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07 Hewlett Packard

07 Hewlett Packard

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Published by: 9874567 on Nov 23, 2011
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Hewlett-Packard – 2008
Forest David: Francis Marion University
A.Case Abstract
Hewlett-Packard (www.hp.com) is a comprehensive business policy and strategicmanagement case that includes the company’s fiscal year-end October 2007 financialstatements, competitor information and more. The case time setting is the year 2008.Sufficient internal and external data are provided to enable students to evaluate currentstrategies and recommend a three-year strategic plan for the company. Headquartered inPalo Alto, California, Hewlett-Packard’s common stock is publicly-traded on the NewYork Stock Exchange under the ticker symbol HPQ.Hewlett-Packard operates in five segments: Enterprise Storage and Servers, Services,Software, Personal Systems, Imagining and Printing, and Financial Services. Thecompany has over 170,000 employees and is led by CEO Mark Hurd whose base pay was$14 million in 2007. The firm’s major competitors include Dell, IBM, Canon, TexasInstruments, and Apple.
B.Vision Statement
(proposed)To become recognized as the number one computer company in the world.
C.Mission Statement
(proposed)Hewlett-Packard is committed to being the best technology solutions provider toconsumers, businesses and institutions globally by providing superior products andservices for businesses and personal consumers (1,2). Our emphasis is based on domesticand global markets (3). We provide information technology systems to serve our customers more efficiently (4). We are dedicated to quality and consistency to maintainand gain customer loyalty (6). We are dedicated to growth and profitability (5) bytreating employees (9) in ways that create extraordinary products for our customers, andthat create high shareholder value, while maintaining a valued name throughout thecomputer and technology industry (8). Hewlett-Packard is synonymous with quality products and high customer satisfaction in every product and service that we provide (7).1. Customer 2. Products or services3.Markets4.Technology
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall84
 
5.Concern for survival, profitability, growth6.Philosophy7.Self-concept8.Concern for public image9.Concern for employees
D.External Audit
Opportunities
1.The worldwide personal computer industry posted its fourth consecutive year of double digit expansion in 2006, recording 10 percent unit growth.2.PC shipments in the Asia-Pacific region expanded by an estimated 17.6 percent in2006 on a unit basis.3.IDC’s “rest of the world” category, which includes Eastern Europe, Latin America,and the Middle East rose 22 percent on a preliminary basis.4.It is estimated that the PC industry will post total unit growth of approximately 11 percent for 2007.5.Dell’s units sold declined 8.4 percent, so Dell’s market share fell by nearly 300 basis points on a year-over-year basis.6.Over the past three years, Gateway’s gross margins narrowed from 14.4 percent in thefirst quarter of 2004 to 5.2 percent in the fourth quarter of 20067.During the fourth quarter of 2006, server market revenue grew by 5.2 percent.8.Dell achieved server market share of 9.4 percent on server revenue growth of 2.4 percent, down from 9.6 percent9.Worldwide revenues for servers were up 2.0 percent to $52.3 billion.10.In the first quarter of 2006, IBM’s server revenue growth of 3.8 percent put its marketshare at 37.9 percent, down from 38.4 percent the comparable year-earlier quarter.
Threats
1.IBM maintained its position as the leader in overall server market revenues in 2006.
2.
PC unit shipments in the U.S. declined 0.5 percent in the fourth quarter of 2006.
3.
During the fourth quarter of 2006, Apple grew its units by 31.8 percent in the U.S.market.
4.
Sun’s server market share was 9.7 percent in the fourth quarter of 2006, up from 8.2 percent a year earlier.5.Apple’s switch in 2006 to Intel-based chips increased the processing power of Macs.
6.
IBM’s server factory revenues increased 0.8 percent.
7.
Sun Microsystems’s server factory revenues increased 11.2 percent.
8.
Apple’s improvement in the U.S. market share from 3.3 percent in 2004 to 4.0 percent in 2005, and then to 4.2 percent in 2006.
9.
IBM’s high-end sever market share rose to 57.2 percent from 53.6 percent asrevenues improved by 6.6 percent.
10.
Sun Microsystems’s low-end server market share expanded 60 basis points to 8.2 percent.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall85
 
CPM – Competitive Profile Matrix
Hewlett-PackardDellIBMCritical SuccessFactorsWeightRatingWeightedScoreRatingWeightedScoreRatingWeightedScore
Market SharePriceFinancial PositionProduct QualityProduct LinesConsumer LoyaltyEmployees0.200.100.200.150.100.200.0533334340.600.300.600.450.400.600.2023332220.400.300.600.450.200.400.1032444340.600.200.800.600.400.600.20
TOTAL1.00 3.15 2.45 3.40
External Factor Evaluation (EFE) Matrix
Key External FactorsWeightRatingWeighted ScoreOpportunities
1.The worldwide personal computeindustry posted its fourth consecutive year of double digit expansion in 2006, recording 10 percent unit growth.0.0740.282.PC shipments in the Asia-Pacific regionexpanded by an estimated 17.6 percent in 2006on a unit basis.0.0630.183.IDCs rest of the worldcategory,which includes Eastern Europe, Latin America,and the Middle East rose 22 percent on a preliminary basis.0.0520.104.It is estimated that the PC industry will post total unit growth of approximately 11 percent for 2007.0.0840.325.Dells units sold declined 8.4 percent,so Dell’s market share fell by nearly 300 basis points on a year-over-year basis.0.0730.216.Over the past three years, Gatewaysgross margins narrowed from 14.4 percent in thefirst quarter of 2004 to 5.2 percent in the fourthquarter of 20060.0730.217.During the fourth quarter of 2006,server market revenue grew by 5.2 percent.0.0630.188.Dell achieved server market share o9.4 percent on server revenue growth of 2.4 percent, down from 9.6 percent0.0420.089.Worldwide revenues for servers wereup 2.0 percent to $52.3 billion.0.0520.1010.In the first quarter of 2006, IBM’sserver revenue growth of 3.8 percent put itsmarket share at 37.9 percent, down from 38.4 percent the comparable year-earlier quarter.0.0520.10Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall86

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