Hewlett-Packard
Hewlett-Packard Company is one of the world’s largest information technology corporations. It has a global presence in the field of computing, printing, digital imaging and also sells software and services. Hewlett-Packard Corporation (HP) is the second-largest computer company in the world and a leading seller of desktop computers, servers, peripherals, and services. The company, growing since 1938, has 86,000 employees contributing to sales of over billion in 2000.
HP is second to IBM. Hewlett Packard also manufacturers testing and measurement equipment, and medical equipment in a recent creation company of Agilent Technologies in 2000. Over 50% of Hewlett Packard’s sales are outside the United States, and are made up of nearly 85% computers and related products. The vision, culture, and environment created by the co-founders are very much alive today, and continue to make Hewlett-Packard stand out from the crowd.
Hewlett-Packard Company (HP) is a technology solutions provider to consumers, businesses and institutions globally. The company’s offerings span information technology infrastructure, personal computing and access devices, global services, and imaging and printing. Product and service categories include desktops and workstations, notebooks and tablet personal computers, printing and multifunction, handheld devices, monitors and projectors, fax, copiers and scanners, digital photography, entertainment, storage, servers, supplies and accessories, networking, and software products.
The company’s offerings span IT infrastructure, personal computing and access devices, global services, and imaging and printing. Its billion (U.S.) annual investment in research and development fuels the invention of products, solutions and new technologies that enable HP to better serve customers and enter new markets. The May 2002 merger of Hewlett-Packard and Compaq Computer Corp. forged a dynamic, powerful team of 140,000 employees with capabilities in 160 countries and doing business in 43 currencies and 15 languages. Revenues for the combined companies were billion for the fiscal year that ended October 31, 2002 ().
HP has many aggressive competitors in all areas of their business. There are numerous competitors, may it be the world’s largest corporations to relatively small and highly specialized firms. The major competitors of HP are the Apple Computer, Inc., Dell Inc., International Business Machines Corporation, Lexmark International, Inc., and Toshiba Corporation.
But in spite of the competition, HP has sustained its competitive advantage. The depth, breadth, and vitality that comes alive daily through the firm’s values which is the HP Way are assets of Hewlett Packard. HP general managers regularly discuss and assess the vitality of the HP Way, a process that inevitably results in corrective actions to ensure its continued viability.
To create an organization that could sustain its competitive advantage regardless of marketplace whims and what their competitors were building, HP founders based their corporate culture on the integration and reinforcement of critical opposites. This became known as the Hewlett-Packard Way.
HP has achieved the greatest dichotomy which is creating an environment that celebrates individualism, but at the same time one that is also wholly supportive of teamwork. Although HP people are taught to engage in cross functional team, they are also rated on the performance of decentralized business units and personal achievement.
In Technology Business Research, Inc. (TBR) released in the first quarter of 2004 of Corporate IT Service & Support survey, HP services is described as having its “first shot at stardom” as it moves to a ranking position ahead of competitors IBM and Dell. HP earned the number one ranking in customer satisfaction among vendors of corporate IT service and support, and TBR believes HP’s efforts in “taking a consultative, partnership approach” could potentially be a competitive advantage in the IT services industry.
The TBR (2004) study surveyed 688 mid-size to large companies in North America finding that HP ranked number one over competitors IBM and Dell based on the weighted satisfaction index, a measure of the total customer satisfaction experience with IT services. The study covers satisfaction with on-site support, remote support services, hardware deployment, software support, and training services.
survey (2004), HP earned the highest overall rating from its customers of nearly 1,200 information technology managers and professionals. In this study, customers gave HP the top satisfaction marks in six of eight categories, including meeting customer expectations, contribution to customer profitability, product quality, product reliability and licensing policies. HP’s overall rating was eight points higher than Dell and seven points higher than IBM.
In the contribution to profitability category, HP was eight points higher than Dell and 11 points higher than IBM. When asked which vendors they were most likely to recommend, customers consistently ranked HP as their top choice.
