Case Memo of Corporate Governance
Case Assignment: Hewlett Packard (A)
1. Based on your experience and general business knowledge, what are the key strengths and weakness of the way Hewlett-Packard structure and supported the Kittyhawk development team? Why do you think that HP made the mistake it did? (***)
The HP culture deeply valued technical innovation as a key to success, which means that the company encourages innovation.
HP favored a decentralized structure so as to allow its business freedom of decision making and movement.
HP employed a management-by-objective (MBO) process to focus its business on financial goals and its people on the potential paths of innovation and strategy to achieve such goals.
HP has the experience of the production of 5.25 and 3.5 inch disk drives and had diskdrive sales of 519 million dollars in 1992, which will be very helpful for the design and production of 1.3-inch drives.
HP’s Corvallis Division was designing a “super” subnotebook that would need the new 1.3-inch drives. The kittyhawk team worked closely with the Corvallis group to meet their operating requirements.
Lack of scientific and reasonable policy decision procedure
Hackborn, the executive vice president in charge of the company’s computer products organization, approved the Kittyhawk project totally by himself. This is unwise and will easily lead to wrong judgment.
The low sales volume of HP disk drive
From exhibit 3, we can see that the disk-drive revenues of HP are just a very small part of the corporate net revenues, and have a slow growth from 1983-1992, which means disk-drive is not the main business of the company and it should not occupy huge resources.
The low market share of HP disk drive
From exhibit 4, we can see that the market share of the products sold by DMD is much lower than the competitors such as Conner and Quantum, which means...
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