STRATEGIC MANAGEMENT

Strategic management

Strategic management

Introduction

Currently Hewlett-Packard (HP), an American information technology (IT) cooperation headquartered in Palo Alto, California, announced its offering to take over the American IT service provider EDS (Electronic Data system) for $13.9 billion. The acquisition would help HP to become the number two in the IT service business behind the market leader IBM. Thereby, HP would double its revenue in this industry segment to $38 billion and reduce the gap to IBM with $54 billion revenue in 2007. At present HP is located at the fifth position and has a market share of 2.2 % compared to 3.0 % of EDS arid 7.2 % of IBM. HP's CEO Mark Hurd promised a global leadership in the IT services and benefits from strong synergy and cost saving through the acquisition. The EDS management board agreed with the HP's offering and the acquisition should be completed in this year.

HP is nowadays an International giant in the information technology industry. The company offers a wide product portfolio from personal computers (PC), notebooks, serves, storage, calculators, printers, scanners, fax, and digital camera to network management software. The company features a phenomenal growth history and has developed from a 'garage” with a working capital of $538 in 1938 to a leading global provider with $100 billion revenue. 2 HP provides products, technologies, solutions and services for both individual consumers and large businesses. However the global competition becomes fiercer today and HP has to face with different competitors in all business segments. Can HP continue its success story and beat the global competitors? This question will be tried to answer in the present study.

HP is:

No. 1 globally in the inkjet, all-in-one and single-function printers, mono and colour laser printers, large-format printing, scanners, print servers and ink and laser supplies (refers to unit)

No. 1 globally in desktop PCs, notebooks and workstations, and No. 2 globally in Pocket PCs (refers to unit)

No. 1 globally in blade, x86, Windows, Linux, UNIX and high-end UNIX servers and No. 2 globally in total disk storage systems (refers to factory revenue)

No. 10 globally and No.1 in the U.S. in Environment, Social Impact Ratings by the Economist

Using appropriate analytical tools (such as PESTEL and five forces), analyse the external business environment in relation to the analysed cases.

PESTEL analysis

A PESTLE analysis of the industry was undertaken to examine the local, national and global influences of political, economic, social and technological factors to understand opportunities and threats well.

Political

Moreover, both home and private businesses are granted the authority for decentralized decision-making. The free system in the American business sector is made evident by the amount of the production and output of private businesses.

Economic

Since the events of September 11th the world economies have suffered heavily, stocks plummeted and prices are at all time lows and it has obviously affected the American economy as well.

Social

Changes in consumer taste and lifestyle represent both opportunities and threats for the industry. Opportunities in terms of new market and consumers are ...