIES

HP focuses on simplifying technology experiences for all of its customers – from individual
consumers to the largest businesses. With a portfolio that spans printing, personal computing,
software, services and IT infrastructure.

E-services

In 2000 when Fiorina was CEO of company, HP was a collection of independent businesses,
each selling a particular kind of product. Fiorina was hired to execute an "e-services" strategy
that would meld these pieces into one powerful, profitable whole. HP could sell everything from
handheld gizmos to back-office servers, with the

After post merger of HP-Compaq

Main strategies on which HP is focusing are:
• Sustainability : The new HP must retain and grab additional market share
• Uniqueness : Largest I.T company in the world
• Value added : Merger must demonstrate success
• Enhancement : Increased product line
• Flexibility :Adaptation to market forces
• Stability –:Retention of customer/client base
HP launches ‘Instant-On Enterprise’ for integrated IT solution(2010)

Hewlett-Packard unveils "Instant-On Enterprise", an organization to better address the rapidly

changing needs of customers. It is an integrated solution that helps businesses and governments
create their own Instant-On Enterprise due to the three global mega trends: evolving business
models, technology advancements and changing workforce. HP is helping organizations reinvent
their use of technology to innovate at every point in the value chain within the enterprise. This
includes services that are delivered, the mobile devices that provide the access and the global
data centres required to power the Instant-On Enterprise."It takes a special kind of enterprise to
close the expectation gap between what customers and citizens expect and what the enterprise
can deliver," said Piau Phang Foo, senior vice president and managing director for HP Asia
Pacific and Japan. "The Instant-On Enterprise delivers differentiated competitive advantages
serving customers, employees, partners and citizens with whatever they want and need, instantly.
Only HP has the solutions to help organizations become Instant-On Enterprises.

Hewlett-Packard improved its technology; the company uses to manage its direct sales,
while it continues with commercial printing efforts and acquisitions of software companies
(2006)

Those acquisitions included security software companies, storage software makers and software
companies that serve the blade server market. The acquisitions dovetail with HP's growth plans
for its Technology Systems Group, which has already bought companies such as AppIQ for
storage management. Market trends indicated a movement away from mainframe computers and
a shift to blade servers, as well as virtualized storage. HP is likely to follow those trends.
Meanwhile, in HP's Imaging & Printing Group, the long-term plan to develop commercial
printers was likely to continue. On the chip front, although HP and Intel had had a long
relationship involving their collaboration on the Itanium chip, but delays by Intel have created
frustration in the HP camp, the source said. As a result, HP used Intel's archrival Advanced
Micro Devices as a cattle prod of sorts to the chip giant, the source noted.

Porter five forces analysis

Porter's five forces is a framework for the industry analysis and business strategy development
developed by Michael E. Porter of Harvard Business School in 1979. It draws upon Industrial
Organization (IO) economics to derive five forces that determine the competitive intensity and
therefore attractiveness of a market. Attractiveness in this context refers to the overall industry
profitability. An "unattractive" industry is one in which the combination of these five forces acts
to drive down overall profitability. A very unattractive industry would be one approaching "pure
competition", in which available profits for all firms are driven down to zero. Porter's five forces
include three forces from 'horizontal' competition: threat of substitute products, the threat of
established rivals, and the threat of new entrants; two forces from 'vertical' competition: the
bargaining power of suppliers and the bargaining power of customers. Porter five forces model is
described in diagram 2 in annexure.

The threat of the entry of new competitors

Profitable markets that yield high returns will attract new firms. This results in many new
entrants, which eventually will decrease profitability for all firms in the industry.

The existence of barriers to entry the most attractive segment is one in which entry barriers are
high and exit barriers are low. Few new firms can enter and non-performing firms can exit easily.

