The Hewlett Packard Company (HP) is a leading American technology company. HP was established by William Hewlett and David Packard in 1939; Operations were organized and set up in Palo Alto California as an up and coming IT and computing Systems Company. As the largest IT Company with revenues totaling $127.2 billion, in 2011 HP ranked #11 as a Fortune 500 company and established itself as the leading high technology company in America (HP Annual Report). The organizational structure can be divided into three major categories which are personal systems, print and image systems, and service and server systems. In detail, Hewlett Packard has seven different groups which include a Personal Systems Group (PSG), Services group, the Imaging and Print Group (IPG), Enterprise servers group, Storage and Networking group (ESSN), HP financial services (HPFS), an HP Software Division and a Corporate Investment division.
The company has a full range of product lines to include personal computers, software, servers, networking products, storage devices, financial service solutions, printers, and imaging products. HP not only targets individual customers, they also serve businesses and organizations such as governments, the military, and health and education departments. With such huge revenues in fiscal 2011, HP’s industry servers and infrastructure technology outsourcing services each accounted for more than 10% of the company’s revenue. HP’s computers and printing supplies accounted for more than 10% of the company’s revenue over the past three fiscal years. HP also has a well-established global presence with revenues accounting for two thirds of the company’s total sales. Emerging
In 2001, HP and Compaq merged creating the largest IT Company in America. Compaq was founded in 1982, specializing in personal computers. This merger became the new HP. Compaq was the largest computer supplier in the 1990s, but struggled against low-cost competitors like Dell which had overtaken Compaq in total sales in 2001. In the same decade, HP also struggled meeting its target growth. The two CEOs decided to merge and Compaq was purchased by HP for $24.2 million (Exhibit A). This acquisition had a significant influence on both HP and Compaq since these the two organizations announced a plan that offered the industry’s most complete IT products including services, print and imaging, access devices, information technology infrastructure and personal computers. In 2002, HP surpassed Dell in total PC market share and took over NO.1 in total sales. Exhibit A (Transaction Summary)
0.6325 of an HP share per Compaq share
HP shareholders 64%; Compaq shareholders 36%
HP has developed the most intensive supply chain in the IT industry and has turned this into a tremendous competitive advantage. The company has four manufacture operations located in Brazil, Russia, India and China (BRIC). Four years ago, HP located a factory in China to take advantage of low cost labor, and better serve customers all over the world. Overall, the company has business relations with more than 600 suppliers and conducted over 500 supplier site audits, this has become one of the main reasons HP has had a significant improvement in their supply chain activities. HP’s supply chain management system operates in basically four phases; First HP conducts risk assessment studies, and requires Social and Environmental Responsibility Programs to be put into place. Second, Suppliers implement and complete the required assessments, when all assessments have been completed HP then conducts a review and provides feedback to the various vendors involved. The third step is validation, both parties complete onsite audits. The final step is continual improvement, follow up on assigned audits and build-up of skills, relationships etc. Competition
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