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Running head: STRATEGIC ANALYSIS

HP Strategic Analysis
Student name
Institution
28/06/2018

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STRATEGIC ANALYSIS

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Abstract

The technology sector is an economic sector that consists of companies that deal with
semiconductors manufacturing, communication providers and equipment, computer hardware
and software, technology-related equipment, IT services and consulting firms (Kokko, 2018)
...
For this analysis, the emphasis will be on HP, established in
2015
...

The primary products for the company are Personal Computers, Printers, Scanners, Copiers,
Cloud services, 3D Printing, and Displays
...
The company was
formed 79 years ago, and it was called Hewellet-Packard
...
They were both
graduates of electrical engineering
...
Over time, the company evolved and diversified
their products
...
It also offers services in clouds, IT solutions, and web
services (HP,2017)
...

In 2017, the company had total revenue of $ 52
...
From that, the company was able
to get an operating income of 3
...
526 billion
(NASDAQ,2018)
...
It is also traded as
HPE at NYSE as they split into two companies traded separately at the exchange markets
...
The company operations and activities are placed under

STRATEGIC ANALYSIS

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the information technology industry, a subsidiary of the technology industry (NASDAQ,
2018)
...
The company incorporated in 1947 and went public on 6 November 1957
...
One of the earliest customers of the company was Walt Disney who
needed the audio oscillator for use in certifying their Fantasound surround sound systems in
theatres for their fantasia film
...
The
company partnered with Yokagawa Electric to develop high-quality products, but the venture
was not successful
...

The company started the computers production in 1966
...
In
the 1970s the company also produced advanced stock-based computing servers that could be
used as ATMs and Gas pumps
...
The company
had a chance to branch into personal computers when Steve Wozniak (Co-Founder of Apple
Inc
...
The main reason was
that the company wanted to remain in the industrial markets, business and scientific sectors
...
The company also merged with COMPAQ in 2002
...
The
company was able to introduce most products including the desktops, enhanced notebooks,

STRATEGIC ANALYSIS

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workstations and software’s managers and open view client configuration manager
...
It was during this period that the company was finally
able to overtake IBM who is their main competitor
...

In 2015, the company underwent a significant change
...

and HP Enterprises to be traded as two separate companies
...
It was a strategic move as the
company continued to trade in the NYSE as HPQ while its counterpart Hewlett Packard
Enterprises could trade as HPE
...
will sell printers and PCs, while HPE
will sell servers storage, software’s networking, and any associated services
...
Industry Economic Features—What are the industry’s dominant economic
features?
Market features- The top ten technology companies in 2018 alone was$ 1 trillion
...
4 trillion
...

Market growth rate- The industry growth rate in 2016 and 2017 was 5%
...

Stage in life cycle- Mature
The number of companies in the industry- The number of companies in the industry is
over 200 in the US alone
...
Therefore, the number of customer for the products are over 80% of

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Americans population according to NASDAQ
...
4% of
market shares in personal computers
...
Most companies adopted the strategy to
maintain their competitive advantages
...

Technology/innovation- The industry is dynamic as it is faced with constant technological
advancements as that is the main competitive advantage
...

Product characteristics- At first the technology sector was mainly about the semiconductors, communications equipment, and computing hardware
...

Scale economies- Scale of economies exists for most companies
...
HP has invested heavily in
the R&D for innovation purposes
...

Additionally, the unit costs run significantly low
...
HP enjoys above-average profits, but there is an opportunity to increase the
profits significantly
...
Industry Competitive Forces—What causes the industry competitive structure
and business environment to change?
The technology sector is faced with a lot of dynamic changes
...

With each invention or technological advancement, there is a significant change in the
competitive structure and business environment (Porter, 2018)
...
That causes the
business environment and competitive structure to change significantly
...
However, there is
also significant competition in term of their platforms rather than just products
...
Example of the competition between HP and
Samsung, Apple, Microsoft, Xerox, IBM has made the companies stay on their feet and
produce more advanced products in quality, prices, and efficiency
...

The technology sector faces a significant impact by the new entrants or upcoming
companies that change the competitive structure and business environment
...
Also, some companies
engage in vertically disintegrated platforms that allow for divided leadership in the
companies
...
Specifically, HP still faces a significant amount of competition from entrants,
even though they have some contracts or have bought the companies
...