According to 2004 results from Technology Business Research, Inc.’s ongoing IT customer satisfaction study, HP secured the No. 1 ranking in customer satisfaction among vendors of Intel-based servers in the first quarter of 2004. HP has held the top rating for loyalty in the Intel server space for the last three quarters.
In the 2004, TBR released its Corporate IT Buying Behavior & Customer Satisfaction Study on Notebooks in which HP scored a virtual tie for top honors with Dell and IBM. The good news for HP came about due to a rise in HP’s weighted satisfaction index this quarter, while Dell’s declined considerably and IBM’s remained stable. Customers are recognizing HP’s portfolio of products, services, solutions and its ability to provide a complete customer support experience as key elements in allowing them to synchronize business and IT to capitalize on change.
Hewlett Packard’s basic business purpose is to create information products that accelerate the advancement of knowledge and improve the effectiveness of people and organizations. These products and services are used in industry, business, engineering, science, medicine, and education in over 130 countries worldwide.
Hewlett Packard has well defined corporate goals that are a reflection of the overall mission. Service is most important to HP, whether the relationship is HP/consumer or HP/employee. Profit is one of the components of HP goals but only as a means to the greater ends. HP primary goal is to give its customers the products and services they desire. HP specific corporate goals is to achieve sufficient profit to finance our company growth and to provide the resources we need to achieve our other corporate objectives
Hewlett Packard corporate objectives have guided the company for several years. These goals include, firstly, customer loyalty which the company will provide products, services and solutions of the highest quality and deliver more value to our customers that earns their respect and loyalty.
Second, is to achieve sufficient profit to finance our company growth, create value for our shareholders and provide the resources we need to achieve our other corporate objectives.
Another is to grow by continually providing useful and significant products, services and solutions to markets we already serve—and to expand into new areas that build on our technologies, competencies and customer interests.
Moreover, to view change in the market as an opportunity to grow; to use our profits and our ability to develop and produce innovative products, services and solutions that satisfy emerging customer needs.
Further, is to help HP employees share in the company’s success that they make possible, to provide people with employment opportunities based on performance, to create with them a safe, exciting and inclusive work environment that values their diversity and recognizes individual contributions; and to help them gain a sense of satisfaction and accomplishment from their work.
It is also important for the company to develop leaders at every level who are accountable for achieving business results and exemplifying our values. Lastly, the company believes that good citizenship is good business. The company lives up to their responsibility to society by being an economic, intellectual and social asset to each country and community in which they do business.
HP is a company committed to building a work environment where everyone has an opportunity to fully participate in creating business success and is valued for their distinctive skills, experiences and perspectives.
They address commitment through development programs targeted to the next generation of HP leaders, work-life initiatives for our employees, recruiting of diverse talent, and other efforts that help employees and managers foster an inclusive work environment. In addition, they establish diversity goals to create accountability and drive to their success.
Diversity is being weaved into the fabric of the company into all processes and day to day business practices to create a mindset in every employee and every manager that allow them to think consciously about diversity and inclusion in everything they do. Diversity and inclusion are the intrinsic part of our nature and key to fulfilling HP’s vision which is to be “a winning e-company with a shining soul.”
At Hewlett Packard, diversity is believed to be the key driver of success. Putting all differences to work across the world is a continuous journey of the company which is fueled by personal leadership from everyone in the company. The aspiration of HP is that the behaviors and actions that support diversity and inclusion will come from the conviction of every HP employee which is making diversity and inclusion a conscious part of how the business is run throughout the world.
In HP point of view, diversity is the existence of many unique individuals in the workplace, marketplace and community. This includes men and women from different nations, cultures, ethnic groups, generations, backgrounds, skills, abilities and all the other unique differences that make each of us who we are.
Inclusion means a work environment where everyone has an opportunity to fully participate in creating business success and where each person is valued for his or her distinctive skills, experiences and perspectives. Inclusion is also about creating a global community where HP connects everyone and everything through our products, services and our winning workforce.