The intensity of competitive rivalry

In the traditional economic model, competition among rival firms drives profits to zero. But
competition is not perfect and firms are not unsophisticated passive price takers. Rather, firms
strive for a competitive advantage over their rivals. The intensity of rivalry among firms varies
across industries, and strategic analysts are interested in these differences. For most industries,
the intensity of competitive rivalry is the major determinant of the competitiveness of the
industry.

The intensity of rivalry is influenced by the following industry characteristics:

• A larger number of firms, slow market growth, high fixed costs

• Low switching costs increases rivalry. When a customer can freely switch from one
product to another there is a greater struggle to capture customers.

• Low levels of product differentiation are associated with higher levels of rivalry. Brand
identification, on the other hand, tends to constrain rivalry.
 • Strategic stakes are high when a firm is losing market position or has potential for great
gains. This intensifies rivalry.

• High exit barriers place a high cost on abandoning the product. The firm must compete.
High exit barriers cause a firm to remain in an industry, even when the venture is not
profitable.

The threat of substitute products/ services

The existence of products outside of the realm of the common product boundaries increases the
propensity of customers to switch to alternatives:

• Buyer propensity to substitute

• Relative price performance of substitute

• Buyer switching costs

• Perceived level of product differentiation

• Number of substitute products available in the market

• Ease of substitution. Information-based products are more prone to substitution, as online

product can easily replace material product.

• Substandard product

• Quality depreciation

The bargaining power of customers (buyers)

The bargaining power of customers is also described as the market of outputs: the ability of
customers to put the firm under pressure, which also affects the customer's sensitivity to price
changes.

• Buyer concentration to firm concentration ratio

• Degree of dependency upon existing channels of distribution

 • Bargaining leverage, particularly in industries with high fixed costs

• Buyer volume

• Buyer switching costs relative to firm switching costs

• Buyer information availability

• Ability to backward integrate

• Availability of existing substitute products

• Buyer price sensitivity

• Differential advantage (uniqueness) of industry products

The bargaining power of suppliers

The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw
materials, components, labor, and services (such as expertise) to the firm can be a source of
power over the firm, when there are few substitutes. Suppliers may refuse to work with the firm,
or, e.g., charge excessively high prices for unique resources.

• Supplier switching costs relative to firm switching costs

• Degree of differentiation of inputs

• Impact of inputs on cost or differentiation

• Presence of substitute inputs

• Strength of distribution channel

• Supplier concentration to firm concentration ratio

• Supplier competition - ability to forward vertically integrate and cut out the buyer

PORTER FIVE FORCES MODEL OF HP COMPAQ

 1. Threat of New Entrants (Barriers to Entry): (moderate)

There is moderate level for threat of new entrants because of economies of scale achieved by
existing players which becomes their competitive advantage.

• There is also need for high capital requirement if any new player wants to enter in the
market.

• Product differentiation: there is constant need of for technology improvement for

grabbing the attention of customers.

• Moderate customer switching costs: due to standardization of most of computer

components, it becomes easy for customers to change their laptops.

• Access to distribution channels: the current scenario is such that with the availability of
direct-to-customer service and Internet & computer retailers, it becomes easy for
customers to approach their desired product as well as for companies to provide their
products in less time and with reduced cost.

2. Bargaining Power of Buyers: (moderate)

• Moderate customer switching costs: due to standardization of most of computer

components, it becomes easy for customers to change their laptops.

• Low number of suppliers: There are very less no. of suppliers who are providing hp
Compaq products to customers.

• Suppliers also operate with high fixed costs which is the main reason of few no. of
suppliers.

3. Bargaining Power of Suppliers: (High)

• High number of customers who are fragmented: customers are highly fragmented so
to provide products to them is not an easy task. That is why suppliers bargain highly.
 • A few larger suppliers: there are few suppliers which are trustable, recognized and
provide good quality raw material such as Foxconn, Intel, Hitachi.

• There is also difficulty in re-producing specialized technology which becomes

competitive advantage of suppliers..