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Industry KSF’s—What are the key success factors for future competitive

success?
The technology sector has the advantage of increasing demand every year
...
The companies have to keep up to date with the technology
companies which creates increased demand for the companies in the sector
...

Explicitly, the businesses now depend on internet, websites, programme, computers, some
applications, robots, and a range of products to conduct their daily business
...
They will only
be able to do so if they use technological products, hence increase the market of the sector
...
The companies, just like any other
business in any industry are highly motivated since they have to compete for resources,
market and labor forces
...
It is, therefore, a factor that drives the success of the industries
...
The competition makes the company grow at an accelerated rate
...
Due to the pay and other allowances, it has encouraged and absorbed highly
skilled individuals
...
The future of the industry is bright, as the most

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skilled, experienced and dedicated individuals have been employed and are aspiring to work
in the sector (Bresnahan and Greenstein, 2017)
...
The technology industry is in a sea of change that will lead to potential tripling
demand for their products in the next ten years
...
HP has also aligned their
strategies and future production in that line to ensure smarter products, connectivity for the
internet of things and efficiency
...
The company faces competition from the basis of the technology, quality of the
products produced, reliability, brand, ease of use of the products, the performance of the
products relationships, security, availability, software, infrastructure reputation, the range of
products and internet infrastructure of the companies (Kokko, 2018)
...
The competition is regardless of whether the competitor is a large corporation, a
start-up or just a small company in addition to the fast-growing companies that are entering
the market
...
Also, the company competes with most of its partners as the deals
are complicated and maybe for particular products only (Kokko, 2018)
...
However, the company will also have to have adjust their prices for most of the
products to be competitive
...

5) Relative Positions of Rivals—What market positions do rivals occupy?
Personal systems- The personal systems sector is one of the intensely competitive
industries with HP products
...
The competition has intensified with the introduction of the tablets and other
form factors that have shifted the customer preferences
...
, Lenovo Group Limited, ASUSTeK Computer Inc
...
, and Acer Inc
...
The company relies heavily on their broad portfolio of products, innovation, the
brand of the company, research and development resources, ability to cross-sell the products,
extensive service and support and ease of access to the HP products
...
The basis
of competition is also on the pricing and the innovation to come up with new products
...
The company faces competition from local
producers who offer cheaper options for the printer accessories like the cartridges, inks and

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toner supplies
...

Enterprise Group and Enterprise services
...
The sector is characterized by dynamic and ever-changing
technological inventing and price competition
...
, Cisco Corporations, EMC Corporation, Computer
Science Corporation, and Tata Consultable services among other companies (HP, 2018)
...

The company is only able to survive in the industry due to their deep technology expertise,
ownership of the differentiated intellectual property, reputation of high-quality services,
cooperation with corporations like Microsoft and Oracle and access to skilled global
resources from SAP Platforms (Kokko, 2018)
...
The rivals
occupy a considerable part of the market
...
HP has one of the highest market shares in
personal computers, printers’ scanners, and photocopiers, but it is performing relatively poor
in the cloud services, internet services and infrastructure and other services
...
For example, IBM and Google are better placed to have the cloud services,
Apple and Samsung are highly innovative with computers, and XEROX is also offering stiff
competition in the printer’s section
...
HP has to use them as benchmarks for all their activities (Porter, 2018)
...
The technology
sector is dynamic
...
All the companies in the
sector are aware of the fact that the primary competitive advantage of any company in the
industry lies in the new products and innovativeness
...
HP rivals next moves will be to counter any new product that HP avails in the
market for their customers (Bresnahan and Greenstein, 2018)
...

While innovation and new products are the main moves, rivals could also improve
their marketing strategies and price their products competitively
...
However, some situation calls for the company to input
their best reactive and response strategy depending on the situation
...
It will result in reduced sales and revenue
...

Depending in what HP has done, the rivals will be responding accordingly to protect their
interest
...
Also, Wells Fargo, a bank in the US advised that the tech
stocks are one of the best-performing stocks in the country
...
The successful companies
have in the past always posted above-average growth rates
...
However, since March the industry
has faced a slump and suffered a 10% average reduction in stocks prices (NASDAQ, 2018)
...

HP, alongside Google, Facebook, Amazon, Netflix, Apple and the top 20 stocks are highly
valued because they have shown consistency over the years
...
One issue is that investors have limited data and track
records of companies before investing
...

