International University College

Business Environment
Assignment
Business environment
analysis of
Hewlett-Packard
Company

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Student: Kateryna Piddubna

Lecturer: Robert Stevenson
Table of contents
1. Summary.3
2. Introduction3
3. Structure of the company4
3.1.
The HP Way........5
4. Legal Format..6
4.1.
Partnerships....6
5. SWOT Analysis..7
6. PEST Analysis8
7. Conclusion11
7.1.
Recommendations...11
8. References12

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Summary
The main purpose of this paper is to analyze the business environment
of an organization (internal and external factors) including an appraisal of its
form of ownership and organization structure. The analyzing can be done
using the next methods: PEST analysis, SWOT analysis or Porters Five
Forces analysis.
The organization which will be analyzed is Hewlett-Packard Company. I
have chosen this company for it was the worlds leading PC manufacturer until
2012 and their products can be found in every office in the world. It provides
products, technologies, software, solutions and services to consumers, smalland medium-sized businesses and large enterprises, including customers in
the government, health and education sectors.

Introduction
Hewlett-Packard Co. is an American multinational organization of high
technology, operating in more than 170 countries. The company is working on
understanding how technology and services can help people and companies
to solve problems, on achieving the desired results and realizing their
potential and dreams. HP uses new ideas and approaches to create easy to
use, more efficient and reliable technology for an improved and more easier
live of all its customers.
HP was founded in 1939 by two university classmates William Hewlett
and Dave Packard in a small garage in Palo Alto, California. The company's
first product was an audio oscillator - an electronic test instrument used by
sound engineers. One of HP's first customers was Walt Disney Studios, which
purchased eight oscillators to develop and test an innovative sound system
for the movie Fantasia. From a garage-suited little organization with a starting
capital of $538 HP expanded to being a worldwide leader in technology
manufacturing with a net revenue of $127 billion in 2011.
Now, HP printers lead the country in reliable printing supplies and
devices. Many different models are available making them suitable for home,
small business and corporate use. It is pretty easy to find a household with an
HP computer, printer, digital camera and other devices. People tend to stick
with one brand and HP offers everything a person might need for their office.

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Structure of the company

Organization - is the process of creation of the company structure, which
allows people to work together effectively to achieve its goals. The essence of
the function is to ensure that the solutions are performed from the
organizational side, that is to create such management relations, which would
ensure the most efficient communication between all elements of the control
system.
To organize means to divide into parts and to delegate the overall
management problem by distributing responsibility and authority, and to
establish relationships between different types of work. Due to the fact that
this is a large company with a wide range of products and it conducts
business on a global scale, the divisional management structure is optimal for
it. Divisional structures are based on the allocation of large industrialautonomous business units and their respective levels of government with the
provision to this units of production independence with the transfer of
responsibility to this level for a profit.
Now, here (Table 1) how approximately looks the management structure
of HP Co.
Table 1

The Hewlett-Packard Co. has different groups which are responsible for
the various product lines. These include HP's Imaging and Printing Group
(IPG), HP's Personal Systems Group (PSG), HP Enterprise Business (EB), HP
Software Division, HP's Office of Strategy and Technology and others.
The picture below shows the membership of the current executive team.
In the history of HP Co. Meg Whitman, having replaced Lo Apotheker, is the
10th President and CEO. The first ones are William R. Hewlett and David
Packard co-founders of HP.

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The usage of divisional structure allows HP to pay a specific region as

much attention as pays a small specialized company, which results in the
ability to quickly respond to changes in the environment, and to adapt to
changing conditions. This type of structure is oriented to the achievement of
the companies outcomes - saturation of a particular regional market with
goods & services. However, it can cause an opposition of the goals of the
different offices to the overall objectives of the company; increase in costs for
the maintenance of the administrative apparatus to duplicate the same
functions in the units and the corresponding increase in staff, the difficulty to
control from the top bottom and so on.
The HP Way
Thats how is called the organization culture in this company. The HP Way
states:

We
We
We
We
We

have trust and respect for individuals.

focus on a high level of achievement and contribution.
conduct our business with uncompromising integrity.
achieve our common objectives through teamwork.
encourage flexibility and innovation.

"...an egalitarian, decentralized system that came to be known as 'the HP Way.' The
essence of the idea, radical at the time, was that employees' brainpower was the
company's most important resource. ...one of the first all-company profit-sharing
plans... gave shares to all employees... among the first to offer tuition assistance, flex
time, and job sharing..."

