Corporate Strategies of HP

Section 1

The paper extracted for performing the relevant study is written by Richard Waters. The paper’s name is “Why HP’s printers are a lesson for today’s tech leaders?”

URL link – https://www.ft.com/content/84c847d6-017a-11ea-b7bc-f3fa4e77dd47?

Section 2

(Source: https://lighthouse-sf.org/gala/colors-hp-logo/)

The company chosen for bringing out the analysis in this paper is Hewlett-Packard (HP Inc.) Company. The company is a leading manufacturer of software and is also engaged in providing computer services to customers. The company is headquartered in Palo Alto, which is located in California (Bickel and Kryvinska 2017, August). The two joint founders of the company are William R. Hewlett and David Packard, who established the company on January 1, 1939. The company was established by following the ideas of Frederick Terman, who was a professor in the engineering department of Stanford University. The professor also provided support to the company through his innovative and creative ideas.

The company was primarily established with the motive of manufacturing sophisticated instrumentation and soon became popular in its respective field. The first customer of HP Inc. was Walt Disney Productions. The company sold eight audio oscillators to Walt Disney Productions for preparing its animated film during the 1940s. HP Inc. developed products for the military bases during World War II (Bohas et al. 2016). Post World War II, the company grew massively by developing product diversification strategies. In 1951, the company became popular through the development of high-speed frequency counter. This device was widely used in radio stations and television broadcast stations for setting up signal frequencies accurately. This process was regulated by the Federal Communications Commission. Sale from this device, as well as from the military applications, earned massive revenue for the company.

In the year 1957, the company funded the development of new products through the issue of public stocks in the market. The company also carried out many acquisition activities for expanding its line of products. The company became a public limited company after it took over F.L. Moseley Company, which was one of the manufacturers of graphic recorders. The year 1961 saw a significant shift in the company’s operations when it started manufacturing medical-instruments after acquiring Sanborn Company (Burgelman et al. 2017). The company gained international recognition for its instrumentation work in a technological publicity stunt. The first desktop calculator was introduced in the market by HP Inc. with the help of advanced integrated-circuit technology.

Section 3

The article written by Richard Waters discusses the mass popularity of the latest models of printers, as developed by HP Inc. These printers were recognized as personal laser printers, which were manufactured by HP Inc. before four decades. This project has been considered as one of the significant hit projects as undertaken by the company. The products built a new kind of market for the company (Caputo et al. 2016). For the benefit of the customers, the company developed ink cartridges for these printers and sold these cartridges along with the printers. This was an added advantage for the company, and it earned a good position in the market. Another company named Xerox has placed a massive bid on HP Inc., which might bring the curtains down for the company. The successful tender will lead to the takeover of HP by Xerox and will result in the throwing of cash for the company. This is because Xerox has planned to use the vast profits of HP to support its debt.

Despite its phenomenal success, the company has not been able to manage its profits in a timely manner, which is visible through many of its failed activities. The company has tried to invest its advantage in many reinvention activities, which were not successful. Due to all these reasons, the operating profit of HP ranged within 40-70%, which was not a pretty good figure. To minimize the risk and increase the rate of profit, the company has planned out diversification strategies similar to many other big-tech companies. Many other companies who have suitably adopted diversification strategies are Microsoft, Google, Apple, and Amazon (Cho et al. 2017). Through diversification strategy, the company believes in increasing the life span of its majorly hit products. Diversification has always been considered a valuable tool for grown-up companies, which have risks associated with their core businesses. The future years are going to decide the fate of HP Inc., concerning standing in power in the market.

Section 4

One of the essential corporate strategies, which can be suitably linked with the given case is the strategy of competitive advantage. Competitive advantage is a kind of business strategy, which allows a company to outpace its competitors in the market. Through competitive advantage, the company can achieve superior margins through the value proposition of its customers and shareholders (Claver-Cortés et al. 2019).  A competitive advantage generally comes with innovation, which cannot be easily imitated by competitors. One good example of competitive advantage is the development of new technology to enhance the quality of the products. Competitive advantage can also be gained if the company wishes to bring new technology to the market that will disrupt the existing technologies.

There are three prerequisites of competitive advantage strategy. They are a benefit, target market, and competitors. The company should establish the benefits of the newly invented product or technology. The company must ensure that the newly developed product or technology has the capability of proposing value to the customers and has the features that would attract the customers towards it. Similarly, the company should also take into account the needs and preferences of the targeted customers. The product should cater to these needs and preferences (Dou et al. 2020). Thorough knowledge of the competitors is also required in this process. Keeping all these elements into mind, the company can develop three strategies of competitive advantage, that is, cost leadership, differentiation, and focus. Considering the above case, it can be understood that HP Inc. has tried to incorporate a differentiation strategy of competitive advantage to gain a favorable position in the market through its invention. Cost leadership strategy is utilized by the companies when they attempt to sell mass products at lower costs and exploit economies of scale. In a focus strategy, the company creates a niche market for its products. It concentrates on the development of its products according to the needs and preferences of that narrow market. Differentiation strategy focuses on the differentiation of products to segregate them from other players of the market.

