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Page 1: Porter five forces model for HP compaq

Term paper

On

Analyse Porter five forces model of HP Compaq

Submitted to Submitted by

Mr. Ajay Chandel Manjit Paul

Reg.no: 10902965

Roll no.R1903A23

Page 2: Porter five forces model for HP compaq

ACKNOWLEDGEMENT

Through my gratitude towards my supporters yet I like to add a few hearts full for the people

who were part of this case study in numerous ways. People who gave understanding support

right project ideas were conceived.

I want to thank Mr. Ajay Chandel, lecturer of LSB, LPU, Phagwara for assigning this term paper

& I also want to give hands full gratitude to him for their help & guidance, for having faith inme,

& for their kind inspiration and helping me whenever asked.

Last but not least, I expand my heartiest gratefulness all people who have given me best wishes

& all help that I needed for the completion of the term paper.

MANJEET PAUL

Page 3: Porter five forces model for HP compaq

CONTENTS

Executive summary

Introduction of HP

Introduction to Compaq

HP-Compaq merger

Review of literature

Objective of study

Scope

Need

Methodology

Business strategy of HP

Pricing strategy of HP

Introduction to Porter five forces model

Porter five forces model of HP-Compaq

Interpretation

Recommendations

Suggestions

Conclusion

References

Annexure

Page 4: Porter five forces model for HP compaq

EXECUTIVE SUMMARY

This term paper is based on analysis of Porter five forces model of HP- Compaq. In this first of

all introduction of HP- Compaq is provided. Which give insight into how HP Company is

formed it mission, competitive advantage, pricing strategy, business strategy. Then brief

information is provided about Compaq Company, its merger with HP. Porter five forces model is

discussed. For the additional information review of literature of twenty articles is given. Based

on these articles and porter five forces model, findings are extracted, based on these findings,

recommendations are provided.

INTRODUCTION

Hewlett-Packard Company commonly referred to as HP, is an American

multinational information technology corporation headquartered in Palo Alto, California, USA.

The company was founded in a one-car garage in Palo Alto by Bill Hewlett and Dave Packard, and

is now one of the world's largest information technology companies, operating in nearly every

country. HP specializes in developing and manufacturing computing, data storage, and networking

hardware, designing software and delivering services. Major product lines include personal

computing devices, enterprise servers, related storage devices, as well as a diverse range of printers

and other imaging products. HP markets its products to households, small- to medium-sized

businesses and enterprises directly as well as via online distribution, consumer-electronics and

office-supply retailers, software partners and major technology vendors

Stanford University classmates Bill Hewlett and Dave Packard founded HP in 1939. The

company's first product, built in a Palo Alto garage, was an audio oscillator—an electronic test

instrument used by sound engineers. One of HP's first customers was Walt Disney Studios, which

purchased eight oscillators to develop and test an innovative sound system for the movie Fantasia.

Company objective

HP is committed to developing products, services and information that are accessible to everyone,

including people with disabilities or age-related limitations. This commitment supports our

company's diversity and "Total Customer Experience" objectives and helps ensure that the benefits

Page 5: Porter five forces model for HP compaq

of technology are available to all.

“It is necessary that people work together in unison toward common objectives and avoid working

at cross purposes at all levels if the ultimate in efficiency and achievement is to be obtained.”1

– Dave Packard

vision and strategy

At HP, we believe diversity is a key driver of our success. Putting all our differences to work

across the world is a continuous journey fueled by personal leadership from everyone in our

company. Our aspiration is that the behaviors and actions that support diversity and inclusion will

come from the conviction of every HP employee - making diversity and inclusion a conscious part

of how we run our business throughout the world2.

Competitive Advantage

HP leaders have an advantage that enables them to learn and adjust as few others can. The depth,

breadth, and vitality that come alive daily through the firm's values –  the HP Way – are asset from

which most of the Silicon Valley continues to learn. HP general managers regularly discuss and

assess the vitality of the HP Way, a process, which inevitably results in corrective actions to ensure

its continued viability.

