Académique Documents
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Culture Documents
Hewlett-‐Packard
Company
4/29/2013
Present
in
this
report
is
an
overview
of
Hewlett
Packard
Company,
better
known
as
HP.
HP
is
a
technological
giant
in
the
Information
Technology
Industry.
Unfortunately
for
HP,
their
inability
to
adapt
to
changing
markets
has
had
them
in
struggling
positions
in
the
past
few
years.
Armin
Milak,
Ozzie
Marrero,
Amerlin
Burgos,
Dan
Fahey,
Alex
Skramstad
https://sharepoint.uvm.edu/sites/bsadhp/SitePages/Home.aspx
Hewlett-‐Packard
Company
Spring
2013
Executive Summary
Hewlett Packard Company was founded in 1939 by Bill Hewlett & Dave Packard. The
company evolved from producing oscillators to producing various products such as computers,
printers, scanners, etc. Hewlett-Packard, more famously known as HP, has grown to become the
world’s largest producer of computers. In attempts to contend with competitors like Apple and
Dell, HP has invested billions of dollars in purchasing assets to combine with their current
possessions. These investments haven’t been transformed into profits, hence why HP has
accumulated over $30 billion in debt. Poor management in the last decade has proven to be a
major concern and liability with investors. Meg Whitman, former CEO of eBay, has been hired
along with other notable mangers to take over the marketing, financial and operational functions
of the business. 1
The financial state of HP in the past 5 years has seen a dramatic drop in overall market
value. Consistent drops in share values have led investors to pull money out of the company.2
The debt seems to just be increasing, while the overall profitability of the company is in the
midst of a downward spiral. With new management in place, HP has taken new approaches to
finance and marketing. Spending insurmountable amounts of money on advertisements, their
new storytelling concept is in place to reshape its marketing strategy. New commercials such as
the “the magic of touch,” and “make it matter,” are at the forefront of HPs new marketing push. 3
1
This
is
the
executive
summary
of
your
report.
The
first
paragraph
should
introduce
your
company’s
history,
from
the
first
sections
of
your
report.
You
want
to
include
only
the
most
important
and
relevant
information.
In
the
corporate
world,
the
executive
summary
is
at
times
the
only
part
of
the
report
read.
It
also
provides
the
reader
a
reference,
if
they
desired
refreshing
their
mind
on
something
they
read,
without
needing
to
re-‐read
the
whole
thing.
Include
things
such
as
threats
to
profits,
and
the
ways
the
company
is
addressing
those
threats.
Make
sure
that
you
have
bits
and
pieces
of
each
section
in
your
report.
2
Notice
the
factual
format
of
the
summary.
The
majority
of
the
sentences
are
facts
pulled
directly
from
the
report
itself.
Take
into
consideration
that
each
sentences
should
be
important
in
regards
to
your
overall
mission
of
the
report.
For
example,
all
of
the
sentences
in
this
summary
provide
facts
an
investor
would
like
to
know
if
deciding
whether
or
not
buy
stock
from
this
company.
3
A
good
strategy
to
use
is
compiling
summaries
of
each
group
members’
individual
sections.
Once
this
is
in
hand,
constructing
a
cohesive,
yet
informative
executive
summary
should
be
a
breeze.
1
Hewlett-‐Packard
Company
Spring
2013
In addition to a new marketing strategy, HP has been rigorously overhauling their IT
systems. The primary focus for the company is a more sleek and efficient operational system.
With how quick transitions to new technologies are made, HP is working day and night to try
and improve their adaptability. Ethical Conflicts within the company’s higher executives have
proven to be a setback in terms of the trust received by their consumers. HP settled a lawsuit for
their role in the allowance of pretexting, or sharing of information, and was forced to pay out a
substantial amount of money to the state of California. Although some states have no laws
against these practices, there is still an underlying responsibility for the company to maintain in
terms of their ethics. Although poor ethics may not directly affect profits, there is always a
chance for it to indirectly punish the company’s profitability. 4
4
Note:
Your
executive
summary
should
be
at
most
ONE
page.