4. Threat of Substitutes: (Moderate)

• Switching costs for consumers is high because of low price of hp Compaq laptops
indicate that it targets to middle class and upper middle class people. For them it is
difficult to switch from one product to another.

• Frequent product introductions and continuous improvements in price is also a cause

of moderate threat.

5. Rivalry: (High)

• High Fixed costs: cost for setup of manufacturing units increased fixed cost which
makes difficult for existing players to exit.

• Constant changes in products and price makes intercategory competition stiffer.

• Two big players hold the top two market share spots in the computer hardware industry.

IBM

o Strong R&D and marketing

o Gave rise to PC industry with Microsoft Windows OS

o IBM Global Services – strong customer assistance

DELL

o Direct business model

o Low inventory costs, introduce new technology quickly

 o Close customer relationships built loyalty

o Ranked 1 in global PC market share in 2001.

INTERPRETATION

• With the merger of companies HP and Compaq, Hp has very clear benefit that resulted
from the HP and Compaq merger. Both Compaq and HP were in an unwinnable price war
with Dell.
• From the Porter’s five forces model of HP – Compaq in laptops it is cleared that there are
moderate entry barriers, threat of substitute is moderates, intercategory competition is
high, bargaining power of buyer’s is moderate, bargaining power of supplier is High.
• HP focuses on simplifying technology experiences for all of its customers – from
individual consumers to the largest businesses. With a portfolio that spans printing,
personal computing, software, services and IT infrastructure.
• HP top business priorities are to lower costs, IT systems/technology improvements,
Increase business growth, Improve efficiency, Customer service improvements.

• The professional staff of the Hewlett-Packard Co. (HP) Market Research & Information
Center is trained to be expert in research strategy and technique as applied to marketing
decision making.
• HP has well-branded employee-engagement programs where they work to bring
education and awareness about sustainability to their employees. Main motive here is to
train employees to think like sustainability champions and empower them to find
practical, business-building solutions for their workplaces. HR departments, focused on
employee career development, can champion employee training on sustainability and
harness the collective innovation of their employees
• The HP' vision is based on ENSA or enterprise network storage architecture that unites
HP and Compaq to help customers optimize their IT resources with greater efficiency,
flexibility and continuity.
 • The HP-Compaq merger presents an interesting case in which two of the most significant
complexities are the blend of different organizational cultures and the integration abilities
of leadership.

RECOMMENDATIONS

After analyzing all the above information about HP-Compaq,

• It can be recommended that Hp-Compaq has reduced its cost annually by $3 billion.

• Even though both HP and Compaq were mature companies before the merge, it can be
considered that the merged company is under redevelopment/restructuring; as a result the
company has lost some ground as a mature company.

• Now it is more supportive in providing better products and services to customers.

• Its employee engagement and career development programs result in more motivated and
enthusiastic workforce.

• Blending of two different cultures of both organization results in more innovative ideas.

SUGGESTIONS

• From the above data it can be suggested to company to focus more on introducing
improvements and innovations in its product due to competition in existing players is
high.
• They have to focus on suppliers because bargaining power of supplier is high. Company
need to do backward integration like beverages company coke has done who acquired the
bottlers’ plants.
• As threat of substitute is moderate, this is also an alarming stage for company; it should
try to focus on making its products differentiated from others by continuous product
innovations and technology improvements.
CONCLUSION

After analyzing all the above information, it can be concluded that HP-Compaq is doing mergers,
introduce innovative technology, continuous improvements for gaining market share and
competitive position in the market. HPs’ top business priorities its lower costs, IT
systems/technology improvements, Increase business growth, Improve efficiency, Customer
service improvements. Company is focusing its strategies to achieve all these business priorities
by adjusting and optimizing product line, enhancing high end service.
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http://www.laptopical.com/compaq-laptops.html, viewed on 6 Nov, 2010

http://forio.com/pcpricesim.htm, viewed on 7 Nov, 2010

ANNEXURE

Diagram (1)
Diagram(2)