Top business priorities of HP are its lower costs, IT systems/technology improvements, Increase

business growth, Improve efficiency, Customer service improvements.

Processes

HP is organized around two groups: the Business Customer Organization and the Consumer

Business Organization (Wagonfeld, Rubenstein, and Block, 2001). Supplying both groups are the

four product divisions: computing systems, imaging and printing systems, and embedded personal

systems. HP also has a group, HP Services, which works between the customer, and product

groups; and HP Labs, which supplies the product groups with new technologies and ideas. HP's

computing systems provides a broad range of computing systems, ranging from mission-critical

1 http://alignment.wordpress.com/2007/09/17/management-without-walking-around/,viewed on 26oct, 20102 http://foi.becta.org.uk/content_files/corporate/resources/policy_and_strategy/board/hp_about.pdf, viewed on 26 Oct, 2010.

Page 6: Porter five forces model for HP compaq

systems and software to personal computers for the business and home. Major product lines

include UNIX-r and personal computer (PC) servers, desktop and mobile personal computers,

workstations, software solutions and storage solutions. HP's imaging and printing systems provides

laser and inkjet printers (both monochrome and color), copiers, scanners, all-in-one devices,

personal color copiers and faxes, digital senders, wide- and large-format printers, print servers,

network-management software, networking solutions, digital photography products, imaging and

printing supplies, imaging and software solutions, and related professional and consulting services.

HP's IT Services provides consulting, education, design and installation services, ongoing support

and maintenance, proactive services like mission-critical support, outsourcing and utility-

computing capabilities, including financing capabilities such as leasing, automatic technology-

refreshment services, solution financing and venture financing.

Compaq computers

Headquartered in Houston, Texas, Compaq was founded in 1982 by Rod Canion, Jim Harris and

Bill Murto, three senior managers who left Texas Instruments and invested $1,000 each to form

their own company. Sketched on a paper place mat in a Houston pie shop, the first product was a

portable personal computer able to run all the software then being developed for the IBM PC. In

1986, after four years of operation, the company moved to the Fortune 500 more rapidly than any

company previous.

Process

Compaq develops its products through three groups: The Enterprise Computing Group, the

Commercial PC Group, and the Consumer PC Group. The Enterprise Computing Group designs

and develops mainframes, servers, workstations, fault tolerant business-critical solutions,

enterprise options, enterprise solutions, Internet products, and networking products. The

Commercial PC Group designs and develops commercial desktops, portables, options, and small

and medium business solutions. The Consumer PC Group designs and develops consumer

products, including desktops, minitowers, portables, printers, and options. Compaq markets its

products and services primarily to customers from the business, home, government, and education

Page 7: Porter five forces model for HP compaq

sectors.3

HP Compaq merger

In 2001, Compaq engaged in a merger with Hewlett-Packard. The new HP will become the second

largest global technology provider with about $87B in revenues (combined revenue for the last

four reported quarters) and many opportunities to create competitive advantages with their

resources. Having the capability to provide multiple solutions (servers, access devices, imaging

and printing, storage and IT services), the new HP will be in a position of significant competitive

advantage - comparable to leader IBM. Before the merger, Compaq's ticker symbol was CPQ. This

was melded with Hewlett-Packard's previous symbol (HWP) to create the current symbol of HPQ.4

REVIEW OF LITERATURE

Aaron, Shari (2010): Increasingly, companies understand that they can strengthen

their competitive advantage and reach new heights through innovation and sustainability.

Increased collaboration and cooperation among all sectors will accelerate the pace by which

companies can achieve sustainability. The time is now to empower more employees who work

inside corporations to champion sustainability. Companies such as HP and Wal-Mart have

active, well-branded employee-engagement programs where they work to bring education and

awareness about sustainability to their employees. The theory is to train employees to think like

sustainability champions and empower them to find practical, business-building solutions for

their workplaces. HR departments, focused on employee career development, can champion

employee training on sustainability and harness the collective innovation of their employees.

