Strategic Management

The strategic management in the organization is very important as it can be considered as the main driving force. If the management of the organization is qualified and expert in this domain, then the organization is going to move towards its success capturing the market share and gain customer loyalty and satisfaction. In this paper, we will be discussing about HP an information technology corporation that is being one of the most market share capture when it comes to the personal computers and laptops. Every organization has some of the environmental factors that may affect the performance of the organization. The same case is with HP. We will be looking at the environmental factors that may affect the performance of the organization. These factors include the macro and micro factors. It will reveal how HP is handling those factors and not letting down the performance to satisfy the customers. HP is an information technology corporation, we will also discuss what the competitive advantages in this industry are and what the competitive advantages to HP are. Every organization has a competitive advantage that lets it stay in the market. The SWOT analysis of HP will reveal in detail what are the advantages and disadvantages to the company that it can make use of for its further development. The opportunities and the threats to the company will also be discussed. Looking at the weakness and threats to the company, in the last there will be some recommendations that the company should adopt in order to compete with its competitors and earn more market share. Without those steps, the company will not be able to survive.

HP should be focusing on the following recommendations

  • Bring Innovation
  • Product expansions
  • Android Tablets

1.  Introduction

Hewlett-Packard or HP for short is an Information Technology corporation working from 1939 with providing hardware, software solutions to organizations and corporations. Starting from personal computers, the corporation has moved towards the manufacturing of different solution of hardware and software like tablets, servers, network devices and online service. It has been one of the most wanted advancing corporation in information technology with its existence in 171 countries around the world where computer market exists. From its foundation in a car garage, HP has its headquarters in Palo Alto, California and has employees 331,800 around the world who are working hard enough to make the company grow more and more and generate revenue (Forbes, 2013). The company is growing with the growing information technology as the company is investing around $4 billion in its research and development department giving new innovations and facilities to the world for better future and life style. It provides solutions to small and medium size enterprises and corporation, moreover providing household solutions as well. In 2012, HP was declared as number one PC provider in the world according to the number of PC units it sold in the world (STAMFORD, 2013). HP has market capitalization of $43.12 Billion and is ranked at number 31 as most valued brands of the world in 2013 (Forbes). HP continues its journey towards its invention and market capturing with its sales and providing solutions to the world. In the further sections, we will be focusing on the factors that are affecting the organization and how the organization is handling the risks. Moreover, the SWOT analysis of the company will reveal its strengths, weaknesses and opportunities that it may have in the future, and how the company is prepared to make use of those opportunities and face the threats.

2.  Environment for HP

There are two types of the environments that will be affecting the organization, one is the macro environment factors and the other one is micro environment factors. In Macro Environment factors are basically the largest societal factors that in turn will be affecting the micro factors. The macro factors include economic, political, technological and demographic. On the other hand the micro factors include, suppliers, customers, the components, community or social groups (Raj, 2012).

 

2.1.    Macro Factors

Macro factors can be defined as the general environment factors that influence the company. The macro factors that affect HP are

  1. Economic Environment Factor
  2. Political Environment Factor
  3. Social Environment Factor
  4. Technological Environment Factor

2.1.1.Economic Environment Factor

The economic environment are always influence the performance of any organization, the economic environment factors include like inflation, exchange rate, economic growth and interest rate. The same case is with HP, the markets which are growing, HP has the advantage to make more and more profit and sales in that region. If the countries that are facing inflation and decrease in economic growth will not be interested in buying technological equipment’s because of less buying power (Elibens, 2009). The company has seen a growth of %8 adding $6.9 billion because of its existence in the competitive market (UKEssays, 2014).

2.1.2.Political Environment Factor

The political environment of the country is also responsible for the growth of business. If the political environment of the company is stable, it will be promoting the business and the growth of the business will be assured. It also includes the government policies regarding the business, if the government policies regarding trading are not good then they will surely have a negative impact on the business of the organization. In this regard, HP is forced to follow the regulation of EU which includes the restriction for stopping the company for using the hazardous materials. Moreover, the instability of the political system causing the devaluation of company and operating cost of the units in the country are hurdles for the company. HP is well aware of the facts and investing only in the regions that are politically stable and operating cost is low like China.

