Case Study Description of Hewlett-Packard: Creating a Virtual Supply Chain (A)
Describes a decision to be made on the future of manufacturing for tape drives at Hewlett-Packard. HP has used several different manufacturing partners in the earlier versions of its products. Now HP is facing a decision to outsource manufacturing and create a virtual supply chain for the next product generation. Provides opportunities to discuss the strategic and operational challenges of outsourcing and the use of electronics manufacturing services companies in supply chain operation.
Authors :: Carlos Cordon, Ralf W. Seifert, Thomas E. Vollmann, Petri Lehtivaara
Swot Analysis of "Hewlett-Packard: Creating a Virtual Supply Chain (A)" written by Carlos Cordon, Ralf W. Seifert, Thomas E. Vollmann, Petri Lehtivaara includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Manufacturing Hp facing as an external strategic factors. Some of the topics covered in Hewlett-Packard: Creating a Virtual Supply Chain (A) case study are - Strategic Management Strategies, Manufacturing, Product development, Supply chain and Technology & Operations.
Some of the macro environment factors that can be used to understand the Hewlett-Packard: Creating a Virtual Supply Chain (A) casestudy better are - – increasing energy prices, supply chains are disrupted by pandemic , increasing commodity prices, competitive advantages are harder to sustain because of technology dispersion, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, talent flight as more people leaving formal jobs,
increasing household debt because of falling income levels, there is increasing trade war between United States & China, etc
Introduction to SWOT Analysis of Hewlett-Packard: Creating a Virtual Supply Chain (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Hewlett-Packard: Creating a Virtual Supply Chain (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Manufacturing Hp, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Manufacturing Hp 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: Creating a Virtual Supply Chain (A) can be done for the following purposes –
1. Strategic planning using facts provided in Hewlett-Packard: Creating a Virtual Supply Chain (A) case study
2. Improving business portfolio management of Manufacturing Hp
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Manufacturing Hp
Strengths Hewlett-Packard: Creating a Virtual Supply Chain (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Manufacturing Hp in Hewlett-Packard: Creating a Virtual Supply Chain (A) Harvard Business Review case study are -
Strong track record of project management
– Manufacturing Hp 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 lead change in Technology & Operations field
– Manufacturing Hp is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Manufacturing Hp in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
High brand equity
– Manufacturing Hp has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Manufacturing Hp to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Learning organization
- Manufacturing Hp 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 Manufacturing Hp is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Hewlett-Packard: Creating a Virtual Supply Chain (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Manufacturing Hp is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Carlos Cordon, Ralf W. Seifert, Thomas E. Vollmann, Petri Lehtivaara can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Diverse revenue streams
– Manufacturing Hp is present in almost all the verticals within the industry. This has provided firm in Hewlett-Packard: Creating a Virtual Supply Chain (A) case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Superior customer experience
– The customer experience strategy of Manufacturing Hp in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Low bargaining power of suppliers
– Suppliers of Manufacturing Hp in the sector have low bargaining power. Hewlett-Packard: Creating a Virtual Supply Chain (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Manufacturing Hp to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Manufacturing Hp
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Manufacturing Hp does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Successful track record of launching new products
– Manufacturing Hp has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Manufacturing Hp 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.
Operational resilience
– The operational resilience strategy in the Hewlett-Packard: Creating a Virtual Supply Chain (A) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Highly skilled collaborators
– Manufacturing Hp 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: Creating a Virtual Supply Chain (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Hewlett-Packard: Creating a Virtual Supply Chain (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Hewlett-Packard: Creating a Virtual Supply Chain (A) are -
Slow decision making process
– As mentioned earlier in the report, Manufacturing Hp has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Manufacturing Hp even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Manufacturing Hp is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Hewlett-Packard: Creating a Virtual Supply Chain (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Products dominated business model
– Even though Manufacturing Hp 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: Creating a Virtual Supply Chain (A) should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Manufacturing Hp has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to strategic competitive environment developments
– As Hewlett-Packard: Creating a Virtual Supply Chain (A) HBR case study mentions - Manufacturing Hp takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High cash cycle compare to competitors
Manufacturing Hp 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.
No frontier risks strategy
– After analyzing the HBR case study Hewlett-Packard: Creating a Virtual Supply Chain (A), it seems that company is thinking about the frontier risks that can impact Technology & Operations strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
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 Manufacturing Hp supply chain. Even after few cautionary changes mentioned in the HBR case study - Hewlett-Packard: Creating a Virtual Supply Chain (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Manufacturing Hp vulnerable to further global disruptions in South East Asia.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Hewlett-Packard: Creating a Virtual Supply Chain (A), is just above the industry average. Manufacturing Hp needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Need for greater diversity
– Manufacturing Hp 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Manufacturing Hp 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.
Opportunities Hewlett-Packard: Creating a Virtual Supply Chain (A) | 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: Creating a Virtual Supply Chain (A) are -
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Manufacturing Hp in the consumer business. Now Manufacturing Hp can target international markets with far fewer capital restrictions requirements than the existing system.
Using analytics as competitive advantage
– Manufacturing Hp 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: Creating a Virtual Supply Chain (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Manufacturing Hp to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Better consumer reach
– The expansion of the 5G network will help Manufacturing Hp to increase its market reach. Manufacturing Hp will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Technology & Operations industry, but it has also influenced the consumer preferences. Manufacturing Hp can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Developing new processes and practices
– Manufacturing Hp can develop new processes and procedures in Technology & Operations 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.
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 Manufacturing Hp 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.
Loyalty marketing
– Manufacturing Hp 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.
Creating value in data economy
– The success of analytics program of Manufacturing Hp has opened avenues for new revenue streams for the organization in the industry. This can help Manufacturing Hp to build a more holistic ecosystem as suggested in the Hewlett-Packard: Creating a Virtual Supply Chain (A) case study. Manufacturing Hp can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Manufacturing Hp can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Hewlett-Packard: Creating a Virtual Supply Chain (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Learning at scale
– Online learning technologies has now opened space for Manufacturing Hp to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Low interest rates
– Even though inflation is raising its head in most developed economies, Manufacturing Hp can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Manufacturing Hp 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 Manufacturing Hp to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Manufacturing Hp in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Threats Hewlett-Packard: Creating a Virtual Supply Chain (A) 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: Creating a Virtual Supply Chain (A) are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Manufacturing Hp in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Manufacturing Hp.
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.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Manufacturing Hp 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: Creating a Virtual Supply Chain (A) .
Consumer confidence and its impact on Manufacturing Hp 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.
Environmental challenges
– Manufacturing Hp 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. Manufacturing Hp can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Increasing wage structure of Manufacturing Hp
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Manufacturing Hp.
Shortening product life cycle
– it is one of the major threat that Manufacturing Hp is facing in Technology & Operations sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Manufacturing Hp business can come under increasing regulations regarding data privacy, data security, etc.
Regulatory challenges
– Manufacturing Hp 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 Technology & Operations industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Manufacturing Hp with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Manufacturing Hp can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of Hewlett-Packard: Creating a Virtual Supply Chain (A) 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: Creating a Virtual Supply Chain (A) 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: Creating a Virtual Supply Chain (A) 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: Creating a Virtual Supply Chain (A) 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: Creating a Virtual Supply Chain (A) 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 Manufacturing Hp needs to make to build a sustainable competitive advantage.