Anon (2010): Risks, uncertainties and assumptions include macroeconomic and geopolitical

trends and events; the execution and performance of contracts by HP and its customers, suppliers

and partners; the achievement of expected operational and financial results; and other risks that

3 http://proquest.umi.com/pqdweb?index=1&did=653882411&SrchMode=1&sid=4&Fmt=4&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1287155610&clientId=129893, viewed on 7 nov,20104 http://proquest.umi.com/pqdweb?index=1&did=653882411&SrchMode=1&sid=4&Fmt=4&VInst=PROD&VType=PQD&RQT=309&VName=PQD&TS=1287155610&clientId=129893, viewed on 7nov, 2010

Page 8: Porter five forces model for HP compaq

are described in HP's Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2010

and HP's other filings with the Securities and Exchange Commission, including but not limited

to HP's Annual Report on Form 10-K for the fiscal year ended October 31, 2009.

Roy, Preeta, Roy, Probir (2004): investigate the ongoing challenges faced by consolidation in

the technology industry. Their focus is on analyzing the potential of technology mergers by

focusing mainly on the merger of HP and Compaq. The HP-Compaq merger presents an

interesting case in which two of the most significant complexities are the blend of different

organizational cultures and the integration abilities of leadership. Compaq could be too big for

HP to digest and many are wary of HP management's attempts to aggressively reinvent the

organizational culture overnight. As Compaq rose quickly through innovation and acquisitions,

unlike HP, to become an industry leader, many argue that the clash of cultures is imminent

between HP's conservative corporate culture and Compaq's more maverick corporate culture. But

leadership skills of top management helped a lot in blending the two different cultures of both

companies so that synergy can b e induced for better productivity and profitability of

organization

Brown, Meredith, Kubek, Gary (2002): The Delaware Chancery Court has rejected challenges

to the vote at which Hewlett-Packard (HP) shareholders approved issuing shares to carry out the

company's proposed merger with Compaq Computer. The challenges came from Walter Hewlett,

a dissident director of HP, who questioned the validity of the vote on two grounds: vote buying

and improper disclosure. Although the court did not uphold either claim, the decision depended

heavily on the evidence presented and the credibility of the witnesses. The legal significance of

the case lies not in its ultimate decision, but in its elaboration of legal principles, especially with

respect to vote buying. This could lead to successful challenges to voting in other cases if

participants in a proxy contest are not careful.

Anon (2002): When institutional shareholders famously opposed the HP/Compaq merger, the

power of the investor in today's organization was seen. Shareholders have the ability to block

mergers, replace board members, and influence directors. However, if it comes to light that an

organization has behaved unethically, investors are rarely held accountable.

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Davidson, Alistair (2002): An interview is presented of Robert I. Sutton, author of Weird Ideas

That Work: 11 1/2 Practices for Promoting, Managing and Sustaining Innovation. Sutton

discusses his diverse hiring approach. One way to think about whether to hire qualified

specialists or smart generalists is to look at the professional demographics of Silicon Valley.

Sutton also looks at HP and its merger with Compaq. He suggests that the HP/Compaq merger

controversy between management and key board members is, in many ways, about power.

Sutton suggests that the successful visionaries only hold one constant.

Business line (2002): Post merger with Compaq, HP, is the only company delivering

virtualisation that facilitates customers to scale their storage, upgrade functions and add services

as required. Banking and financial services industry and the growing telecom business and e-

governance applications in the country offer a great scope for growth of network storage

business, Mr [Avijit Basu] said. The HP' vision is based on ENSA or enterprise network storage

architecture that unites HP and Compaq to help customers optimise their IT resources with

greater efficiency, flexibility and continuity. The US Corporation, which has over 750

virtualisation installations globally, sees this as new technology that will be useful in

the Indian context as this extends end to end storage solutions that provide a seamless interface.