With
the
addition
of
these
footnotes,
the
executive
summary
in
this
report
went
over
1
page.
2
Hewlett-‐Packard
Company
Spring
2013
Contents
Introduction
.................................................................................................................................................
4
Environment/Industry
Analysis
....................................................................................................................
4
Company
Description
..................................................................................................................................
6
Financial
Analysis
.........................................................................................................................................
8
Recent
Marketing
Strategy
.......................................................................................................................
10
Use
of
Information
Technology
.................................................................................................................
12
Ethical
Issues
.............................................................................................................................................
14
Conclusion
..................................................................................................................................................
16
Bibliography
..............................................................................................................................................
17
Hewlett-Packard Products
3
Hewlett-‐Packard
Company
Spring
2013
Introduction5
Since Hewlett Packard Company was first founded in 1939, they have produced
countless amounts of innovative and revolutionary products. The HP slogan for years has been,
“invent.” This slogan describes the founders of the company, but on the other hand doesn’t
match with the current route HP seems to be running on. With all of the success that comes with
being part of HP, it comes as a huge surprise that HP is currently struggling with its operations.
A changing market, a large debt, poor management, and more combine to create a serious
problem for Hewlett Packard in the coming years. 6
With the accumulated debt and the massive consolidation of the company to come,
reporters have pronounced the dimmest fates for HP.7 Judith Hurwitz of Businessweek magazine
said, “I believe that by the end of the decade (if not before), HP will either become a holding
company or be broken up and sold off” (Businessweek, Judith Hurwitz).8 Our group has put
together an analysis of 6 different components of the company to try and funnel down what has
gone wrong with HP in the last decade. The six categories used were an environmental/industry
analysis, a company description, a financial analysis, a recent marketing strategy, HP’s use of
information technology, and finally a look into ethical/environmental issues that have soured the
taste for Hewlett Packard’s products. 9
Environment/Industry
Analysis
Hewlett Packard (HP) is and has been a diversified technology giant in the world today,
but continuing poor management may prove to be a cause for concern for investors and the
5
A
clear,
different
font
colored
footnote
appears
to
separate
sections.
6
Introduce
the
focus
of
your
report.
Here,
we
introduce
a
main
point
in
our
argument:
that
HP
is
currently
not
being
as
inventive
as
they
have
been
known
for.
7
Here
is
a
powerful
statement
about
how
HP
seems
to
be
heading
into
a
downward
spiral.
This
introduces
our
argument
that
we
believe
HP
needs
to
make
some
serious
changes
in
order
to
survive
in
the
changing
market.
8
In
business
classes
Professors
will
ask
for
in
text
citations
along
with
a
reference
page.
From
experience,
professor
wont
specify
the
format
desired,
but
will
require
consistency.
So
choose
a
citing
format
and
stick
to
it.
9
The
last
sentence
is
a
place
where
a
transitional
sentence
is
needed.
Here,
we
listed
all
of
the
sections/topics
that
we
were
going
to
be
talking
about.
4
Hewlett-‐Packard
Company
Spring
2013
future of the company.10 Hewlett Packard lies in the Information technology industry. The
Information Technology Association of America defines Information technology (IT) as “the
study, design, development, application, implementation, support or management of computer-
based information systems.” With alliance to this, HP produces various types of computers,
printers, scanners, services, servers, and software. They are also a large provider of storage, and
servers, and are continuing to invest in cloud technology. As for the size of the industry, it is one
of the biggest in the world, and it has actually continuously grown over the years. By 2002, the
computing industry was worth a whopping $220 billion globally. The market for PCs, and
subsequent products and services is of a wide range and is truly a universal phenomenon. There
are markets all over the world, including personal use and business consumption for the products
11
that HP provides.
