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1. Introduction

Hewlett Packard (HP) is a multinational information technology corporation headquarterd in Palo Alto, California, USA. This report examines the external and internal factors that have influenced HP defining their strategic and competitive position. Evaluation of the company’s strategic choices is presented. The models of Porter’s five forces, Ansoff Matrix, SWOT and PESTEL are used in the analysis.

1.1.(i) PESTEL Analysis

Political: The political analysis of HP pertaining to government controls and rules in the effort of HP to keep up with the Environmental and CSR (Corporate Social Responsibility) Codes and in terms of decency, quality and environmental concerns.

Economical: HP mainly relies on revenue from its printing hardware, financial investments, investments in small and medium enterprises and internet solutions for its maintenance.

Social: HP has the local US consumer base well captured but it seems that there is very little to be done here in terms of attracting the upcoming young generation of IT zealot and unless there is a stress upon updating the models of its hardware for printing and PC’s to catch up with the hype created by HP and Intel who unveil new models almost every other month.

Technological: HP went “cyber” almost a decade ago, which is fairly recent in comparison to its 70 year long market presence (HP, 2009). In fact the turning point of HP’s luck came in 1998 when HP’s corporate software and support division and corporate systems division was amalgamated and Ann Livermore took over to run this new Enterprise Computing Solutions Organisation (ECSO), with an investment of $15 billion and an employee base of 44,000 employees (Moore and Snyder, 2000).

Environmental: HP’s operations are subject to regulations under federal, state, local and foreign laws concerning the environment, including laws addressing the discharge of pollutants into the air and water, the management and disposal of hazardous substances and wastes, and the cleanup of contaminated sites.

Legal: Patent Reform Legislation – As one of the largest patent holders in U.S, HP is on average granted four patents every day. HP is a constant target of frivolous patent lawsuits. These lawsuits force HP to divert resources away from innovation and product development, leading to reduced economic benefits from invention (HP, 2009).

1.1 (ii) Porter’s Five Forces Analysis

Threat of Entry: Threats of entry in this case is moderate. There is low brand loyalty of existing firms. Consumers usually compare the prices with different brands when they decide to purchase PCs. They think that every PC has the same price and has the same function no matter what brand it is, which means low product differentiation. There is medium capital requirements, no government regulations and low economies of scale in manufacturing. There is low investment for independent stores. Decreasing profitability indicates that there is a threat of new entrants

Threat of Substitutes: Threat of substitute products is low. HP believes in standards-based technology, which represents the opportunity to decide in the item of much preferance. HP tries to eliminate barriers by continuous updating processes and presenting new products to remain in the top of the industry.

The Power of Buyers: Bargaining power of buyers is high. Consumers are very price sensitive because they like to buy cheap and high quality products. If they see a hardware or software or PC with similar functions but different brands and price, they will tend to buy a cheaper one. The buyer power for HP can be low since product demand is high, this means that the company has power to control the amount of production and also its products price. On the other hand, customers have lots of substitutes. Moreover there is not a huge difference between products which are produced in the market.

The Power of Suppliers: HP bargaining power of suppliers...
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