As a company, HP is committed to developing work/life skills, providing tools, resources and a supportive environment for all of the employees. At HP, employees work with their managers to make choices that assist them in navigating their work and personal life challenges while meeting the business needs of the organization. This kind of reciprocal partnership with employees and a flexible work environment has been a hallmark of HP’s business success.
There are core values which Hewlett Packard shared to get thing done accordingly. First is passion for customers in which customers are put first in everything they do. They also practice trust and respect for individuals. Employees and every individual working in the company work together to create a culture of inclusion built on trust, respect and dignity for all.
Moreover, they motivate themselves for achievement and contribution in which employees strive for excellence in all they do. The company believes that each person’s contribution is a key to company’s success. They also put in mind the value of results through teamwork. Employees effectively collaborate and always looking for more efficient ways to serve customers.
Furthermore, they value speed and agility. They practice to be resourceful, adaptable and achieve results faster than competitors. HP being a technology company invents meaningful innovation. They are a company that invents the useful and significant innovation. Lastly, HP value uncompromising integrity. HP is open, honest and direct in our dealings.
In order for HP to attain the goals they have set forth, several corporate strategies and practices have been implemented. These create an atmosphere in HP of informality and a sense of working together for the common good of the company.
One of the practices of Hewlett Packard is Management by Wandering Around. This practice involves keeping up to date with individuals and activities through informal or structured communication.
Another is Management by Objective. In this practice, individuals at any level contribute to HP goals by forming goals or strategies, which are integrated with their manager’s and those of HP as a whole. Adaptability and innovation in recognizing alternative approaches to meeting goals provides an effective way of meeting customer needs.
In addition is the Open-Door-Policy. In this practice, the assurance that no adverse consequences should result from responsibly raising issues with management or personnel. Trust and integrity are important parts of the Open Door Policy. For example, ability to voice frustrations in a constructive manner, willingness to consider or see alternatives in a new way or openness to discussion of advancement, or transfer opportunities open communication.
At the core of HP practice of open communication is the belief that when given the right tools, training and information to do a good job, people will contribute their best. HP believes that open communication leads to strong teamwork between HP people, customers and others, and energized team achievement and contribution.
By April 2005, Mark Hurd took charge of the Hewlett Packard appointed chief executive officer after Ms Fiorina. He is also the president of HP and a member of the company’s board of directors, positions to which he was named in early 2005. Hewlett-Packard‘s board of directors has claimed that in firing former Chief Executive Carly Fiorina, the company had the right strategy but the wrong execution. The board also believes that the problem is not on the strategy but on the follow-through on strategy.
Hurd has reversed Fiorina’s consolidation of HP’s printing and computer businesses and ripped up her heavily centralized, underperforming sales structure. Hurd reinvigorated the individual operating units and empowered them to meet clear financial objectives. Business managers are asked to operate more efficiently and profitably while fine-tuning their product mix. Hurd undone one of Fiorina’s major strategic moves in an effort to right the ship. Hurd separated the PC and printing division which Fiorina merged.
The biggest thing Mark Hurd has going is getting a lot of these cost-cutting initiatives. Tactically focusing on right-sizing the business makes economic sense and Mark Hurd’s track record at NCR probably gives him even more credibility to enact cost-cutting measures. Right-sizing the company is important for investors and for the company in order to compete longer-term. Hurd has also layoff 10,000 workers to cut costs. Acquisition is a part of a broader strategy.
But too often the company has been blindsided by problems outside printing that affected overall results. An unexpected implosion in HP enterprise storage business in the third fiscal quarter of 2004,
HP has at times been unable to get its top customers to spend more, mostly because of HP’s own problems. Communication across business lines like enterprise computing and printing or across geographic regions was poor.