Porter’s five forces is a great tool for describing what the current information technology
industry looks like and what possible risks that they may have to endure in the future. 12First,
there are always competitors in each industry, and the rule applies to the IT industry as well. The
main competitors for HP are Dell, Apple, Accenture, and IBM. What sets HP apart from its
competitors is the company’s ability to provide packaged deals of computers, software, printers,
and scanners. Next, HP has one of the widest ranges of customer’s the industry has to offer. It
gives quantity discounts to many businesses and even large enterprises who love HPs ability to
provide full packaged deals of products. Following customers, HP holds leverage with its
suppliers because of the high quantity of products they require to fulfill its demand. When you
hold this kind of leverage that HP has, you have bargaining power over your suppliers and are
qualified to receive quantity discounts from them. Although they hold this leverage as a benefit,
there are threats in which they must take account of, like the threat of new entrants and the threat
of substitute products. The threat of new entrants is relatively low given the difficulty to compete
10
Like
any
paper,
topic
sentences
are
needed.
Here,
there
is
a
topic
sentence
identifying
HP’s
place
in
the
technology
industry.
11
An
Environment/Industry
Analysis
section
is
a
key
topic
to
research
for
a
company
analysis.
Find
information
such
as
how
big
the
industry
is,
who
are
the
company’s
competitors,
and
the
types
of
products
that
coincide
with
the
industry.
12
Use
Porter’s
five
forces
to
describe
the
industry.
1.
Threat
of
new
entrant.
2.
Threat
of
substitute
products
or
services.
3.
Power
of
customers.
4.
Power
of
suppliers.
5.
Intensity
of
competition.
5
Hewlett-‐Packard
Company
Spring
2013
with the reputation HP has built. It would take an extremely large investment to compete in the
computing industry because of the level of barriers that it holds. The biggest threat to HP is the
rising sensation of substitute products. Apple has produced the iPad and the iPhone. Along with
Apple, many other companies have introduced their own versions of this new small, portable,
touch screen computing device. Apps on mobile phones produce a large threat because they have
the ability to provide the same functionality of apps on computers, but at a cheaper price, and in
a smaller more portable form (Central Penn).
13
Note
that
each
section/topic
is
clearly
divided
and
easily
identifiable.
Your
reader
should
know
when
you’re
switching
topics.
14
Adding
in
the
corporate
objectives
of
the
company
in
the
company
description
section
is
a
very
good
idea.
What
better
way
to
describe
the
company
than
by
providing
what
their
goals
and
values
are?
15
Describe
the
company’s
current
position
financially.
Talk
about
what
they
are
struggling
with,
how
they
are
trying
to
deal
with
it,
and
if
they’re
successful
in
their
attempts.
6
Hewlett-‐Packard
Company
Spring
2013
innovative. As they move on in their business plans, they hope to utilize their assets in servers,
networks, and services to implement a large cloud computing service which they hope will
rebuild their struggling profits (Businessweek).
Currently, Hewlett Packard Company is run by CEO Meg Whitman, who was hired in
September of 2011. As CEO of eBay, she played an essential role in the expansion and success
of the company. One of Whitman’s first objectives as CEO was to combine HP’s printing and
computing services into one. 16Together the two services account for $65 billion in revenue.
Whitman explained this combination as a way to increase efficiency within the company and cut
costs of production, as well as decrease operational costs (Businessweek). HP purchased and
merged with Compaq in 2002, and to this date that has been the most successful business move
the company has made in the past few decades. This expanded the company’s ability to offer a
full package of items to its customers. 17 Whitman is reported to have forced former leader of
HP’s printing industry, Vyomesh Joshi, out of the company (AllthingsD). Business Week
magazine reported that the combination of the two product lines may eventually lead to woes for
investors because ultimately the two may not be a good fit together (Businessweek). In a report
from the Los Angeles Times, analysts believe that management has lost control over its
operations in recent years due to the drastic changes to management, and the company’s overall
ability to adapt to the worlds changing market (LA Times). The amount of internally developed
talent in HP has shrunk enormously over the past years. Until Carly Friorina was hired as CEO in
1999, all of HP’s past CEO’s and senior leaders were lifelong employees of the company
(Businessweek). That says a lot to the recent switch in organization and management of the
company. Although HP has acquired a great deal of assets in the past few years, the
management’s inability to implement them in a way that would provide growth and profit has
clearly been a problem. If HP continues with the practices it has employed for the past 5 years I
wouldn’t count on a comeback from the IT giant (Businessweek). Along with Whitman, Hewlett
Packard hoists a strong team of executives who are looking to turn the company’s fortunes
around. Marty Homlish, Executive Vice President and Chief Marketing Officer, has over 25
16
Find
some
information
about
their
current
leadership
and
talk
about
their
impact
on
the
company.