The top ten tech companies and other selected tech companies have the capability of
giving the investors a return on investment that is higher than average returns
...
HP return in
investment to the investors was 12
...
Even with a track record that the sector can return above-average returns, taking HP as
an example
...
If one believes that, then they are limiting and denying
themselves chances, to be part of the most dynamic and powerful engines to modern
economies
...
One must carry out research have self-education and invest y if the valuations

STRATEGIC ANALYSIS

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make sense (Bresnahan and Greenstein, 2018)
...

Section 3
INTERNAL ANALYSIS
8) Current Strategy—How well is the company’s present strategy working?
HP Strategy
To deal with the competition that they face the company has devised a marketing
strategy that will allow them to stay ahead
...
The company understands that they are well known for their
computers and their and printers (HP Strategic Report, 2018)
...
The company also uses the differentiating strategy to avail customized products and
services to their customers and enterprises
...
The strategy has served the company
well over the years
...

9) SWOT & Financial Analysis—What are the company’s strengths, weaknesses,
opportunities, and threats?
SWOT Analysis
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STRENGTHS
HP has production excellence- the
company is ranked as the second

•

WEAKNESSES
The company is facing declining
demand overall in most of their
products

STRATEGIC ANALYSIS

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•

•

•

•

•
•
•

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company in the world regarding
shipping PC
The company has a significantly
high market share, about 40
...

The company has invested highly in
research and development which
helps them to stay ahead in
technology
In the industry, the company ranked
as number 10, which shows it is
popular in the industry
...
2
Most of the company’s products are
highly differentiated from their
competitors regarding their quality,
durability, and pricing
The company has an effective
marketing strategy and always uses
catchy advertisements that enhance
their brand image and awareness
OPPORTUNITIES
3D Printing – the company has
invested in the 3D printing sector
which set to grow, and the market
will reach about 30
...
9 billion by 2024
The electronic market has always
been on the rise and is set to reach $
299 billion by 2019
...
The company
should concentrate on those services
...
2001)
...

The company has a low presence in
the tablets market
...

The increased use and demand for
the smartphone has reduced the
market for the personal computers
...

The technology sector is highly
dynamic which is a significant threat
for HP
...
It is a big threat to the
company, currently is outdated in
some of its products regarding
technology advancement, price and
quality of the services and the
products (Valentin, 2001)
...
2: rank of HP
Financial Analysis
The following analysis is for the 2017/2018 financial year of HP Inc
...
09 per share
...
24%
...
The
shares had a dividend yield of 2
...
The tables
below show key financial and evaluation statistics of the company for the 2017/2018 business
year (NADAQ,2018)
...
The company stocks performed poorly in
mid-February from the chart provided and hit its highest mid-March
...
Also, a more in-depth analysis of the financial and profitability shows
that the company enjoyed normal profits
...
77
...
74 and a cash ratio of 0
...

The company can meet its short-term obligations but will have to struggle since it has a quick
ratio of less than one
...

HP

Stock Price
52wk High – Low
EPS
P/E ratio
Dividend Yield

Stock Quote from
Yahoo Finance as of
26/06/2018
23
...
75- 17
...
81
8
...
41 %

Table 1
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00%
5
...
04%
6
...
2%
8
...
66%
8
...
3: liquidity ratios

Table 1
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26
23
...
58
152
...
20

Table 1
...
00
0
...
31

52
...
52
BILLION

STRATEGIC ANALYSIS
Operating Activities
Free cash flow

17
2
...
5: cash flow

Last One-year performance of the HP stocks

Fig 1
...
The huge company success has
also been attributed to its practical and active marketing strategy and competitive pricing of
its products
...
However, the company is facing stiff competition from the
already established global company in most of their products, to cope up with them they have

STRATEGIC ANALYSIS

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to exploit all their competitive advantages
...
The company also makes sure that it has competitively priced
all the products
...
The personal computer industry faces a real threat from
the growing use of the smartphone that has reduced their market and revenue share
...

STRATEGIC ISSUES (and Basis for Each)
HP recently split into two companies
...
However, the strategy to break the company also faces
some challenges that will hinder them
...
Whereas
the company has focused more on the marketing strategy, its main focus should have been on
the products and the services that the company delivers
...
The best strategy for a
company like HP who has a broad portfolio of products in the market is to differentiate
between software that improves the business technology
...

