Case Study Description of Hewlett-Packard-Compaq: The Merger Decision
Hewlett-Packard's proposed $24 billion acquisition of rival Compaq marked the largest merger in the history of the computer industry. The merger was Hewlett-Packard's response to sweeping changes impacting the technology industry. The severity of the stock market's reaction to the deal's announcement, coupled with a "slim but sufficient" 51.4% shareholder approval margin, left many wondering whether the deal was beneficial for shareholders.
Swot Analysis of "Hewlett-Packard-Compaq: The Merger Decision" written by Krishna G. Palepu, Jonathan Barnett includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Hewlett Packard's facing as an external strategic factors. Some of the topics covered in Hewlett-Packard-Compaq: The Merger Decision case study are - Strategic Management Strategies, Change management, Financial management, Leadership, Mergers & acquisitions and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Hewlett-Packard-Compaq: The Merger Decision casestudy better are - – increasing household debt because of falling income levels, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, technology disruption, increasing commodity prices, central banks are concerned over increasing inflation, increasing transportation and logistics costs,
supply chains are disrupted by pandemic , geopolitical disruptions, etc
Introduction to SWOT Analysis of Hewlett-Packard-Compaq: The Merger Decision
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Hewlett-Packard-Compaq: The Merger Decision case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Hewlett Packard's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Hewlett Packard's operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Hewlett-Packard-Compaq: The Merger Decision can be done for the following purposes –
1. Strategic planning using facts provided in Hewlett-Packard-Compaq: The Merger Decision case study
2. Improving business portfolio management of Hewlett Packard's
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Hewlett Packard's
Strengths Hewlett-Packard-Compaq: The Merger Decision | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Hewlett Packard's in Hewlett-Packard-Compaq: The Merger Decision Harvard Business Review case study are -
Organizational Resilience of Hewlett Packard's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Hewlett Packard's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Strategy & Execution industry
– Hewlett-Packard-Compaq: The Merger Decision firm has clearly differentiated products in the market place. This has enabled Hewlett Packard's to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Hewlett Packard's to invest into research and development (R&D) and innovation.
Strong track record of project management
– Hewlett Packard's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Hewlett Packard's is one of the leading recruiters in the industry. Managers in the Hewlett-Packard-Compaq: The Merger Decision are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Innovation driven organization
– Hewlett Packard's is one of the most innovative firm in sector. Manager in Hewlett-Packard-Compaq: The Merger Decision Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Hewlett Packard's is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Hewlett Packard's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Hewlett-Packard-Compaq: The Merger Decision Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Hewlett Packard's has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Hewlett-Packard-Compaq: The Merger Decision HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Low bargaining power of suppliers
– Suppliers of Hewlett Packard's in the sector have low bargaining power. Hewlett-Packard-Compaq: The Merger Decision has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Hewlett Packard's to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Hewlett Packard's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Hewlett Packard's has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Cross disciplinary teams
– Horizontal connected teams at the Hewlett Packard's are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Hewlett Packard's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Hewlett Packard's has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Superior customer experience
– The customer experience strategy of Hewlett Packard's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Hewlett-Packard-Compaq: The Merger Decision | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hewlett-Packard-Compaq: The Merger Decision are -
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Hewlett Packard's supply chain. Even after few cautionary changes mentioned in the HBR case study - Hewlett-Packard-Compaq: The Merger Decision, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Hewlett Packard's vulnerable to further global disruptions in South East Asia.
Workers concerns about automation
– As automation is fast increasing in the segment, Hewlett Packard's needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Hewlett Packard's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Hewlett-Packard-Compaq: The Merger Decision can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High operating costs
– Compare to the competitors, firm in the HBR case study Hewlett-Packard-Compaq: The Merger Decision has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Hewlett Packard's 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Hewlett Packard's has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Low market penetration in new markets
– Outside its home market of Hewlett Packard's, firm in the HBR case study Hewlett-Packard-Compaq: The Merger Decision needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Products dominated business model
– Even though Hewlett Packard's has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Hewlett-Packard-Compaq: The Merger Decision should strive to include more intangible value offerings along with its core products and services.
Lack of clear differentiation of Hewlett Packard's products
– To increase the profitability and margins on the products, Hewlett Packard's needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Hewlett Packard's has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Need for greater diversity
– Hewlett Packard's has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Hewlett-Packard-Compaq: The Merger Decision HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Hewlett Packard's has relatively successful track record of launching new products.
Opportunities Hewlett-Packard-Compaq: The Merger Decision | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Hewlett-Packard-Compaq: The Merger Decision are -
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Hewlett Packard's can use these opportunities to build new business models that can help the communities that Hewlett Packard's operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Hewlett Packard's to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Creating value in data economy
– The success of analytics program of Hewlett Packard's has opened avenues for new revenue streams for the organization in the industry. This can help Hewlett Packard's to build a more holistic ecosystem as suggested in the Hewlett-Packard-Compaq: The Merger Decision case study. Hewlett Packard's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Hewlett Packard's can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Hewlett Packard's to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Hewlett Packard's to hire the very best people irrespective of their geographical location.
Manufacturing automation
– Hewlett Packard's can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Hewlett Packard's is facing challenges because of the dominance of functional experts in the organization. Hewlett-Packard-Compaq: The Merger Decision case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Hewlett Packard's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Hewlett Packard's can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Loyalty marketing
– Hewlett Packard's has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Using analytics as competitive advantage
– Hewlett Packard's has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Hewlett-Packard-Compaq: The Merger Decision - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Hewlett Packard's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Leveraging digital technologies
– Hewlett Packard's can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Hewlett Packard's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Hewlett-Packard-Compaq: The Merger Decision External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Hewlett-Packard-Compaq: The Merger Decision are -
Stagnating economy with rate increase
– Hewlett Packard's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Hewlett Packard's will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Hewlett Packard's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Consumer confidence and its impact on Hewlett Packard's demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Hewlett Packard's needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Technology acceleration in Forth Industrial Revolution
– Hewlett Packard's has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Hewlett Packard's needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Hewlett Packard's can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Hewlett-Packard-Compaq: The Merger Decision .
Environmental challenges
– Hewlett Packard's needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Hewlett Packard's can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Shortening product life cycle
– it is one of the major threat that Hewlett Packard's is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Hewlett Packard's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Regulatory challenges
– Hewlett Packard's needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
Weighted SWOT Analysis of Hewlett-Packard-Compaq: The Merger Decision Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Hewlett-Packard-Compaq: The Merger Decision needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Hewlett-Packard-Compaq: The Merger Decision is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Hewlett-Packard-Compaq: The Merger Decision is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Hewlett-Packard-Compaq: The Merger Decision is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Hewlett Packard's needs to make to build a sustainable competitive advantage.