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Peter Burrows, BusinessWeek

Legal Format
Starting on 1st January 1939 Bill Hewlett and Dave Packard formalized
their partnership and named it Hewlett-Packard Company. It means that
they shared the responsibility for controlling the business and all the profits
were shared between them. HP was incorporated on August 18, 1947 with
Dave being named president and Bill vice president. Later on, the founders
were seeking the capital to expand, to help with their estate planning and to
enable employees to share in the company. So, on November 6 th 1957 HP hold
its Initial Public Offering (IPO). The company went public: its shares were and
are listed in stock exchanges, it was able to raise funds and capital through
the sale of their securities (stock/shares, bonds/loans, etc.), it was obliged in
law to have an Annual General Meeting of shareholders etc.
Recently HP has approximately 2 billion shares of common stock
outstanding. The Company may for the first quarter, six months or nine
months of the fiscal year, take decisions about dividend payments. The annual
dividend may not exceed the amount recommended by the Board of Directors
(Supervisory Board).
Partnerships
Since Hewlett-Packard Co. is a multinational transcontinental
organization working in over 170 countries it has numerous list of partner
companies in different fields such as: HP authorized resellers, Consultant and
integration partners, Business application and solution partners. The company
has even created a special program called HP PartnerOne. The goal of this
program is getting the final customers familiar with the services of their key
partners and the advantages provided by the cooperation with these partners,
as well as providing a predictable return on partner investment. The program
provides two levels of partners that they can choose for themselves: HP Gold
Specialist and HP Preferred Partner. The partners of HP PartnerONE - are the
most successful resellers of HP, the number of which is 5% of the total
number of resellers, working for companies in Europe, Middle East and Africa.
Some of the most significant partners of HP are: Microsoft, Intel, Agfa,
IBM, Ericsson, Novell, Quantum, SAS, Siemens PLM Software, NetScout,
Accenture and so on.

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SWOT Analysis
This method is used to estimate the Strengths, Weaknesses,
Opportunities and Threats in a given organization. Identification of SWOTs is
essential because following steps in the process of planning for achievement
of the selected objective may be derived from the SWOTs.
Basing on this and the other analysis we will be able to make
recommendations for the companies improvement and this will be done later
on in this paper. Now, lets see more particularly what strengths, weaknesses,
opportunities and threats HP has.

Strengths. Here, the company gets points for a vital thing solid
financial base. For a long period of time now it remained profitable
with a strong cash flow thanks to the two most developed and
largest sectors PCs and printing. Another point it gets for the
incredibly strong brand name and for spectacular competing on
global scale with mastered supply-chain and channel
management.
Weaknesses. One of the main problems HP encountered seems to
be turmoil in the boardroom. Over the past 8 years there have
been 8 different CEOs. When Meg Whitman, current CEO, was
appointed, she took command of a disoriented and badly
demoralized company. Another problem is that HPs products offer
little differentiation and thats mostly in PC market, while now is
the era of AOS phones and tablets and HP isnt a player in that
field yet. Also, HP has not yet solved its hardship with being
totally dependent on Microsoft for critical software.
Threats. One challenge is that HP has to enter the smartphone
market and it has only two choices Android and Windows Phone
8. With that it will be a new entrant competing against Nokia and
HTC, which doesnt sound so good. Another problem is that tablets
might replace printed documents in the near future which will lead
to a long-term secular decline in printing
profit losses.
Opportunities. Expanding presence in cloud computing market (a
new delivery model for IT services). In 2008 HP with Yahoo!
created a project which was to promote collaboration among
industry, academy and governments by removing the financial
and logistical barriers. The increasing demand for cloud computing
is likely to create demand for HPs solutions in coming years. The
global spending on cloud computing is forecast to cross a value of
over $40 billion by 2012. Another opportunity is expanding
portfolio of imaging and printing solutions. HP introduced new
products in the imaging solutions segment in recent times which
leads to new growth opportunities in commercial printing and
capturing high-value pages in areas such as industrial
applications, outdoor signage, and graphic arts.
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And here in this table you can see the summarized SWOT analysis.
Table 2