Another strategic issue at HP is that the company relies heavily on acquisitions and
buying out companies
...
In 2001, HP made a

STRATEGIC ANALYSIS

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move to purchase Compaq Computer, so that it can be able to compete with the emerging
Asian computers like Dell, IBM, and others
...
Also, the computers were turning into a common
commodity which meant that the prices were also going to fall
...
However, the problem with the strategy is that, in the mobile sector, HP is not a
leader but rather a follower
...
In 2011, the company also purchased the software
maker Autonomy at a price of 10
...
The move will put them on par with
IBM, Salesforce, and Oracle
...
That exercise managed to save the company some money, but it is
not a long-term strategy that the company can rely on whenever they run into problems
...
For a moment, during the same year, the company estimated savings that will
amount form the exercises would be 27 cents per share
...
70 to 1
...
However, Merrill, a research firm, said that the company still needs to
address its strategic issues if they are to maintain the increasing upward trend (NASDAQ,
2018)
...
The ultimate threat to
the company is in the form of malware monetization, patching and application vulnerabilities
...
The
company faces a continued threat of cyber-attacks from unauthorized and malicious

STRATEGIC ANALYSIS

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individuals who might gain access to their servers and cause a lot of damage to the company
(Porter, 2018)
...

Annual report of the Cyber Risk report reveals that every year the attacks sophistication and
complexity is on the rise
...
The company has a challenging task of keeping up
with dissolving the perimeter and diversify the platforms to reduce the risk of the attacks (HP
Strategic Report, 2018)
...
They must protect the
customers’ data applications and their privacy which is becoming difficult every year
...
HP is a worldwide company and enjoys an outreach to some geographical regions,
brand awareness, marketing capability, and customer loyalty
...
Instead of waiting to be crashed out of
the market by the technology, the company should focus on getting deals, signing
partnerships and acquiring patents that will allow them to hold an advantage in the market
(Porter,2018)
...

One such opportunity is for HP to work alongside Oracle, Amazon, Microsoft, and
IBM rather than work against them (Bresnahan et al
...
It will also be cheaper than going
out to acquire start-ups or companies that don’t have a significant market share
...
HP is also in the Cloud and Web and Internet
service provision, but it stands a better chance if it works in collaboration with three or two of
the companies
...

RECOMMENDATIONS (Preferred Course of Action, Minimum of 1 Defensive Initiative
Required)
HP is one of the biggest players in the Tech Market
...
The company should return to its innovative
trait
...
and Apple are doing
...
It is a company with the financial capabilities to
finance research and developments that will allow them to come up with new products
periodically
...

The company should diversify away from Personal computers related products and
focus more on the future products
...
The company plan is to come up with products that
support the business
...
The company should
concentrate on developing products and services that will be mainly used in corporate
environments rather than home settings
...
It arises from the competitive
nature of the industry and other economic factors that affect the industry at large
...
It is, therefore, essential for HP to have a contingency or
backup plan for their activities
...

While the company has had relatively successful business with their tablet, it is not yet at par
with other leading companies like Samsung and apple
...

The company has the cloud services, the internet services and the IT solution among
their product portfolio
...

Businesses are currently moving towards sustainable technologies that enhance their service
delivery and customer care
...
Before the big players can come in the market HP will have already taken a more
significant share of the market
...
A closer look reveals that HPE is already planning to release the
ProLiant Easy Connect EC200A for strategic service providers, 3Par, Aruba Powerhouse
among other products that are used explicitly for networking solutions in the corporate world
(WSJ, 2018)
...
It has advantages of a
broad portfolio of products and global presence
...
The company has
also suffered from poor strategic moves in the past
...


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References

Annual Financial Report for HP (2018) http://h30261
...
hp
...
aspx
Bresnahan, T
...
, & Greenstein, S
...
Technological competition and the structure of the
computer industry
...

HP 2017 Sustainable Impact Report
...
www3
...
com/~/media/Files/H/HPIR/documents/reports/2015/hpq-annual-report-2014
...
(2018)
...
Journal of development
economics, 43(2), 279-293
...
https://www
...
com/symbol/hpq/financials?query=income-statement
Pearce, J
...
, Robinson, R
...
, & Subramanian, R
...
Strategic management: Formulation,
implementation, and control
...

Porter, M
...
(2018)
...
Harvard business
review, 86(1), 25-40
...
K
...
SWOT analysis from a resource-based view
...

Porter, M
...
(2018)
...
Harvard business
review, 86(1), 25-40
...
https://quotes
...
com/HPQ/financials

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