Hewlett-Packard SWOT Analysis

1. Hewlett-Packard SWOT Analysis

Strengths
Hewlett-Packard is a global technology company and after its merger with Compaq it became world’s biggest computer hardware and peripherals company in the world, ranking 20 in the Fortune 500 list. 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).
Hewlett-Packard generated nearly $6.1 billion in cash flow from its operations and increased its cash and equivalents by 3 billion in 2003 (Datamonitor, 2004). Debt levels in this year were also very low which was significantly lower then the previous year. This is a great advantage which enables the company to increase its investments.
HP always recognized the need to compete in global markets. Product diversity of the company is another big advantage that enables the company to hold its position even in the times of recession. As long as the products are good and have reasonable prices there will be a demand. Company has a product span from calculators to laser printers , from notebook computers to servers. The company has a long history of inventions and innovations until it came to this stage. Research and Development (R&D) is foucused on key growth areas like rich digital media, mobility, management softwares and security. HP knows that enterprises and consumers might have different needs, but the technology requirements to meet those needs are usually the same. HP labs continue to research future technologies such as nanotechnology to ensure that the company is investing in longt-term growth and competitiveness.
After the acquisition of Compaq the new company formed four new divisions including enterprise systems group, imaging and printing group, HP services and Personal systems. This gave the opportunity to the company to broaden out the product line so that it could have a compelling offering against (International Business Machines) IBM and (enterprise content management) EMC companies (Connor, 2002).
There is a shared sense of mission among the employees at HP. The company is also one of the first corporations in U.S that used the “management by objective� approach. “Management by objective is an art of management and technique whereby the actions of analysis, direction and control are focused on the end result� (Trautmann , 2003). Executives in HP also created an informal workplace which encouraged employees to use their first names. They visited as many departments as possible without appointments and scheduled meetings and talked with line workers as often as with managers in order to understand the operations. The company endorse the idea that employees have as valid interest in the performance as do shareholders. This gave the company a unique strength among its competitors.
Hewlett-Packard has a strong position in Europe unlike many of its competitors. The company focuses on expanding its sales of PC market using its satellites in Geneva, Switzerland and Boeblingen, Germany. The company is expecting to remain dominant computer vendor in this region for a long time by increasing the investments to develop its satellites.
Today, network and communications technology has made it possible to access information from almost everywhere. HP has a long history of innovation in the area of mobility including a broad span of products from handhelds and notebooks to fault-tolerant servers, which form the backbone of the telecommunications industry. The company has a leadership in public and wireless local-area networks which enables HP to integrate its printing products and softwares using Bluetooth technology so that people can even print from their mobile phones. The company also focuses on Internet-protocol (IP) telephone technology to leverage networks for voice and video communication that drives cost savings for service providers and customers which is an important strength among competitors.

Weaknesses
Hewlett-Packard’s majority of earnings are coming from its printing supplies division. This makes the company’s total earnings extremely sensitive to this segment. which is a potential weakness for HP.
HP also lost shares in the PC and server markets between 2002-2003 while its top competitors Dell and IBM increased their shares in the same period. The company’s profitability is currently very low at the server and storage markets. Some analysts evaluate HP’s weak peformance as signaling a trend for IT spending (Rivlin, 2004).


Opportunities
Hp expects recovery in the personal computer market during 2004. The company launched more then 150 products between 2003 and 2004. Product launches are expected to support the growth of higher margin.
HP is currently seeking opportunities in the Business Process Outsourcing area which IBM indicated $20 billion in 2004. The company has set up a contact center in Bangalore, India. This will enable the company to get closer to the consumers and understand what support processes are working and not working (Ribeiro J., 2004).

Threats
There is a great pricing pressure in the overall PC market. Dell is a strong competitor and has a focus on the standardized computer markets. The company eliminates inventories more efficiently then any of its competitors which is a main threat for HP.
HP recently had to deal with a number of lawsuits which have been filed for various reasons like unfair business practices and patent rights from other companies and academic institutions like Cornell University . The outcome of these events may create bad reputation which can affect the operations.


Bibliography:



1. Datamonitor. (2004). Hewlett-Packard Company. Retrieved October 14, 2004 from
http://www.datamonitor.com

2. Hewlett –Packard Development Company, L.P. (2004). HP 2003 Annual Report , 4-11.

3. Hoover’s Online (2004) Hewlett-Packard Company. Retrieved October 16, 2004 from
http://0-premium.hoovers.com.oasis.lib.tamuk.edu/subscribe/co/fin/xhtml


4. Ribeiro, J. (2004, February 11) HP sets up India Call Center. IDG News Service.
Retrieved October 16, 2004 from
http://www.nwfusion.com/news/2004/0211hpsets.html

5. Rivlin, G. (2004, August 13). Hewlett profits come in lower then expected. New York
Times, pg. C.1.

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