Considering the case of HP, it can be explained that the company has tried to adopt a differentiation strategy to create a competitive advantage in the industry. The company has invented personal laser printer to develop innovation in the sector of technology. The company built the most advanced laser printer for personal use that gained massive popularity among customers (Elliott et al. 2019).  The company also tried to come up with a creative business model, where it manufactured ink cartridges for the customers and sold them along with the laser printers. This was a unique move taken by the company, which suitably defines its differentiation strategy. The company has been able to create a brand position in the minds of the customers through the application of this strategy. For almost four decades, the company created a new market for these newly developed printers, and the project was considered as the most successful one among all the other projects of HP Inc.

Another crucial corporate strategy used by the companies is a diversification strategy through which the companies manage a group of businesses at the same time. A diversification strategy is defined as one where the company widens its business through diversification of its products or markets. This strategy is mainly applied by those companies that aim for a new direction of its business through its growth and development. Diversification helps the company to widen its business by tapping new markets or creating new products (Huaping et al. 2016). The process helps in the dilution of the activity of the company through the diversification of the product offerings and expansion of the business horizon. The strategy also helps the organizations to increase their sales volume and enhance their profit figures, while minimizing their cost structures. Diversification is one of the significant strategies present in the Ansoff matrix, which denotes the development of new products for the newly targeted markets.

Sometimes, the diversification strategy is associated with several risks. This is because an organization needs to gain experience and knowledge of the new market, where it is planning to enter. The process might bring up new issues and challenges for the organization, or it might incur additional unpredicted costs in its way (Jones and Augustine 2017).  On the other hand, it might help the organizations in exploring new kinds of opportunities and spread the risks of the operation to a more profitable zone. The organizations get to identify their core competencies and capabilities. The strategy also helps the organizations to formulate suitable goals and objectives for future businesses and work upon their core values.

The paper written by Richard Waters has investigated on the diversification strategies of HP along with its key competitors. Many examples have been provided, which are relevant to the market of technology. Yahoo has proved itself superior to Google through its substantial online display advertising business. Many other examples have been given, which denote the tapping of new markets by the big technology companies (Mackey et al. 2017).  Amazon first ventured into cloud computing, which turned out to be a successful side project. However, it faced imitations from Microsoft and Google soon after the launch. Apple has brought about another innovation in technology through Apple TV+. This is a premium video subscription service, which was a reinvention of the original functions of Apple. Hp has also looked for reinventions through diversification strategies.

Though there were many successful attempts of diversification strategies, still many attempts proved to be a failure for the companies. Carly Fiorina Company decided to consolidate with the hardware industry. It purchased Compaq computers worth $25bn, which could not provide a considerable amount of sales for the company. Another failed attempt was made by Mark Hurd when it purchased the IT services company worth $13.9bn (Mahdi et al. 2019). The last unsuccessful attempt was displayed by Leo Apotheker when it bought software Autonomy worth $9bn. Even though these unsuccessful attempts persist in the market, diversification efforts are still made by the companies to dilute their margins and pursue a single, irresistible goal.

Section 5

From the above essay, it can be inferred that HP Inc. has successfully adopted two important business strategies to position itself competitively in the market. These two strategies are differentiation strategies and diversification strategies. The company has used a differentiation strategy as a part of its strategy for competitive advantage. The company has been one of the top leaders in its industry for many decades. The company has developed many innovative technologies and has brought about significant disruptions in the market. Many incredible inventions are visible through the study of the portfolio of the company. These inventions include sophisticated instrumentation, audio oscillators for radio frequencies, and signal corps for controlling armies in military bases, counter-radar technology, and advanced shell fuses. Despite enjoying the position of the market leader for many decades, the company faced a huge problem when Xerox decided to bid for its products. This situation has created enormous pressure for the company as it meets throwing off its cash.

The company can adopt suitable strategies to come out of its stressful situation. The company can improvise new ways of presenting its products or services to the market, catering to the current choices of the customers. The company can adopt digital marketing strategies to promote and capture a large customer base (Moscardo and Hughes 2018). The company can engage its customers through digital channels through improved versions of customer engagement strategies. Another suitable way of developing business strategies is by the digitization of the supply chain. This helps in reducing the cost and bringing in more efficiency into the system. Effective management of a supply chain can prove to be a competitive advantage for the company in the upcoming days.

References

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Bohas, A., Camus, A., Capdevilla, I., Dandoy, A., Fabbri, J., Glaser, A., Haefliger, S., Laniray, P., Mukherjee, A., Periac, F. and Scotto, C., 2016. Coworkers, Makers and Hackers in the city: Reinventing policies, corporate strategies and citizenship?.

Burgelman, R.A., McKinney, W. and Meza, P.E., 2017. Becoming Hewlett Packard: why strategic leadership matters. Oxford University Press.

Caputo, F., Giudice, M.D., Evangelista, F. and Russo, G., 2016. Corporate disclosure and intellectual capital: the light side of information asymmetry. international Journal of Managerial and financial Accounting, 8(1), pp.75-96.

Cho, M., Furey, L.D. and Mohr, T., 2017. Communicating corporate social responsibility on social media: Strategies, stakeholders, and public engagement on corporate Facebook. Business and professional communication quarterly, 80(1), pp.52-69.

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Appendices

1) COMPETITIVE ADVANTAGE STRATEGIES

2) ANSOFF MATRIX SHOWING DIVERSIFICATION STRATEGY