Hewlett Packard competitive strategy

Introduction

HP-Hewlett Packard originated in just a garage near a place called Palo Alto. It was established by two Stanford university electrical engineering graduates William Bill Hewlett and David Dave Packard hence the coined name Hewlett Packard. This company has been the world’s the largest technology offer. It has branches in almost all countries. (HP Company, 2009).

Company background

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Hewlett Packard HP is a company operating in the computer industry; its key activities are to manufacture storage devices, computing, and software networking hardware services. HP main products are:  personal computers, servers, related storage devices, as well as a diverse range of imaging products and printers. The other product, comprise medical electronic devices, electronic test systems, instrumentation for chemical analysis and solid state components were established as proprietary software (HP Company) .

Porter generic strategies

Porter generic strategies, this is a strategy on the dimensions of the strategic scope meaning the market penetration and strategic strength referring to the company. For porter a company is impacted by five forces. (Porter, 1985)

Rivalry

In a normal economic setup, competition among rival companies reduces profits of the companies to zero (Porter, 1985). Nonetheless, competition can not be perfect and companies are so sophisticated to counter competition by gaining competitive advantage over their rivals. Competition varies depending on the different industries. In the computer industry, competition is high as there are many companies offering the same services. In pursing the competitive advantage in the industry, HP have continued to improve products, by providing more cost effective products as in line of providing low end computers, printers, scanners and their accessories.

Threat of substitutes

Substitutes in an industry according to Porter (1985) are products from other industries. A threat of a substitute will occur when the demand of the product is affected by changing of price of a substitute product. Computer industry is a wide industry that face various substitutes products from other industries, however, the industry is not under threat as many of its products are essential and also lack competitive substitutes.

Buyer power

This is the impact that buyers have on a specific industry. Generally if there is a strong buyer power, the relation between the industry and the buyer is termed as “monopsony” such a condition happens when there is one buyer and many suppliers (Porter, 1985).  Other printers manufacturing companies have a weak buyer’s power, HP has taken advantage of this by setting prices of its products which are customer friendly and offering more products on the market to satisfy the demands of various customer segments.

Supplier power

Each industry needs raw material, components and labor and other provisions. This need creates supplier-buyer relationships between the companies which provide the raw material and the industry. In the computer industry, suppliers are many and the industry is not impacted by the suppliers (Porter, 1985). HP is a smaller buyer in the industry and does not benefit from  economic of scale, however it tries to  source for better deals to ensure that it gets the best quality of raw material at the best prices.

Barriers to entry

Apart from rivals posing threat to existing companies, new entries in the industry also pose a threat the existing companies and increases competition in the industry. In practice any company should be able to enter and leave the market. The computer and Printer industry has remained open for any player to enter as the there is free and liberal market. (Porter, 1985) However, HP has protected its market share through trying to be innovative and opening more branches so that it can reach more customers in order to keep its market share. In this analysis we shall look at two of the system that HP produces; these include: A HP Compaq computer and DeskJet printer.

Alignment with the Organization’s Business Strategy and Management of Innovation

HP Compaq computers have according to Malone (2007) been one of the best selling computers. Some of the attribute to this is the way their products are aligned to organization business strategy and management of future and current innovation. This is done through

1. A good user interface: The user interface consists of WIMP (Windows, Icons, mouse and pointers) environment. This shows that HP computers were designed to suit busy organization rendering services such as desktop publishing. The icons are designed to emulate the real physical items such as recycle bin is in the form of a basket. This enables one to easily identify icons from the context. The easy with which arbitration is done enables the user interface to be flexible. This enables change of the interface design without affecting the inner structure a situation called “black box”. (HP Company, 2009).
2. All in one: The Helward Packard printer is all in one. This means that both printing, scanning, photocopying is integrated within one package. This enables one to save time and money since these processes are done within the system. Furthermore, the total price of a typical HP printer is a half the price of each independent item hence HP printers are very cheap(HP Company, 2009).
3. Speed of integration: HP promotes large scale integration of circuits. According to Malone (2007) the speed of integration in a typical computer system is rising at a rate of 10000 per year. This means that by the year 2030 integrated parts will be 30000 times this year in a single circuit. This enables computers to be fast in processing and hence adapt to the modern advancement in technology.
4. Increased speed on PC: The possibility of upgrading memory in both HP printers and PCs has enhanced processing speed. This will easily cater for high memory demands for multimedia systems, parallel processing, networking and server demands. This explains why it is very easy to network HP computers. The increase in speed of these computers is attributed to flexibility in design of their microprocessors. Since installation is easy to enable several customers to like HP products.
5. Faster printing and scanning: The speed of printing for typical HP printer can be increased by using 72-pin SIMMS (PS/2 SIMMS). The speed can be 70ns or faster. Their memory size is 4MB to 8MB.The SIMM do not need parity checking (error changing) hence they are           full secure.
6.  Print larger files: Hp printers can print almost any size of paper since its paper feed mechanics can easily be adjusted. The maximum number of papers to be printed is 200 per cycle. They can allow for application processing to run faster since the memory size can be upgraded.
7. Increased overall productivity: Productivity according to Malone (2007) should be the goal of any firm that is competing to attain a competitive edge over similar firms.

Overall these characteristics of HP printers, Computers memory size speed and intergration aim at increasing productivity. HP focuses to enhance a high productivity and technologically innovative products. Read also Business and Society Relationship

Contribution to Attainment of Competitive Advantage

Hp marketers have this advantage that enables them to gain an edge over others. There general managers seat and discuss the way forward for there marketing and strategies to put in place to gain popularity over other firms producing similar products. This process ensures continuous viability of their products.