Good?
Bad?
Potential
to
succeed?
17
Find
some
of
the
good
things
the
company
has
done
in
recent
years.
What
has
made
them
money?
Is
it
still
making
them
money,
and
looking
back,
was
it
still
the
right
move
to
make?
7
Hewlett-‐Packard
Company
Spring
2013
years of experience in marketing. 18 He spent 15 years with Sony and is responsible for unifying
the brand management of Sony’s different segments including PlayStation, Music, and pictures.
Catherine Lesjak, Chief Financial Officer, has 25 years of experience within Hewlett Packard, in
which she was responsible for the companies worldwide cash, debt, foreign exchange, capital
structure, risk management, and benefits plan administration. Bill Veghte, Chief Operating
Officer, has the responsibility to work closely with the executive council to oversee the
operational activities and overall success. Veghte has held senior leadership positions in
Microsoft, and has contributed greatly to the success and launch of Windows 7 (HP Labs).
Financial
Analysis
When analyzing Hewlett-Packard over the past five years, the company has seen a
dramatic decrease in its overall market value. While quarter one for Hewlett-Packard in 2013
brought growth to the company, it is still not expected to make significant profits until 2014.
CEO Meg Whitman told CNBC that, “the financial results are going to have to underscore the
strategy and that’s why we have laid out this multiyear journey to basically be very clear to
people that we won’t see revenues accelerating until 2014” (Thompson 1). Profit margins, which
is the amount by which revenue from sales exceeds costs in a business, rest far below
Information Business Machines (IBM) and Apple who are two competitors in the same market.
19
Dell however is seeing almost an identical trend as Hewlett-Packard with almost a fifty percent
decrease in profits margins since 2011. 20
18
Describing
the
company
has
a
lot
to
do
with
describing
their
leadership.
19
Notice
how
the
entire
paper
is
in
a
really
factual
tone.
You
want
to
maintain
this
type
of
tone
throughout
the
paper,
and
infuse
analysis
whenever
possible.
20
Talk
about
the
company’s
profit
margin
and
compare
them
financially
to
their
competitors.
Are
they
doing
better
than
them?
Worse?
Why
is
the
company
struggling
to
compete,
or
what
makes
them
better
than
the
competition?
8
Hewlett-‐Packard
Company
Spring
2013
Profit
Margin
30.00%
25.00%
HP
20.00%
15.00%
IBM
10.00%
DELL
5.00%
AAPL
0.00%
2009
2010
2011
2012
2013
21
Having been founded in 1939, Hewlett-Packard has been able to make a notable name for
its self over the years. With that being said, massive companies such as Apple have entered the
market and developed new technologies that have caught the eyes of the average consumer.22
Big name companies combined with poor market adaptability have caused Hewlett-Packard to
lose some of its significance. As the return on assets and current ratio fall at a steady pace, this
company is wedged in a downward spiral. Debts and liabilities are increasing at a swift rate,
while assets are being sold off to fight their climbing debt. This in turn affects the current ratio,
which stands for the measure of whether or not a firm has enough resources to pay its debts over
the next 12 months.
Current
Ratio
Total
Assets
$250.00
3
$200.00
HP
2.5
HP
$150.00
2
IBM
IBM
1.5
$100.00
DELL
1
DELL
$50.00
AAPL
0.5
AAPL
$0.00
0
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
21
There’s
nothing
better
than
a
graph
that
tells
a
story
without
words
when
reading
a
long
report.
Add
in
multiple
graphics
showcasing
important
and
relevant
information
about
the
company.