PEST Analysis
One of the most used methods for analyzing the external factors which
influence an organization. These factors are as follows: Political, Economical,
Social and Technological.
Political Factors
HP is a global multinational company that sells its products and services in
all over the world (170 countries). Over 60% of HP revenues result from sales
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outside the U.S. Bad international relations, wars and terrorism might
influence HP in a huge manner; moreover these are all factors HP has no
ability to control. HP Co. produces many of its parts and products outside the
U.S. It has government affairs teams in place in the various regions in which it
does business such as in Asia-Pacific Japan, in Europe, Middle East and Africa
(EMEA), in the U.S. and in Americas (non-US). Political conflicts between the
U.S. and any of these states may have awful outcomes for HP Co.
Political factors include government regulations and legal issues
determining the conditions under which companies have to operate. Like in all
markets, HP is also subject to laws that regulate virtually all aspects of their
business, including such areas as health safety, pollution, and advertising and
labeling requirements. Another problem is the political stability of the country.
In the United States, where are suited the headquarters of HP Co., there is a
stable democratic political system and a strong legal system. But there are
countries like Mexico, Afghanistan, Chad, Egypt, Iraq, Israel, Palestina and so
on that are currently politically instable, which might have a negative effect
on the sales rate.
In order to support and enhance access to key markets, HP supports
comprehensive and progressive bilateral and regional trade agreements
worldwide that include deep commitments to liberalization on government
procurement, services and standards disciplines.
Economical Factors
As the worlds largest technology company, HP both contributes to
economies worldwide and is influenced by broader economic factors and
market trends. Economic trends that influence its business include the
continuing rapid shift to an information economy and the burgeoning middle
classes in emerging markets, which represent growth markets for our products
and services. An economic factor that can adversely affect the computer
industry is the exchange rate of the home currency, all branded products are
imported, and their prices vary with changes in the relative exchange rates.
Also an important factor is global economic depression. It can lead to inflation,
lower income of the customers and thus reduced sales rates. But since June
2009 the worlds economy was recovering from a crisis. The real growth of
GDP in US was 3% (2010 est.) and 1,7% (2011 est.), so there was an increase
in income, consumers started purchasing higher quality products rather than
to simply purchase more. Thus there is a growing market for higher quality
and priced computers.
Social Factors
The social environment includes all factors and trends related to groups
of people, including their number, characteristics, behavior, and growth
projections. Changes in the social environment can affect markets differently
Changing lifestyles: as we know that human wants are unlimited so, in
this changing scenario, computers have become the essential part of the
lifestyle of the contemporary world and in these too, anywhere and anytime
computing has brought a great change in the trends of carrying a notebook
everywhere around with you. That leads to increase in sales rate.
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Growth rate of population: higher the population the more is the
demand for PCs. The US Census Bureau stated that the overall population of
the world has passed 7 billion on March 12, 2012.
Age distribution: there are several age categories such as children,
teenagers, students, young people, middle-aged and elderly. Certain
categories make different effect on the companies well-being. For example,
the teenagers, students and young people give a positive effect to the sales
rate of PCs; and an aging population may imply a smaller and less-willing
workforce (thus increasing the cost of labor).
Education: The national demand for HP computers is dependent on the
educational level in different countries. The higher the educational standard,
the higher is the demand. Furthermore, HP products get more and more
involved in daily life. Today, children already get familiar with the use of
computers at a very young age, representing a generation that will hardly live
and work without a computer in the future.
Technological Factors
The technological environment includes factors and trends related to
innovations that affect the development of new products or the marketing
process. New products can be developed using these technological trends.
Research & Development (R&D): As Hewlett-Packard goes, so goes the
world (Peter Sims,2011). The world is developing incredibly fast in
technological sense. And such IT companies like HP contribute largely to this
development. As for now, HP spends 3% of their overall revenue in its R&D,
but theres a prediction of increasing the spending on R&D up to 7% in the
next years and HP said it will make the following R&D bets: services will invest
in cloud, analytics, and high-value delivery; software will invest in analytics,
big data, application management, and security; the servers, storage, and
networking unit will bet on cloud and big data technologies.
Cutting-edge Technologies: One of the most recent innovations of HP Co.
is the Dynamic Defense, which is a new approach to cloud security. The
Internet is evolving into the cloud: the means through which everything will be
delivered as a service - from computing power to business processes and
personal interaction. Another innovation is creating a series of accurate,
efficient, and effective cloud-based, integrated supply-demand management
(ISDM) software which helps to transform the vast and growing universe of
enterprise information into immediate, relevant insight. Yet another and
probably most of current interest is the appearance of a new product line,
made in collaboration with Microsoft Windows 8 PCs. Owing to this theres
expected an increase in demand for the new PCs since consumers love
exploring new things.
Internet: it is a great opportunity for companies to get their into the
public domain as well as a fast way to tailor services to its customer
segments. It provides a lot easier way to distribute HPs products and
services.
Also a good technical infrastructure leads to better production,
procurement and distribution logistics, resulting in reduced wastage and lower
costs. There is no problem in HP with that.
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Conclusion
In conclusion, while doing this research I was able to understand how a
strong company can function and have different strategies. HP Co. as any
other company has its own strengths and weaknesses. I also discovered that a
crucial factor for a company to stay alive is to stay up-to-date with ongoing
and upcoming trends, as uncertain and important they might appear. Having
passed a long way since the 1940s, Hewlett-Packard Co. is now one of the
biggest successful and recognized IT companies worldwide. Of a great
significance for the success of the company is their way of managing things
management by walking around. HP has always encouraged open interplay
between employees as a way of fostering innovation.
Looking at the results of the PEST analysis, we can say that any changes
in the worlds environment (be it social, technological, political or economical)
affect the company positively or negatively. But HP has its own ways in
dealing with the negative effects and it gets the best out of the positive ones.
Recommendations
Currently Hewlett-Packard Co. is the leader in the market of printing,
laptops and PCs, has the highest profitability of IT-companies. In my opinion,
at this time this company must follow a strategy of concentrated growth, or
rather a strategy of market development. According to this strategy, the
company needs to look for new markets for its existing products. For example,
the market of Russia would be a good choice. At present, HP doesnt pay
much attention to this country. However, if it manages to win the Russian
market, it will recapture a big part of the market from its main competitors
such as Acer and Lenovo.

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Word count : 2961

References
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so-goes-the-world/
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company-histories-press-releases/the-history-of-hp
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timeline/hp-timeline.html
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elkington/hewlett-packard-sustainability-genetic-makeup
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