2.1.3.Social Environment Factor

Social factors that influence the growth and success of the organization are the population and the life style of the people living in the country. Where the population of the country and their living styles will be high, the people will be moving towards the purchase of technology. HP is doing well in this domain as it is also targeting the Asian countries where the population is high and people are also interested in buying technological products (Elibens, 2009). On the other hand, HP is also involved in the solution of social issues like recycling of products helping in the safety of society.

2.1.4. Technological Environment Factor

The technological factors that influence the adoption of technology in the region is the customization in the existing trends. As the trend of adoption of technology increase, the IT companies make use of it by introducing the required products with affordable price. It can be said that HP uses this change in the region as a strategic weapon to take part in the competition of the market and stay in business for longer time. HP is working to capture more and more customer by introducing the products with competing prices and letting the people gain access to the information.

2.2.    Micro Factors

The micro factors that can affect HP are

  1. Customers
  2. Suppliers
  3. Community
  4. Government
  5. Employees

2.2.1.Customers

The customers are very important micro factor that affect the organization, as the purchasing and trust of the customer are main thing. HP has been understanding the demands and wants of the customers with the passage of time and providing them the best technology needed at that time. The other important that attracted customers is the price range. HP has been providing the people with best price as compared to its competitors like Sony, Apple or Dell. HP fulfilled the demands of the customers with the quality and price range. This led the company to make its strong position in the market and built trust of the customers. HP has been doing well in gaining customer satisfaction with its quality of products.

2.2.2.Suppliers

The existence of the company products in every market is very important as it will add to the advantage of the company. HP has got a very simple but strong strange strategy that is to make its existence in every market where there is demand of technology. HP has a supply chain to ensure that the products are available all the time in every region to the customers.

2.2.3.Community

The local community is also an important micro factor that should be kept in mind while forming the strategy for the company. The local community adopts the products of HP because of its quality and acceptance, moreover the community also works as a further promotion of the products.

2.2.4.Government

Local government legislation also enable the company to exploit the resources and environment around it. It helped the HP in the improvement of its operations and progress.

2.2.5.Employees

The employees of HP are quite important as their hard work and dedication makes the best quality of the product. There are certain issues related with the region in which they are operating and trade unions (Elibens, 2009). HP is doing well in this domain by taking care of the employees with X theory helping in eliminating the cultural differences.

3.  Competitive Advantages in IT Industry

The competitive advantage lets the organization or the company excel from its competitor while maintaining the profit. In information technology, the competitive advantage is more and more as compared to any other industry. However there are two main source of competitive advantages that are cost and differentiation advantage. There are other competitive advantages as well like supply chain inexpensive power, sustainability and strong human resources. The companies who are offering the products in the market at a lower cost as compared to the other competitors, are gaining more and more customers. It is the most effective competitive advantage the organizations prefer. It is also called cost advantage (Irenroa, 2012). The trend in the marketing is growing towards the purchase of technology equipment so the company offering the products with lower price will surely get the benefit. HP is recently capturing the market because of its low price products with quality. The company is not only offering the affordable price, but also providing the best quality with it as well. On the other hand, company is also providing a range of the products that will cover different classes of the customers. The other competitive advantage in IT industry is the differentiation advantage that means offering the products that are according to the requirements of the customers also no other vendor in the market is providing the same products with same quality. If the company is offering such products, then the customers will also pay premium for such products and the company will earn from this domain. Apple is the good example who is taking advantage of this strategy with its different products like iPod and MacBook.

The above graph shows the market capture of different IT companies who are operating in the market. We just talked about the differentiation advantage that Apple is taking to generate revenue. On the other hand, the graph also shows the market capture in terms of Notebooks and personal computers. The graph shows the HP is at the top in market capturing shown in percentage. On one side, Apple is generating revenue because of its differentiation advantage, on the other side the company has less customers as well as compared to HP. Looking at HP, making use of cost advantage. The other companies like Dell, Lenovo, and Samsung are offering low price however, the customers are motivated by the market capture of HP and its quality.

4HP Competitive Advantages

4.1.    Cost Advantages

The most important competitive advantage to HP for competing in the market is its price factor. The company understands the requirements of the customers and provides the products that are reasonable and in reach of most of the customers. HP has never compromised over the quality of the products that it is producing. While coming to the quality comparison of the laptops, there are 25% reports of damage to the laptop after 3 years of usage. However, it is reported that the customers get tired of their laptop after 2 years, then it is a good choice for such customers; infect most of the customers (Smith, 2012).