If
adding
in
a
graphic,
it's
vital
that
in
your
report
you
explain
what
you
want
the
reader
to
know
about
it.
You
can’t
expect
the
reader
to
be
able
to
read
and
understand
the
information
giving
in
graph
form.
22
Constantly
comparing
your
company
to
other’s
in
its
industry
is
a
good
way
to
show
investor’s
how
the
company
stacks
up.
9
Hewlett-‐Packard
Company
Spring
2013
The
technology
industry
is
advancing
at
a
debauched
pace
and
with
companies
such
as
Hewlett-‐Packard
falling
behind;
it
will
be
very
hard
to
make
its
way
back
up
from
the
bottom.
When
looking
at
the
graph,
Hewlett-‐Packard
has
seen
a
dramatic
decrease
in
net
income.
What
can’t
be
seen
on
this
year-‐to-‐year
graph
however
can
be
seen
on
the
monthly
graph
for
2012.
Throughout
the
months
of
July
to
October
Hewlett-‐Packard
saw
net
income
plummet
to
negative
eight
billion
eight
hundred
and
five
million
dollars.
This
shocked
the
company
sending
thousands
of
employs
home
without
a
job,
and
Hewlett-‐Packard
into
a
continuous
flow
of
debt
desperately
trying
to
fix
what
had
gone
wrong.
However,
in
recent
years
Hewlett-‐Packard
as
seen
its
profit
margin,
net
income,
assets,
and
liabilities
steadily
come
back
from
their
negative
margins,
giving
hope
to
investors
and
employees
of
the
company.
5
2
HP
0
1
Jan.
Apr.
Jul.
Oct.
Jan.
HP
-‐5
2013
0
2009
2010
2011
2012
2013
-‐10
24
What
kind
of
money
has
the
company
spent
on
advertising?
On
research
and
development?
25
Here
you
see
again
this
reoccurring
theme
we
have
about
HP’s
inability
to
change
with
the
market.
Remember
that
your
report
needs
a
focus,
and
remember
to
stick
with
it
throughout.
26
Topic
sentences.
Yes
they
do
still
matter
in
business
writing.
Here,
the
topic
sentence
clearly
shows
that
the
rest
of
the
paragraph
will
be
about
this
new
“storytelling”
marketing
strategy.
11
Hewlett-‐Packard
Company
Spring
2013
inspires the consumer to “make it matter”. This commercial has multiple scenes of people living
their lives, working hard to accomplish an objective, and even a doctor helping out a poor
community. The commercial makes the consumer feel as if they can “make it matter” by
27
allowing HP to help them reach their goals however big or small.
28
Just
like
in
any
paper,
the
use
of
quotes
is
very
valuable.
You
want
to
insert
the
quote,
and
then
explain
the
relevance
and
significance
of
the
statement.
29
With
the
ever
expanding
IT
world
we
live
in,
it’s
valuable
to
add
in
how
companies
are
using
Information
technology
and
how
it
is
helping
their
businesses.
13
Hewlett-‐Packard
Company
Spring
2013
of the curve, they predict how technology will advance and how there will always be new
demand for more data storage. Hewlett-Packard’s new data warehousing technology addresses
the increasing demand for data storage in a time where technology changes so quickly it is hard
to keep up.30
Conclusion34
As a group, we have come to the conclusion that Hewlett Packard is no longer a company
that has high opportunities for investment. The stock, haven fallen $2 in the past week alone,
seems to be on a steady decline. Their debt, of over $30 billion, is one that will take years and
years of excess profits to pay back. HP’s lowering profit margins will continue to give
management trouble figuring out how to pay all the operational costs and chip away at that debt.
The consolidation of the company should decrease operational costs and increase profits
margins, but in the long run we believe that the company will make fatal attempts to adjust to the
market and face horrid financial times which may force the company out of business. 35The
management in place right now has the experience to be able to pull it off, but we believe HP
will have a lot of work to do to catch up to the rest of their competition. We conclude that HP is
a not company that you should consider for investment, at least for the time being. For
investor’s, the best strategy would be to wait and see what Hewlett Packard has planned for the
rest of 2013 and 2014.