Bray, Hiawatha (2002): discussed that how two competitors HP and Compaq carrying

consolidation plans. This has forced the two companies to assign their consolidation teams to a

"clean room" -- an office separated from the normal business functions of both companies. HP

and Compaq workers in the clean room can't use information learned about each other to gain a

competitive advantage in the market. But they have the confidential information on both

companies that they need to manage the transition. HP already has its own version of UNIX,

called HPUX, with a bigger share of the market than Compaq's Tru64. Nobody expects HP-

Compaq to keep selling both. "For Tru64, there have already been some indications that it's

going to get folded into HPUX in some form," said [Jim Becker]. That means HP-Compaq will

have to provide a migration path to keep the customers happy as they're switched to the other

version of UNIX.

Ahles, Andrea (2002): discussed that merger made HP the largest PC maker in the world,

Austin-based Dell Computer is looking to reclaim its top position. Recent announcements that

Dell was entering the unbranded PC resale market and the printer business, which HP dominates,

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have increased the competitive pressure on HP. The company's reduction in work force is

expected to be completed next year. About

Durant, Bon, R, William (1992): The professional staffs of the Hewlett-Packard Co. (HP)

Market Research & Information Centre is trained to be expert in research strategy and technique

as applied to marketing decision making. The organization is divided into 3 elements: 1. Market

Information Centre, 2. decision support teams, and 3. regional satellites. The goal of research

as HP practices it is to improve the bottom-line impact of marketing decision making. The

company's practice of research is built around a 3-stage concept: intelligence, testing, and

tracking. It is important to differentiate between each of the phases in the process because each

activity has a different purpose and nature. Most of the research it conducts fits into 3 categories:

1. product definition, 2. price elasticity, and 3. advertising and communications. Of all the issues

in research implementation, the ongoing challenges include sampling, reducing the time

necessary to conduct research, and determining the validity of the research methods used.

$200 million in facilities have been closed, and HP has achieved $419 million in savings.

OBJECTIVE OF STUDY

Analyse the porter five forces model of HP-Compaq.

Analyse business and pricing strategies of HP-Compaq

Give suggestions to HP-Compaq Company for the betterment of its future.

SCOPE OF STUDY

This term paper is based on analysis of Porter five forces model of HP- Compaq. This will

helpful in gaining insight into the industry position of HP Compaq. This analysis provides

knowledge on what kind of strategies HP-Compaq should adopt in order to make it competitively

strong.

NEED OF STUDY

In the current scenario, it is very essential for an organization to understand its position in the

industry. There are many players in the computer industry like Dell, IBM, Toshiba, Sony vaio

etc. so it becomes essential for an organization to understand which factors are having greater

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effect on me like customers, suppliers, competitors etc. these factors will help the industry to

know how to sustain in this particular marketplace to gain win-win situation.

METHODOLOGY

Research methodology comprises of two words research and methodology. Research is a process

of defining and redefining problems formulating the different hypothesis with suggested

solutions by collecting, summarizing, organizing and evaluating different data’s by thus reaching

on solutions with careful testing. Research is common means which refer to search for

knowledge and methodology is defined as a particular procedure or set of procedures used in

finding the answers of problem or problems. This research is based on second hand data.

Secondary data: secondary literature is also being used which studies are made by others for

their own purposes. For this we have used articles from www.proquest.com, www.ssrn.com and

also from times of India, books, journal.

PRICING STRATEGY OF HP-COMPAQ

There is at least one clear benefit that resulted from the HP and Compaq merger. Both Compaq

and HP were in an unwinnable price war with Dell. By merging, at least Compaq and HP

stopped competing with each other. In February 2001, Dell biggest competitor of HP-Compaq

launched a campaign to become the largest competitor in the PC industry. It announced that it

was intentionally undercutting competitors' prices by 10% to quickly grab market share. That

announcement, along with the well-known fact that Dell has a cost advantage over its

competitors, was a signal to the rest of the PC industry that if others tried to match Dell's prices

they would be playing a game they couldn't win.