4.2.    Differentiation Advantage

4.2.1.Supply chain

Supple chain is very important for HP as it has impact on the customers, company and the shareholders. The supply chain of the company is another competitive advantage for the company. The supply chain has direct impact on the customer total customer experience and satisfaction. On the other hand, $51 of the company revenue is managed by the supply that is almost 64% of the total revenue generated by the organization which in turn increase the profit (Anderson, 2005).It the supply chain performance of the company is very good that it will be helpful in the market capitalization and HP is quite good at its supply chain increasing the market capitalization. HP can increase profit from this supply chain and the cash flow is increased also (Anderson, 2005). Its operational effectiveness and efficiency lets the company to drive simplification and standardization increasing the customer’s satisfaction.

These competitive advantages are good for HP, however the company should also focus on creating a differentiation advantage buy producing the products with new ideas and quality that no other vendor have developed yet. It will surely add a premium revenue for the organization and the profit as well. Simply it can be said that introduce the products like Apple has been doing for last many year. It will bring new premium customers to the company and more profit.

5SWOT Analysis

SWOT analysis is done in order to find out the strengths, weaknesses, opportunities and threats that the company may be facing in the near future or in the coming years. It is a good way to find out the threats in advance and prepare yourself for the threats.

5.1.    Strengths

HP has got customer loyalty for number of reasons including the affordable price, quality and verity of products that are demanding in the market. This has let the HP capture the highest market share in the computer industry (MBASkool, n.d.). The after sales service of the company makes it the first preference of the customers. The company is aimed to bring the new technology at affordable prices. As we discussed earlier in competitive advantage, its supply chain system is remarkable which makes the products available to the customers all over the world around in 170 countries of the world. The employees of the organization are loyal, and the company also aims to educate them in order to move into the other section. HP provides variety of the products that the other companies provide at a higher price.

5.2.    Weaknesses

One of the greatest weakness of HP is slow growth in the market share because of the increasing competition in the market (Insight, 2013). Another weakness that is stopping the new customers towards the products of the company is that it is mostly found to be imitating the products of other companies. Another weakness of the company is that it is quite behind in the production of tablets, the customers are also moving towards the adoption of tablets.

5.3.    Opportunities

The company has a huge investments for its research and development department that can help the company to introduce new products and capture the market even more. On the other hand, the company can also get an advantage of its supply chain to expand its business even in more regions of the world. The company can also get more patients that are related to the technology, but that is only possible now with the invention of technologies (Insight, 2013). The company can also move towards the cloud services.

5.4.    Threats

HP may have to face some of the serious threats in future. The technology is changing very rapidly, so the company needs to keep a pace with the upcoming technological advancements. On the other hand, the competition in the market is also growing that can reduce in the sales of HP. The competitors like Dell, Lenovo are also producing low cast laptops and other gadgets, however the quality is also important that matters.

6.  Recommendations

It is good that company is investing around $4 Billion in its research and development department, but the customers’ demands are changing, and the company should be ahead in inventing something new that no other company has put in the market. The company is moving towards fulfilling the demands of the customer by producing mass products, however there is missing that the customers mostly want that is the customization of the products. HP’s competitor Dell is offering its customers with the customization of its products. Moreover the company should focus on the designs and increase the durability of its products. The durability of Dell’s computer and laptops are much greater as compared to HP (Smith, 2012). HP should also start producing more and more tablets as its competitor Samsung is producing wide range of tablets for its customers. HP has loyal customers, so it should produce the gadgets that its customers want in the price range that is suitable for everyone. Moreover the company should look more into the innovation of ideas and develop them and put them in the market before any other can produce it.

6.  Conclusion

HP is one of the leading companies in the world that has captured the market share because of making use of its competitive advantage that the other companies would have used earlier. The company use the cost competitive advantage and produced the products with better quality to be given to the customers. The company focused on the wants and demands on the customers and produced the right product at the right time. The company has been doing well in different domains like in the supply chain, research and development and innovation. However, the competition in the marketing is now increasing, and the customers are also moving towards the adoption of new innovations in the market. The competitors of HP are also producing low cost products, it is alarming for the company. The company should focus on the recommendations in order to stay in the market and capture more market share.

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