Assignment # 2 – Chapter 14 Case – “Hewitt-Packard Company”
1. Discuss the three most serious problems you have identified in the case. Defend why you think they are the most serious.
When Mark Hurd, the new CEO, took over, he found matrix structures ambiguous, confusing and inefficient. The main reason is that there is no clarity on the roles that each unit in the matrix is intended to play. Unit roles suppose, responsibilities and relationships in a way that is clear, but not excessively detailed and hierarchical. Although the matrix seems to be a logical organizational solution, Fiorina, has not found it an easy structure. She has struggled with ambiguous responsibilities and reporting relationships, been slowed down by the search for consensus decisions, and found it hard to get all the different units to work constructively together. In fact, CEO Carly Fiorina was so preoccupied with immediate issues that she lost sight of her ultimate objectives. Fiorina and her staff consider that the HP Way is an anachronism of a different, slower time, and that for the company to survive and succeed in the future it must be driven purely by a rational business strategy. After all of the layoffs, organizational changes, assertion of executive hierarchies and the destruction of traditional company rules of behavior, the HP Way that the old-timers are fighting to save is probably already dead. Fiorina and her team appear not to believe in the Way, they are now reduced to appealing to it in order to get enough shareholders votes to win. What this means is that, contra-Carly, the HP Way really did exist, it remains as powerful and useful as ever, and that its last use will be to destroy itself forever. So, What Is the Strategy? Fiorina did not believe in the HP Way, and she just followed its dictates. But the heart of the HP Way is the notion of trust, and the ultimate manifestation of that trust is in open communication from the top of the firm to the bottom. And this is where she has failed as CEO. The second mistake is the merger. Is the HP-Compaq merger a good deal? Certainly yes and the managements of the two companies taught so. The information technology industry is undergoing a period not only of consolidation, but standardization, around specific architectures like Itanium, UNIX, Linux and NT. During such periods, competitive advantage goes to those firms that can bring to bear the maximum amount of R&D, sales, marketing and other economies of scale. With the merger, HP will have that scale, and that in turn will help it dominate such high-margin emerging markets as digital imaging and digital publishing. Then, what was wrong? Fiorina failed to trust the intelligence of her employees and shareholders. The fact is that the first requirement of corporate leadership is to get the employees to follow. At that, she failed miserably. She took a company that was one of the most innovative of all time, one that empowers its employees, and turned it into a top-down company that was trying to profit off the PC market. Another fact is that the real reason Fiorina lost her job at HP was because, even as the rest of the tech industry was recovering from the dot-com bust, HP's stock remained flat until current CEO Mark Hurd came along to tear down Fiorina's infrastructure and restore company morale. In other words, Fiorina's leadership was also repudiated.
2. Describe how the company should attempt to correct each of the three most serious problems.
Fiorina does seem to have a strategy, but you have to dig deeply into some of her industry speeches to find clues to it. She should know that a business review or preparation of a strategic vision is a virtual necessity. Even if it is not the key for success, without it a business is much more likely to fail. She should rely on the strategic plan which should: Serve as a framework for decisions or for securing support/approval. Provide a basis for more detailed planning....
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