HP Values: Malone (2007) stated that HP values should be the centerpiece of its performance; these values are not unique from other companies. The different is in the seriousness which these values are treated as a tool of management.

Integrating Critical Opposites: To gain a competitive advantage Malone (2007)  stated that a company should base its productivity on integration and reinforcement of critical opposites. This is what HP has capitalized on in its products. It tries to analyze the weakness of competitor’s products and produces there products by utilizing these weakness which became known as the Hewlett-Packard Way of life. The Compaq computer was designed by capitalizing on the weakness of windows XP professional Its easy of crashing and security breaches. The DeskJet printer was improved on the original DeskJet after realizing customers needed a cheap intergraded all in one printer.

Supporting Teamwork: Malone (2007) stated that when the Japanese view Hp it is like Japanese company. It is because HP focuses on team work a culture of Japanese companies. The design of the Compaq computer was done when HP amalgamated with Compaq computer and jointly they came up with the system. Hp also focuses on innovations research which focuses on individual basis. This allows easy discovery of new production methods. This culture practiced in America and USA where an individual is given the freedom to discover is called dualism.

Enhancing Cross functional Individuals: Maundy (2001) argues that most firms tend to train, recruit and promote employees within their firms. But HP (Hewlett-Packard) breaks the boundaries, in which it create a career framework that commences with employing a wide range of people based on there skills together with personality and they are promoted horizontally and vertically within the company. "In reality, the employees of HP are supposed to move from within four to six areas in their jobs.

Reducing the Barrier to Communication: The common saying in HP is “Only HP knows what HP does!” It is common that the knowledge and wisdom to solve a problem exists in other places. HP keeps trustees on its knowledge asset at the same time realizing the need for sharing ideas. It is until an idea has been born into finished product that it is worth releasing. Therefore most HP technologies are patented to prevent infringement by other companies.

Structural and Cultural Impact on the Organization

1. All in one: With the coming in of HP printers (All in one) it has real improved the speed with which the organization can process its documents. It has also advanced the work organization such that both the scanning printing and photocopying can be done by one man. This has drastically reduced the companies expenditure both initial and operational expenses. (HP Company, 2009)
2. Brain drain: The advent in technology where a document can be scanned at the same time be edited in Microsoft word has caused brain drain such that typing masters have been replaced. Thomson and Rampton (2003) stated that the degree of brain drain in computers is increasing at a high rate and firms need to check this monster. People are being replaced by computing power. DeskJet printers replaced typists; Desktop computers replaced the need for postal services where emails are common.
3. Effect of internet services: Because of the adequate power of Compaq computers internet services especially its speed is now not a nightmare. But though internet a source of information both for research and academic fields, it has enhanced addiction. Most employees connected to the internet are no longer but browsing their emails instead of utilizing this time for beneficial work
4. Noise: DeskJet printers are known to be noisy when printing. Noise affect the working condition since communication between employees might be inaudible. For effective operation of these printers, there is need to provide noise absorbers which is expensive.
5. Untidiness: One of the reason as to why DeskJet printers are not easily admired is because of their easy of spilling ink. The operator working on these printers has to accept chances of being spilled by ink. Such stains are hard to remove when washed hence it might not motivate employees attitude towards work.
6. Home office networking: Home networking has promoted people to be at home while attending to duties in the office. Though these enhance productivity, it leads to chances of idleness and fatigue towards work since the employee has no colloquies to keep him busy.
7. Centralized processing: The PCs have also enhanced centralized processing where all activities within an organization are done under one roof. A company can have all its work processes such as data entry accounting decision making done using integrated software such enterprise resource Planning (ERP).
8. Acceptance of computers: According to News - CIO.com, computers and computer systems are not necessarily accepted within an organization because of fear unemployment. There is need to focus on creation of jobs when designing systems other than reduction in human power.
9. Effects of internet: Thomson and Rampton (2003) agued that moral character is diminishing in today’s culture because of effects of the internet. Phonorgraphical sites terrorist attack production of harmful weapons and malicious attacks has been enhanced by the coming in of internet.
10. Browsing Addiction: Most of the times spend by employees in an organization is on browsing. Internet services enhanced in HP Compaq computers have easen this ability. Though networking has its uttermost significance but if not controlled in an organization can pose a threat to precious time spend on browsing

Conclusion

The current business environment has turned to be competitive than ever, companies are being faced with challenges or remaining competitive, they can only be competitive if they have competitive advantage. As seen one of the major analysis of an industry is through using Porter’s five forces, accordingly, the computer industry is a very competitive industry and companies within the industry have to be innovative to compete well. HP as a company has remained competitive because of its innovative strategies.

Reference:

1. HP Company (2009): about us: Accessed on 17/5/09; from: www.hp.com
2. Johnson, G and Scholes, K. (2002): Exploring Corporate Strategy; Text and Cases sixth edition; Prentice Hall
3. Malone, M (2007): Bill & Dave: How Hewlett and Packard Built the World's Greatest Company; Portfolio Hardcover. pp. 39
4. Maundy, L. (2001): An Introduction to Human Resource Management: Theory And Practice: Macmillan, Pal grave
5. News - CIO.com : Business Technology Leadership: Accessed on 17/5/09; from: www.cio.com
6. Porter, M.E. (1985): Competitive Advantage: The Free Press, New York,
7. Thomson, C. and Rampton, L. (2003): Human Resource Management. Melbourne press, New York

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