From a game theory perspective, each party has the same to lose but, in this game, Dell knows

that HP with Compaq has more to lose. A threat by HP and Compaq to match Dell's prices isn't

credible because HP and Compaq can't sustain losses forever. From a game theoretic perspective,

HP's and Compaq's dilemma can be represented as a 2 x 2 matrix as described in diagram 2 of

annexure. From the matrix it is cleared that there is greater impact of pricing decision taken by

both companies on each other (marker share and profit).

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BUSINESS STRATEGIES

HP focuses on simplifying technology experiences for all of its customers – from individual

consumers to the largest businesses. With a portfolio that spans printing, personal computing,

software, services and IT infrastructure.

E-services

In 2000 when Fiorina was CEO of company, HP was a collection of independent businesses,

each selling a particular kind of product. Fiorina was hired to execute an "e-services" strategy

that would meld these pieces into one powerful, profitable whole. HP could sell everything from

handheld gizmos to back-office servers, with the

After post merger of HP-Compaq

Main strategies on which HP is focusing are:

Sustainability : The new HP must retain and grab additional market share

Uniqueness : Largest I.T company in the world

Value added : Merger must demonstrate success

Enhancement : Increased product line

Flexibility :Adaptation to market forces

Stability –:Retention of customer/client base

HP launches ‘Instant-On Enterprise’ for integrated IT solution(2010)

Hewlett-Packard unveils "Instant-On Enterprise", an organization to better address the rapidly

changing needs of customers. It is an integrated solution that helps businesses and governments

create their own Instant-On Enterprise due to the three global mega trends: evolving business

models, technology advancements and changing workforce. HP is helping organizations reinvent

their use of technology to innovate at every point in the value chain within the enterprise. This

includes services that are delivered, the mobile devices that provide the access and the global

data centres required to power the Instant-On Enterprise."It takes a special kind of enterprise to

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close the expectation gap between what customers and citizens expect and what the enterprise

can deliver," said Piau Phang Foo, senior vice president and managing director for HP Asia

Pacific and Japan. "The Instant-On Enterprise delivers differentiated competitive advantages

serving customers, employees, partners and citizens with whatever they want and need, instantly.

Only HP has the solutions to help organizations become Instant-On Enterprises.

Hewlett-Packard improved its technology; the company uses to manage its direct sales,

while it continues with commercial printing efforts and acquisitions of software companies

(2006)

Those acquisitions included security software companies, storage software makers and software

companies that serve the blade server market. The acquisitions dovetail with HP's growth plans

for its Technology Systems Group, which has already bought companies such as AppIQ for

storage management. Market trends indicated a movement away from mainframe computers and

a shift to blade servers, as well as virtualized storage. HP is likely to follow those trends.

Meanwhile, in HP's Imaging & Printing Group, the long-term plan to develop commercial

printers was likely to continue. On the chip front, although HP and Intel had had a long

relationship involving their collaboration on the Itanium chip, but delays by Intel have created

frustration in the HP camp, the source said. As a result, HP used Intel's archrival Advanced

Micro Devices as a cattle prod of sorts to the chip giant, the source noted.

Porter five forces analysis

Porter's five forces is a framework for the industry analysis and business strategy development

developed by Michael E. Porter of Harvard Business School in 1979. It draws upon Industrial

Organization (IO) economics to derive five forces that determine the competitive intensity and

therefore attractiveness of a market. Attractiveness in this context refers to the overall industry

profitability. An "unattractive" industry is one in which the combination of these five forces acts

to drive down overall profitability. A very unattractive industry would be one approaching "pure

competition", in which available profits for all firms are driven down to zero. Porter's five forces

include three forces from 'horizontal' competition: threat of substitute products, the threat of

established rivals, and the threat of new entrants; two forces from 'vertical' competition: the

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bargaining power of suppliers and the bargaining power of customers. Porter five forces model is

described in diagram 2 in annexure.

The threat of the entry of new competitors

Profitable markets that yield high returns will attract new firms. This results in many new

entrants, which eventually will decrease profitability for all firms in the industry.

The existence of barriers to entry the most attractive segment is one in which entry barriers are

high and exit barriers are low. Few new firms can enter and non-performing firms can exit easily.

