ahp final presentation

8/6/2019 AHP Final Presentation

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Hewlett-Packard CompaqMerger

Business Decision MakingSpring 2005


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Wh at W e Hoped to Learn

Basic M&A criteriaHow th e AHP process really works

Wh at h appened wit h HP & Compaq andh ow can we make it better in t h e future?


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O utline

I. Organizational StructureII. Introduction

III. CriteriaIV. AlternativesV. Hierarc h yVI. Conclusion


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O rganizational StructureCOOR DINATOR

Shannon Caputo

ALTE R NATIVES C R ITER IA EXPER TS W R ITER SSteve Piskadlo Phil Laspisa Evan Taylor Melissa ShahPaul Ferraro Kat h leen Cardelli -Presentations Jonat h an Lai

S h awn Standen C h ris Skorski Chris Skorski Cassie Knox -Expert C h oice

DO MAIN EXPER TS:

Dr. Stephen Andriole

Professor John Toppel


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O utline

I. O rganizational Structure

II. Introduction

III. CriteriaIV. AlternativesV. Hierarc h yVI. Conclusion


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Introduction to HP

W ell-respected systems vendor Smaller, but wort h y competitor to IBM

Competes mainly in t h e h ardwarebusiness wit h desktops and serversLacking in th e services business

Undisputed leader wit h its line of PCprinters


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Introduction to Compaq

Compaq sales leveled off wit h addedcompetition from Dell

Compaq was best known for its personalcomputer offeringsAfter paying $5.4 billion to finance amerger wit h Digital Equipment, Compaqeliminated overlap by cutting t h ousands of

jobs worldwide


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Carly Fiorina: Mike Capellas:

C.E. O . of Hewlett-Packard C.E. O . of Compaq


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Wh y Merge?

To compete wit h IBM and ot h er companies

Th e combined services business will h ave65,000 services professionals vs. 100,000-plus for IBMR educe CostsBolster stock


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Merger Dates

September 4, 2001 - HP and Compaqannounced a definitive merger agreementto create an $87 billion global tec h nologyleader.Eigh ts mont h s later on May 3, 2002 HPand Compaq officially merge.


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Wh at HP Has to Say on Wh y

Because in one strategic move, we will become market leaders in servers, in storageand in management software -- t h e essentials of business infrastructure, w h ereleaders h ip really counts.Because we will greatly strengt h en our dept h and breadt h of tec h nology solutions at a

time w h en customers demand integrated, end-to-end solutions.

B ecause more inventors and engineers will befocused on solving the toughest technology challenges of our times -- together.Because combined we will lead t h e marc h toward open standards more effectively

th an eit h er company could on its own.Because for our employees, customers and s h areowners, we will be a stronger, more

vibrant HP, better conformed to lead and grow under market conditions t h at willdemand unprecedented integration, breadt h and flexibility.

B ecause in our industry, to stand still is to fall behind.


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O utline

I. O rganizational StructureII. Introduction

III. CriteriaIV. AlternativesV. Hierarc h y

VI. Conclusion


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Main Criteria

Ability to ImproveFinancial PerformanceAbility to EvolveCompany

Ability to Integrate

Ability to Improve Financial Con ition

Ability to Evolve Company



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Financial Implicationsi

Goal: Should HP and Compaq Merge? Ability to Improve Financial Conditions (L: .460 G: .460

Ability to Decrease Costs (L: .643 G: .296) Ability to Increase Sales (L: .357 G: .164)

PC Technology (L: .422 G: .069)

Server Technology (L: .228 G: .038)Service Technology (L: .210 G: .034)Printer Technology (L: .140 G: .023)

Ability to Evolve Company (L: .358 G: .358)Increase Intellectual Property (L: .600 G: .215)


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Ability to Evolve Company

. .Server Technology (L: .228 G: .038)Service Technology (L: .210 G: .034)Printer Technology (L: .140 G: .023)

Ability to Evolve Company (L: .358 G: .358)

Increase Intellectual Property (L: .600 G: .215)Improving Brand Value (L: .400 G: .143)

Image (L: .396 G: .057)

Awareness (L: .366 G: .052)Loyalty (L: .238 G: .034)

Ability to Integrate (L: .182 G: .182)Human Capital Management (L: .364 G: .066)

I I ll l P (L 600 G 215)


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Increase Intellectual Property (L: .600 G: .215)Improving Brand Value (L: .400 G: .143)

Image (L: .396 G: .057) Awareness (L: .366 G: .052)

Loyalty (L: .238 G: .034) Ability to Integrate (L: .182 G: .182)

Human Capital Management (L: .364 G: .066)Employees/Culture (L: .667 G: .044)Channel Partners (L: .333 G: .022)

Company Organizational Structure (L: .251 G: .046)Resources (L: .222 G: .040)

Technology (L: .337 G: .014)Marketing (Brand) (L: .268 G: .011)

IT Infrastructure (L: .235 G: .009)Relationships with Customers & Suppliers (L: .161 G: .007)

Future Planning (L: .163 G: .030)Strategy (L: .750 G: .022)Tactics (L: .250 G: .007)


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O utline



VI. Conclusion


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Alternatives

Sh ould t h ey Merge? YESSh ould t h ey Not Merge? N O


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O utline


III. CriteriaIV. Alternatives

V. Hierarchy VI. Conclusion


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Ex pert Choice


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O utline



VI. Analysis & RecommendationsVII. Conclusion


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R esults

NO 53.4% YES 46.6%

Based on t h e M&Acriteria recommended

by our domainexperts, HP andCompaq s h ould noth ave merged

%

%

%

%

%

%

%

%

o es


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Sensitivity AnalysisTo c h ange t h e final outcome

Ability to Improve Financial Performance must

increase from 46.6 to 55.7 or a 19 .5% ch angeAbility to Evolve Company must decrease from35.8 to 27.8 or a -22.3% ch angeAbility to Integrate does not affect t h e decision

O verall, t h e final answer is not very sensitive toany of t h e criteria


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O utline



VI. Analysis & R ecommendationsVII. Conclusion


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Wh at Happened?

Th ey did manage to save $3 billion wit h th e merger, successfully accomplis h ingth eir main goal of reducing costs of $2.1billionHowever, t h at came at t h e price of firing44,000 employees over t h e last 3 years O riginal estimate: 15,000-17,000


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Conclusions

Based on t h e criteriath e HP and Compaq

merger s h ould noth ave gone t h roug h .

Problems wit h integration as well asevolving t h e company

can be forecastedth roug h th e AHPprocess we h ave

s h own h ere today.


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Mark Hurd: HPs New C.E. O .

Mark Hurd, a former president at NC R corporation,wh ere h e spent 25 years; was appointed C.E. O . andpresident of Hewlett-Packard on Marc h 29, 2005.


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Th ank You!

Questions?

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