34
With
every
report,
the
inclusion
of
a
summary
conclusion
is
vital
to
the
success
of
your
paper.
Leaving
the
reader
with
a
short,
but
sweet
conclusion
can
really
enforce
or
reinforce
the
point
you
were
trying
to
make
in
the
report.
The
reader
can
say
with
confidence,
“Oh
so
this
group
wouldn’t
recommend
any
investment
in
this
company.
”Make
it
short
and
sweet,
but
effective.
Recap
the
most
important
information
from
your
sections
and
conclude
with
some
advice
for
people
who
are
debating
whether
or
not
to
invest
in
the
company.
35
Note
here
that
we
included
another
statement
about
how
HP
struggles
to
adapt,
and
how
that
ultimately
may
lead
to
their
demise.
16
Hewlett-‐Packard
Company
Spring
2013
Bibliography
36
Library References:37
Advertising Redbook. Comp. Redbook, LLC. Summit: Red Book LLC, 2013. 438. Web.
Peter Waldman and, D. C. (2006, Sep 29). Probing the pretexters; congress grills
Hewlett-Packard executives over 'sleaze' investigative tactics. Wall Street Journal. Retrieved
from http://search.proquest.com/docview/399022542?accountid=14679
Piller, C. (2000, Nov 14). HP's disappointing 4th-quarter earnings hit company's shares;
wall st.: Profit, revenue rise for hewlett-packard, but the failure to meet expectations causes
concern about its strategy. Los Angeles Times. Retrieved from
http://search.proquest.com/docview/421695191?accountid=14679
Stanwick, P. A., & Stanwick, S. D. (2011). The role of corporate culture in the unethical
activities at hewlett packard. Journal of American Academy of Business, Cambridge, 16(2), 47-
53. Retrieved from http://search.proquest.com/docview/817185188?accountid=14679
36
As
with
most
reports,
you
need
to
include
a
reference
page.
Make
sure
you
ask
your
professor
the
reference
style
they
require.
37
Splitting
up
your
bibliography
into
Library/online
sections
is
a
great
way
to
show
your
professor
you
dug
deep
when
researching.
17
Hewlett-‐Packard
Company
Spring
2013
Online References:38
"Analyzing More Data Faster." HP.com. Hewlett Packard Development Company, June
2012. Web
Arnold , L. Business Week, (2011). Patricia dunn, former hp chairman, dies at 58.
Retrieved from Bloomberg website: http://www.bloomberg.com/news/2011-12-05/patricia-dunn-
hp-chairman-fired-in-spying-scandal-dies-at-58-of-cancer.html
Fool, Motley. "Microsoft Corporation, Hewlett-Packard: Is This the Death of the PC?"
Insider Monkey Free Hedge Fund and Insider Trading Data RSS. Insider Monkey, 15 Apr. 2013.
Web. 17 Apr. 2013.
Henschen, Doug. "HP's Murky Move Back Into Data Warehousing." Informationweek
1292 (2011): 14-16. Academic Search Premier. Web. Apr. 2013.
"Hewlett-Packard Co. (HPQ)." Stock Analysis on Net. N.p., n.d. Web. 21 Apr. 2013.
Hewlett-packard co.: Dunn enters not-guilty plea in probe of corporate spying. (2006,
Nov 16). Wall Street Journal. Retrieved from
http://search.proquest.com/docview/398997939?accountid=14679
38
The
split
is
shown
here,
where
online
references
begin.
18
Hewlett-‐Packard
Company
Spring
2013
Industry. "The Whiteboard: Understand H-P investor concerns with the Five Forces
model| Central Penn Business Journal." Central Penn Business Journal. N.p., n.d. Web. 19 Apr.
2013.
<http://www.centralpennbusiness.com/article/20110902/CPBJ01/110909926&source=RSS>.
Packard, Hewlett. "HP Make It Matter :60 Commercial." YouTube. YouTube, 26 July
2012. Web. 21 Apr. 2013.
19