The Merge of Compaq and Hp

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What went wrong with the merger strategy implementation & why?

The merge with Compaq, put HP under fire for luck-luster revenues and failed strategies:

1.Through the acquisition with Compaq, Carly Fiorina lacked vision and focus. The focus part is readily seen, given the huge and diverse range of products, services and markets that HP’s been saddled with after the Compaq merge Fiorina was unable to leverage Compaq’s presence in the PC business into increased sales for the new HP.

2.At the time of acquisition, Compaq was the dominant low-end computer vendor (focused low cost strategy); Hp on the other hand had a reputation of producing the best computing instruments in the market (differential strategy). Carly didn’t well manage to differentiate between the two brands when brought under a common management. HP could not afford to jettison the Compaq brand because it was too valuable. At the same time, having two products lines for both desktop systems and notebooks made marketing much more difficult. An average customer would be puzzled by the two brands and wonders how to choose them.

3.The bases of generating multiple forecasts of future conditions followed by an analysis of how to respond effectively to each of those conditions in order to avoid uncertainties was absent in Carly’s strategic planning of the merge. This lack of building scenario planning made HP to formulate a weak vision with its merge with Compaq; it was a “shot from the heap”, taking the merge decision blindly without deep analysis and “heuristics rules” that simplify decision making.

4.Carly’s didn’t establish a right acquisition strategy which strikes a balance between the need of HP to redefine itself radically, and yet remains the strength of a unified HP.

5.Carly’s attitude and negative decision making characteristics such as: “Prior hypothesis bias”, “Representative-ness bias”, and “Illusion of control”, made her refuse to delegate operations to top workers managing...
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