HP’s convoluted commission structure, pegged largely to revenue, provided inadequate incentives to sell. Hiring new salespeople was needlessly bureaucratic and time-consuming. Hurd found that there were more than 10 layers of management between his desk and the customer, and nearly 10,000 of the 17,000 people employed in corporate sales were actually administrative staff, who didn’t sell anything.
But in the bright side, HP has some interesting new products and opportunities. In printing and imaging, where HP’s dominance is starting to erode, the company is embarking on an aggressive transition from “printer maker” to “printing business.” HP is challenging the copier giants for a slice of the billion corporate printing market through its line of multi-function machines, which are attached to networks but can produce high-volume copying. In only one year, HP has grabbed 15% share of the multi-function printer market.
Moreover, HP has moved into commercial printing through its roughly billion acquisition of Indigo, which offers commercial printers a digital option for smaller jobs. “I think this is going to be a very big opportunity for us,” says Joshi, the printing chief.
In addition, through its online digital photography acquisition, Snapfish, HP is linking with the likes of Wal-mart and Walgreen to provide photo printing in retail kiosks across the world. HP can join Kodak as the only vendor with exposure to all the key digital printing end-markets. This is another manifestation of incremental future growth opportunities for HP that is still in the germination stage.
Furthermore, after lagging IBM’s rich stable of middleware and business-process software, HP has been quietly snapping up modest, strategic software companies that are designed to complement the company’s strong core software products focused on data center and mobile computing and communications. For example, HP is attacking soaring labor, maintenance and repair costs for corporate computing networks with software and services that almost completely automate data-center functions.
But Hurd said at the news conference that HP needs repairs. While calling the company “fundamentally sound” and a leader in many categories and services, he said, “it is also clear that the company is not performing to its potential.”
In addition, he also stressed that he would keep customer concerns in the forefront. “What you can except from me is a relentless focus on serving the needs of the customer,” said Hurd. “This market is too competitive and too dynamic for us to ever take our eye off that objective. Everything that we do must be for the customer. If it’s not, then we consider why at all we’re doing it,” he said. “My management style reflects a fundamental belief in cost discipline and focused investment in strategic growth initiatives,” Hurd added.
The strategy of HP which Mr. Hurd has been pursuing is to align money to save money and align money to grow the company. According to Hurd, they are working on our cost side, he said they are also working on their execution and trying to align more and more accountability into their business units. And align more and more of their capability down closer to the market and the customer.
With the goal of establishing HP as the world’s leading information technology company, Hurd has sharpened HP’s strategic focus and concentrated its R&D investments on three long-term growth opportunities: next-generation enterprise data center architecture and services; technologies for always connected, always personal mobile experiences; and a broad transition from analog to digital imaging and printing across the consumer, commercial and industrial markets.
At the same time, Hurd has improved HP’s operating efficiency and execution as well as its financial performance and customer focus. The result has been increasing growth and profitability, greater value for shareholders and customers, and a stronger competitive position in global IT markets. For the last four fiscal quarters, HP revenue totaled .9 billion (HP official website).
The analysts and Hurd project that HP will be doing billion worth of revenue in fiscal 2006. HP projects to ship more than 30 million PCs, yet again more than 50 million printers, more than 2 million industry standard servers.
Hurd has set very public financial goals: to grow annual revenues by 4%-6% and fatten operating margins to 13%-15% over the next three years. His goal of cutting about billion in costs by slashing jobs and reducing pension expenses.
Hewlett Packard announced plans to contribute 14,500 employees to the global unemployment pool this morning, introducing a broad of restructuring plan that will reduce its workforce by 10 percent. The jobs will be shed in the next six quarters, and together with some tweaks made to the company’s benefits plan, will ultimately save .9 billion a year.
The hardest hit of HP’s ranks will be its support units such as information technology, human resources and finance. Staff reductions in sales is be minimal. “After a thorough review of our business, we have formulated a plan that will enable HP to begin delivering its full potential,” CEO Mark Hurd said in a statement, “We can perform better for our customers and partners, our employees and our shareholders and we will.”
