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Republic of the Philippines

Laguna State Polytechnic University


San Pablo City Campus
College of Business Management and Accountancy

A CASE STUDY
In
Venture Capital

Hewlett-Packard Company

Submitted by:
Jacinto, Jenina B.
Ostonal, Jexanne Angelie R.

CASE STUDY

Hewlett-Packard Company

INTRODUCTION
In January 1939, in a garage in Palo Alto, California, to graduates from nearby Stanford
University, William Hewlett and David Packard, set up a company the Hewlett-Packard (HP) company
with an initial capital of $538. They marketed their first product (invented by Bill), a resistance-capacity
audio oscillator. HPs initial emphasis was on instrumentation. It was not until 1972 that the company
finally acknowledged that it was in the computer field, with the introduction of its first business computer,
the HP 3000.
In 1995, HP was sprawling corporate giant with annual sales in excess of $25 billion and about
90,000 employees worldwide. It was involved principally in the manufacture, supply, marketing, and
distribution of computer-based products, test and measurement products, medical and analytical
products, electronic components and Information Technology related service and support. HP was ranked
in 1985 by a Fortune magazine survey as one of the two most admired companies in America. In 1995,
the bulk of the companys business, a good 76.6% of the net revenue, came from computational products
and services.
In September 1995, John Peter, a Marketing Manager of Hewlett-Packard Asia Pacific (HPAP)
was evaluating its long-term strategic investment options for doing business in Vietnam, its headquarters
was located in Singapore. Vietnam was recently adopted an open door policy after the United States lifted
its embargo on the country in February 1994. The country had a population 0f over 70 million with a
literacy rate of over 90%. Foreign investment in the country had climbed steadily and had reached almost
12 billion by the end of 1994. An environmental and market analysis revealed that the Information
Technology (IT) market in Vietnam had potential.
TIME FRAME

September 1995; when HPAP was evaluating its long-term strategic investment of doing business
in Vietnam.

POINT OF VEW

Top Management View

PROBLEM

Market entry of HPAP in Vietnam

OBJECTIVES
Long-range Objectives

To establish business in Vietnam.


To make Vietnam a major market for HP.

Short-range Objectives

To extend the reach of products and services offered.


To offer opportunities and growth to different countries.

AREAS OF CONSIDERATION
1. Uncertain market growth
Pros

Cons

More opportunities rather than simply larger risk.


Discourage acquisition of growth options.

2. Lack of currency constrained investment


Pros

Investors can participate in the growth of other countries, hedge their consumption basket
against exchange rate risk investors can participate in the growth of other countries,
hedge their consumption basket against exchange rate risk.

Cons

These constraints, while being reduced by technology and policy, support the case for
internationally segmented securities markets.

3. Depreciation of Dong to US Dollars


Pros

Improved prospects for the firm and for exports.

Cons

Depreciations were associated with an increase in the net import competition faced by
the countrys producers.

ALTERNATIVE COURSES OF ACTION


Hp should establish a strategy that can make their market entry possible to set business in
Vietnam taking into considerations are the market was currently small and market growth was uncertain,
although the information technology in Vietnam had potential the choice of market entry should surpass
the level of expectation of the costumers as well as the existing competitors in the country whether direct
or indirect. International Business Machine (IBM) the worlds largest information system and services
company. IBM had set up in Vietnam particularly in Hanoi in 1995.Another was UNISYS which is the
worlds ninth largest systems and PC investors and COMPAQ the leading manufacturer of PC systemsall had the different advantage of offering different services of same customers at a particular place or
market. It would be HPs distinctive products and services that can make their company ahead among all.
Another suggestion would be for them to use Guanxi an important factor in doing business in
Vietnam it is a Chinese term denoting to the use of personal connections, relationships, or networks to
win business deals, forge business ventures, or to get business approval for government authorities. It
would be better to follow what the country is used of doing, since we are the one asking for approval, we
need to start obeying and make background check to the country it will pave all sacrifices and hardships
after getting the chance of operating in Vietnam.

ACTION PLANS
Areas of Concern

Strategy and
Implementation

Time

Person
Responsible

Success
Indicator

Make Vietnam a
major market for
HP

Secure an
assurance to the
government
authorities
Continue
spreading world
class products
worldwide
HP should have a
continuous
development of
products to
provide innovative
products to
customers

Before or on
September 1995

Top Management

Established office
in Vietnam with
Vietnamese Staffs

All of the time

Top Management

As frequent as
they can

Top Management

Customers
continuous use
and patronage of
product
Continuous
patronage of
different variety of
products offered
by HP and
continuous
demand for
innovation

Continuous
distribution of
computer-based
products
Produce quality
and innovative
products

CONCLUSIONS/RECOMMENDATIONS
Hewlett-Packard (HP) Company should consider entering the market of Vietnam using the Direct
Presence which HP can have this by setting up a subsidiary or representative office to provide marketing,
sales, support, and management services. This strategy required the largest investment and commitment
of resources. It also offered maximum control and flexibility and the best payoff. HPs direct presence in
the market would allow it to keep in touch with the customers, this will prove how sincere they are in
engaging business in the country through this HP would gain invaluable access to markets and
customers. They can start doing business in Vietnam with few numbers of staff and increase the staffing
as time goes by or by the demand increases in which will open the door of job opportunities to the
Vietnamese considering that education there has a high number of percentages.
Under the new foreign law that allows foreigners to own up to 100% of venture against a previous
maximum of 49%.The duration of Venture with foreign capital generally might not exceed 20years, but it
could be extended in special cases. Aside from being approved by law, Vietnam had propelled them into
the twenty-first century through a billion-dollar program called IT-2000. It educate over 5000 Vietnamese
in the use of computer technology and which was designated as a national initiative,
An analysis of Vietnams IT-end user market showed the government, together with its related
agencies and institutions, made up 35% of the market. Statements above are proofs that IT industry is
well-known in the country and that putting up business with regards to this kind of industry is a best shot.