The intensity of competitive rivalry

In the traditional economic model, competition among rival firms drives profits to zero. But

competition is not perfect and firms are not unsophisticated passive price takers. Rather, firms

strive for a competitive advantage over their rivals. The intensity of rivalry among firms varies

across industries, and strategic analysts are interested in these differences. For most industries,

the intensity of competitive rivalry is the major determinant of the competitiveness of the

industry.

The intensity of rivalry is influenced by the following industry characteristics:

A larger number of firms, slow market growth, high fixed costs

Low switching costs increases rivalry. When a customer can freely switch from one

product to another there is a greater struggle to capture customers.

Low levels of product differentiation are associated with higher levels of rivalry. Brand

identification, on the other hand, tends to constrain rivalry.

Strategic stakes are high when a firm is losing market position or has potential for great

gains. This intensifies rivalry.

High exit barriers place a high cost on abandoning the product. The firm must compete.

High exit barriers cause a firm to remain in an industry, even when the venture is not

profitable.

The threat of substitute products/ services

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The existence of products outside of the realm of the common product boundaries increases the

propensity of customers to switch to alternatives:

Buyer propensity to substitute

Relative price performance of substitute

Buyer switching costs

Perceived level of product differentiation

Number of substitute products available in the market

Ease of substitution. Information-based products are more prone to substitution, as online

product can easily replace material product.

Substandard product

Quality depreciation

The bargaining power of customers (buyers)

The bargaining power of customers is also described as the market of outputs: the ability of

customers to put the firm under pressure, which also affects the customer's sensitivity to price

changes.

Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

Bargaining leverage, particularly in industries with high fixed costs

Buyer volume

Buyer switching costs relative to firm switching costs

Buyer information availability

Ability to backward integrate

Availability of existing substitute products

Buyer price sensitivity

Differential advantage (uniqueness) of industry products

The bargaining power of suppliers

The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw

materials, components, labor, and services (such as expertise) to the firm can be a source of

Page 16: Porter five forces model for HP compaq

power over the firm, when there are few substitutes. Suppliers may refuse to work with the firm,

or, e.g., charge excessively high prices for unique resources.

Supplier switching costs relative to firm switching costs

Degree of differentiation of inputs

Impact of inputs on cost or differentiation

Presence of substitute inputs

Strength of distribution channel

Supplier concentration to firm concentration ratio

Supplier competition - ability to forward vertically integrate and cut out the buyer

PORTER FIVE FORCES MODEL OF HP COMPAQ

1. Threat of New Entrants (Barriers to Entry): (moderate)

There is moderate level for threat of new entrants because of economies of scale achieved by

existing players which becomes their competitive advantage.

There is also need for high capital requirement if any new player wants to enter in the

market.

Product differentiation: there is constant need of for technology improvement for

grabbing the attention of customers.

Moderate customer switching costs: due to standardization of most of computer

components, it becomes easy for customers to change their laptops.

Access to distribution channels: the current scenario is such that with the availability of

direct-to-customer service and Internet & computer retailers, it becomes easy for

customers to approach their desired product as well as for companies to provide their

products in less time and with reduced cost.

2. Bargaining Power of Buyers: (moderate)

Moderate customer switching costs: due to standardization of most of computer

components, it becomes easy for customers to change their laptops.

Low number of suppliers: There are very less no. of suppliers who are providing hp

Compaq products to customers.

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Suppliers also operate with high fixed costs which is the main reason of few no. of

suppliers.

3. Bargaining Power of Suppliers: (High)

High number of customers who are fragmented: customers are highly fragmented so

to provide products to them is not an easy task. That is why suppliers bargain highly.

A few larger suppliers: there are few suppliers which are trustable, recognized and

provide good quality raw material such as Foxconn, Intel, Hitachi.

There is also difficulty in re-producing specialized technology which becomes

competitive advantage of suppliers..

4. Threat of Substitutes: (Moderate)

Switching costs for consumers is high because of low price of hp Compaq laptops

indicate that it targets to middle class and upper middle class people. For them it is

difficult to switch from one product to another.