For HP, whose cost structure has long been out of kilter, the cutting jobs, dumping suppliers and iPods, introducing new printer, server and storage products are first step toward bringing costs into line with competitors.
The strategy of Mr. Hurd which he has been pursuing is reduction of cost. In connection with this, he has shed 10 percent of the workforce. He believes that right –sizing is the right strategy for the company. He also separated the PC and printing division of the company to be more specialized.
In a report, Hurd said that the “overall performance leaves room for improvement in many of our businesses” and that HP’s costs were “off benchmark in many areas.” Under Hurd’ management, HP has already made senior management changes that will change the direction of the company.
Randall Mott, Dell’s chief information officer, is hired away to be its senior vice president and CIO. He will report to Hurd and have a seat on the company’s executive committee.
Cathy Lyons, a 26-year company veteran, is promoted to executive vice president and chief marketing officer. She took over the CMO job from Mike Winkler, who will continue to run HP’s customer solutions group.
Moreover, he has also recruit Todd Bradley, handheld maker of Palm, Inc., to run the PC unit on Hewlett Packard.
Wall Street is generally bullish on an HP restructuring. Its shares are trading up 34 cents to .96. S.G. Cowen, in a research note, says head-count reductions offer the potential for upside to its current earnings estimates for 2006 and 2007. Layoffs offer an almost immediate boost to the bottom line, but will do nothing to fix HP’s problems.
Hurd is focused on the things he do. He is focused on creating value rather than pitching on grand visions. Hurd has layoff 10 percent of the workforce to reduce cost and recruit good and capable staff to fill out the different positions. He rather hire experience workforce. He moved to trim HP’s costs in July by laying off 14,500 workers, from a total workforce of 150,000.
He simplify the companywide bonus system that many found incomprehensible and reward employees based on the performance of their business units and HP overall. He’s also tossing out Fiorina’s matrix management structure, which muddied responsibilities, to give business heads more control of their units. According to him, “The more accountable I can make you, the easier it is for you to show you’re a great performer. The more I use a matrix, the easier I make it to blame someone else”( 2005)
Hurd has made the biggest turnaround on HP. Hurd has set out to employ similar strategies at HP with what he has made at NCR.
In August of 2005, Hurd got to work on lowering costs at HP by eliminating14,500 jobs, or about 10% of the company’s work force, over 18 months. That’s supposed to save H-P .9 billion annually as they had visioned.
Hurd’s biggest challenge being the CEO of Hewlett Packard is how to make things right from what Fiorina had left.
In an article of (2005), Hurd said that HP will “double down” its investments and focus on excellence in three areas: creating solutions, creating demand for those solutions, and servicing those solutions.
Hurd strategy is to concentrate on the enterprise systems management and storage. Hp is looking forward to align its business with companies and technologies that are adjacent to its core strengths. Another strategy that he is pursuing is to understand customer better, cross sell them and win customer’s satisfaction. He also develop the Research and Development . R&D is the key to success to HP which has the reputation for investing heavily in research and development.
In summary of all that has pointed out, Mr. Hurd as the new chief executive officer of the Hewlett Packard has a principle of doing rather than saying. With his management of HP, his first strategy for the company to stand again after the management of Ms. Fiorina, is to reduce costs. He has a good reputation of successful cutting off of costs from which he has also done in the NCR. His first of reducing cost is laying off 10 percent of the workforce or 14,500 workers, in particular from the 150,000 workers of HP. He believes that laying off the 10 percent of the workforce will reduce company’s costs by .9 billion.
Aside from laying off workers, he has recruit highly experienced and capable people to do the different duties in the different divisions of the company. He has also separated the printing and PC divisions which was merged by Ms. Fiorina. This is because it is better be more specialized. He also has decentralized the management making the different divisions accountable to its own unit.
Credit:ivythesis.typepad.com
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