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Hewlett Packard

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Presented by:
01 Hassan Sajjad 062116
02 Muhammad Faisal 063156
26 Muhammad Ali Qureshi 081126
33 Imran Ali 081502
36 Shahbaz Noshahi 081434

Presented To: Mr. Aly Raza Syed


Course Name: Business Policy
Date: 19-10-2009
Group NO: 4
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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

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Mission Statement
“”

Vision
“”

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

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Macro Environment Analysis
Demographic:

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

Political:

Legal:

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

Social:

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

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Porter’s Five Forces Model
Potential development of substitute products +

Bargaining Bargaining
power of
suppliers
(-) Rivalry among
competing firms
power of
consumers

N/A
_

Potential entry of new competitors


+

Equal number of negatives and positives


make the industry moderate.

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

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Segmentation
HP has various segments:

Technology solution group (TSG)


Personal system group (PSG)
Imaging and printing group (IPG)

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

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Marketing Mix

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Products
Important P’s

 Price:
N/A

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

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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

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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

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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.

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Unique Selling Preposition
 N/A

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External Factor
Evaluation Matrix
Analysis

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External Factor Evaluation
Matrix
Factors Weight Rating Score
Opportunities

Emerging markets, particularly BRIC 0.17 3 0..51


countries

0.15 4 060
Imaging and printing businesses

e-Commerce expansion .15 3 0.45

Diversification Related/Unrelated 0.10 3 0.30

Threats

Apple computers (Macs) significant growth in 0.12 3 0.36


overall PC shipments

Dell direct-sale marketing 0.11 3 0..33

Intense competition from other PC 0.10 2 0.20


manufacturers
Slowdown in economic conditions in 0.10 3 0.30
US, Europe
Total 1.00 3..05

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Internal Factor Evaluation
Matrix
Key Factors
STRENGTHS
Weight Rating Score

Strong brand equity world’ largest it firm. 0.12 3 0.36


World’s biggest computer hardware and 010 4 0.40
peripherals company in the world.
An advantage HP has over its 0.09 3 0.27
competition it is a total solutions
provider.
Diversified product portfolio 0.10 3 0.30
Solid market position in key segments. 0.08 3 0.24
Strong financial Position. 0.12 4 0.48
The company has a long history of 0.10 4 0.40
inventions and innovations until it came
to this stage
Product diversity of the company is 0.07 3 0.21
another big advantage that enables the
company to hold its position even in the
times of recession.
WEAKNESS 0.36
Price is high in China as compared to 0.12 3 0.20
other
Product line management 0.10 2
problems

Total 1.00 3.22


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Competitive Profile Matrix
hp dell IBM
Success Factors Weight 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

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SWOT Analysis
Strengths
Strong brand equity world’ largest it firm. Weaknesses
World’s biggest computer hardware and
Price is high in China
peripherals company in the world.
An advantage HP has over its competition as compared to other
it is a total solutions provider. Product line
Diversified product portfolio management problems
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.

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SWOT Analysis
Opportunities Threats
 Apple computers (Macs)
Emerging markets,
significant growth in
particularly BRIC countries
overall PC shipments
Imaging and printing
 Dell direct-sale
businesses
marketing
e-Commerce expansion
 Intense competition from
Diversification
other PC manufacturers
Related/Unrelated  Slowdown in economic
conditions in US, Europe

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THE Space Matrix

. FS

+6

Aggressive

+1

CA IS
-1 +1
-6 -1 +6

-6

ES
BCG MATRIX
1.0 0.0
.50
+20 0.0

hp

-20
IE Matrix
IFE total Weighted Scores

Strong 3.0 Average 2.0


Weak 1.0
4.0
1 2 3
High

3.02 3.22
3.0
4 5 6
scores
Wighted
EFE

Medium

2.0
7 8 9
Low

1.0
Grand Strategy Matrix

Rapid Market Growth

Q2 Q1

Weak Strong
Competitive Competitive
Position
Position

Q3 Q4

Slow market Growth


QSPM Matrix
StrategicAlternative
Key Factors Weight AS 1 TAS 1 AS 2 TAS 2

Opetunities:

0.08
Emerging markets, particularly 4 .36 3 .24
BRIC countries

0.07
Imaging and printing businesses 3 .24 2 .14

0.06
Diversification Related/Unrelated 3 .21 2 .12

E-Commerce expansion
.03
3 .09 3 .09

Threats:

0.05
Apple computers (Macs) significant 3 .15 3 .15
growth in overall PC shipments

0.05
Dell direct-sale marketing 3 .15 2 .1
Intense competition from other
PC manufacturers 32
Slowdown in economic 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 3 .27 2 .14
the world.
An advantage HP has over its competition it is a total solutions 0.06 3 .18 2 .12
provider.
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 3 .21 2 .14
it came to this stage
Product diversity of the company is another big advantage that 0.05 3 .15 2 .10
enables the company to hold its position even in the times of
recession.
WEAKNESS 0.05 4 .20 4 .20
In Asia Other Competitor's prices are low

Product line management problems 0.05 3 .15 3 .15

Total 1.0 3.39 2.41


Market Analysis

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Important Figures
 Sales
The HP company sales are increasing
in 2006 as compare to 2004.

 Growth rate
The company growth rate is 12.3%.

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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.

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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 EPS Net
Name employees margin 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 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

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Financial Analysis
Ratio Analysis
Liquidity Ratios
Ratio 2005 2006 Result
Current ratio 1.37 1.34 moderate
Quick ratio 1.15 1.13 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

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Ratio Analysis
Activity Ratios
Ratio 2005 2006 Result
Inventory turnover 12.60 11.82 negative
Fixed asset 2.55 2.71 Positive
turnover
Total asset turnover 1.12 1.11 Moderate

Growth Ratios
Ratio 2005 2006 Result
Growth in sale 8.49% 5.72% Negative
Growth in net (31%) More than 100% positive
income

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Ratio Analysis
Profitability Ratios
Ratio 2005 2006 Result
Gross profit margin 23.61% 24.52% Positive

Operating profit 4.00% 7.15% Positive


margin
Net profit margin 2.76% 6.76% Positive
Return on total 3.10% 7.56% Positive
assets
Return on 0.06 0.16 positive
shareholders' equity

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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 (28.69%) More than 100% positive
share

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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' 2.60% positive
equity
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Main Problems and
Opportunities

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Main Opportunity

Demand increasing in the Asia Pacific


(mainly in India and China)

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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 Cons
• Cheap labor • Heavy investment
• Low other required in start
manufacturing costs
• Low transportation cost
• No import charges
• Opportunity for R&D
expenses, because of
low manufacturing cost

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Alternative Two:
Start new imports to Asia Pacific
Pros Cons
• Brands already • High transportation
familiar to people cost
• High import charges
• Customers are looking
for new technologies
and new features, not
exactly for older
brands

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Alternative Three:
Start selling old brands with
decreased price in the Asia Pacific
Pros Cons
• Directly target • No margin for R&D
Lenovo’s fast-growing due to low price of
low-priced products products
• Developing and/or • Refurbished products
poor areas of the would be unreliable,
region would be able and would have a
to afford information short life cycle, as
technology products customers want new
technologies and new
features

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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.

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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.

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The End

Thank you

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