Frequent product introductions and continuous improvements in price is also a cause

of moderate threat.

5. Rivalry: (High)

High Fixed costs: cost for setup of manufacturing units increased fixed cost which

makes difficult for existing players to exit.

Constant changes in products and price makes intercategory competition stiffer.

Two big players hold the top two market share spots in the computer hardware industry.

IBM

o Strong R&D and marketing

o Gave rise to PC industry with Microsoft Windows OS

o IBM Global Services – strong customer assistance

DELL

o Direct business model

o Low inventory costs, introduce new technology quickly

o Close customer relationships built loyalty

Page 18: Porter five forces model for HP compaq

o Ranked 1 in global PC market share in 2001.

INTERPRETATION

With the merger of companies HP and Compaq, Hp has very clear benefit that resulted

from the HP and Compaq merger. Both Compaq and HP were in an unwinnable price war

with Dell.

From the Porter’s five forces model of HP – Compaq in laptops it is cleared that there are

moderate entry barriers, threat of substitute is moderates, intercategory competition is

high, bargaining power of buyer’s is moderate, bargaining power of supplier is High.

HP focuses on simplifying technology experiences for all of its customers – from

individual consumers to the largest businesses. With a portfolio that spans printing,

personal computing, software, services and IT infrastructure.

HP top business priorities are to lower costs, IT systems/technology improvements,

Increase business growth, Improve efficiency, Customer service improvements.

The professional staff of the Hewlett-Packard Co. (HP) Market Research & Information

Center is trained to be expert in research strategy and technique as applied to marketing

decision making.

HP has well-branded employee-engagement programs where they work to bring

education and awareness about sustainability to their employees. Main motive here is to

train employees to think like sustainability champions and empower them to find

practical, business-building solutions for their workplaces. HR departments, focused on

employee career development, can champion employee training on sustainability and

harness the collective innovation of their employees

The HP' vision is based on ENSA or enterprise network storage architecture that unites

HP and Compaq to help customers optimize their IT resources with greater efficiency,

flexibility and continuity.

Page 19: Porter five forces model for HP compaq

The HP-Compaq merger presents an interesting case in which two of the most significant

complexities are the blend of different organizational cultures and the integration abilities

of leadership.

RECOMMENDATIONS

After analyzing all the above information about HP-Compaq,

It can be recommended that Hp-Compaq has reduced its cost annually by $3 billion.

Even though both HP and Compaq were mature companies before the merge, it can be

considered that the merged company is under redevelopment/restructuring; as a result the

company has lost some ground as a mature company.

Now it is more supportive in providing better products and services to customers.

Its employee engagement and career development programs result in more motivated and

enthusiastic workforce.

Blending of two different cultures of both organization results in more innovative ideas.

SUGGESTIONS

From the above data it can be suggested to company to focus more on introducing

improvements and innovations in its product due to competition in existing players is

high.

They have to focus on suppliers because bargaining power of supplier is high. Company

need to do backward integration like beverages company coke has done who acquired the

bottlers’ plants.

As threat of substitute is moderate, this is also an alarming stage for company; it should

try to focus on making its products differentiated from others by continuous product

innovations and technology improvements.

Page 20: Porter five forces model for HP compaq

CONCLUSION

After analyzing all the above information, it can be concluded that HP-Compaq is doing mergers,

introduce innovative technology, continuous improvements for gaining market share and

competitive position in the market. HPs’ top business priorities its lower costs, IT

systems/technology improvements, Increase business growth, Improve efficiency, Customer

service improvements. Company is focusing its strategies to achieve all these business priorities

by adjusting and optimizing product line, enhancing high end service.

Page 21: Porter five forces model for HP compaq

REFERENCES

Anon (2002): Investor relations - taking a fair share of the responsibility, Strategic

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http://www.laptopical.com/compaq-laptops.html, viewed on 6 Nov, 2010

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ANNEXURE

Diagram (1)

Diagram(2)