Study of HP

Submitted By :

Khusbu Prasad

Sagar Jain

Kishore Kumar Singh

Executive Summary

HP was founded on January 1, 1939 by Bill Hewlett and Dave Packard. The Hewlett-

Packard Company is commonly referred to as HP. It is is a American multinational

informational technology company specialized in developing and manufacturing computing,

data storage, and networking hardware, designing software and delivering services. Their first

product was a precision audio oscillator, the Model 200A.

In 1999, the Hewlett-Packard Company hired Carly Fiorina as its CEO. She revamped the

companys sales and marketing functions. In the process, she drew plenty of attention.

Fortune magazine put her at the top of its list of the 50 Most Powerful Women in Business.

Fiorinas most disruptive move came in 2001, when she announced a deal to acquire Compaq

Computer for $25 billion in stock. At the time, Compaq was the second largest producer of

personal computers, after Dell, and a major supplier of servers. But later on, Carly Fiorina

stepped down from her position as chairman and chief executive of Hewlett-Packard, citing

disagreements with the board over execution of strategy.

Hp faced various challenges such as lack of innovation, poor customer image, etc. These

challenges further led to number of failures in different areas. Major problem faced by HP

was failure in mergers, acquisitions and product failure.

About HP

The Hewlett Packard Company is a American multinational informational technology

company. It develops and provides a wide variety of hardware components as well as
software and related services to consumers, small- and medium-sized businesses (SMBs) and
large enterprises, including customers in the government, health and education sectors. It is a
technology company that operates in more than 170 countries around the world. It explores
how technology and services can help people and companies address their problems and
challenges, and realize their possibilities, aspirations and dreams. It applies new thinking and
ideas to create more simple, valuable and trusted experiences with technology, continuously
improving the way our customers live and work.
No other company offers as complete a technology product portfolio as HP. It provides
infrastructure and business offerings that span from handheld some of the world's most
powerful supercomputer installations. It offers consumers a wide range of products and
services from digital photography to digital entertainment and from computing to home
printing. This comprehensive portfolio helps us match the right products, services and
solutions to our customer's specific needs.

History of HP

HP was founded on January 1, 1939 as a manufacturer of test and measurement instruments,

by Bill Hewlett and Dave Packard, with a US$538 investment. They had both graduated from
Stanford University in 1934. The company originated in a garage there while they were still
fellows at Stanford. (so their story was more "academic gowns to riches" than rags to
riches).Their first product was a precision audio oscillator, the Model 200A. Their innovation
was the use of a small night-light bulb as a temperature dependent resistor in a critical portion
of the circuit. This allowed them to sell the Model 200A for $54.40 when competitors were
selling less stable oscillators for over $200. The Model 200 series of generators continued
until at least 1972 as the 200AB, still tube-based but improved in design through the years. At
33 years, it was perhaps the longest-selling basic electronic design of all time.
The company was originally rather unfocused, working on a wide range of electronic
products for industry and even agriculture. Eventually they elected to focus on high-quality
electronic test and measurement equipment. Throughout the 1940s to well into the 1990s the
company focused on making signal generators, voltmeters, oscilloscopes, counters, and other
test equipment. Their distinguishing feature was pushing the limits of measurement range and
accuracy. For instance, almost every HP voltmeter or signal generator has one or more extra
clicks of its knobs than its competitors. HP volt- or ammeters would measure down and up an
extra 10 to 100 times the units of other meters. Although there were good reasons why
competing meters stopped at 1 volt full scale, HP engineers figured out ways of extending the
range of their equipment by a considerable amount. They also focused on extreme accuracy
and stability, leading to a wide range of very accurate, precise, and stable frequency counters,
voltmeters, thermometers, and time standards.
The sixties and seventies
HP is recognized as the symbolic founder of Silicon Valley, although it did not actively
investigate semiconductor devices until a few years after the "Traitorous Eight" had
abandoned William Shockley to create Fairchild Semiconductor in 1957. Hewlett-Packard's
HP Associates division, established around 1960, developed semiconductor devices primarily
for internal use. Instruments and calculators were some of the products using these devices.

HP is acknowledged by Wired magazine as the producer of the world's first personal

computer, in 1968, the Hewlett-Packard 9100A. HP called it a desktop calculator because, as
Bill Hewlett said, "If we had called it a computer, it would have been rejected by our
customers' computer gurus because it didn't look like an IBM. We therefore decided to call it
a calculator, and all such nonsense disappeared." An engineering triumph at the time, the
logic circuit was produced without any integrated circuits; the assembly of the CPU having
been entirely executed in discrete components. With CRT readout, magnetic card storage, and
printer the price was around $5000.
The company earned global respect for a variety of products. They introduced the world's
first handheld scientific electronic calculator in 1972 (the HP-35), the first handheld
programmable in 1974 (the HP-65), the first alphanumeric, programmable, expandable in
1979 (the HP-41C), and the first symbolic and graphing calculator HP-28C. Like their
scientific and business calculators, their oscilloscopes, logic analyzers, and other
measurement instruments have a reputation for sturdiness and usability.

The eighties and beyond

In 1984, HP introduced both inkjet and laser printers for the desktop. Along with its scanner
product line, these have later been developed into successful multifunction products, the most
significant being single-unit printer/scanner/copier/fax machines. The print mechanisms in
HP's tremendously popular LaserJet line of laser printers depend almost entirely on Canon's
components (print engines), which in turn use technology developed by Xerox. HP develops
the hardware, firmware, and software that convert data into dots for the mechanism to print.

In the 1990s, HP expanded their computer product line, which initially had been targeted at
university, research, and business customers, to reach consumers. Later in the decade HP
opened hpshopping.com as an independent subsidiary to sell online, direct to consumers; the
store was rebranded "HP Home & Home Office Store" in 2005. HP also grew through
acquisitions, buying Apollo Computer in 1989, Convex Computer in 1995, and Compaq in
2002. Compaq itself had bought Tandem Computers in 1997 (which had been started by ex-
HP employees), and Digital Equipment Corporation in 1998. Following this strategy HP
became a major player in desktops, laptops, and servers for many different markets.

In 1987, the Palo Alto garage where Hewlett and Packard started their business was
designated as a California State historical landmark. In July of 1999, HP appointed Carly
Fiorina as CEO. Fiorina was the first woman ever to serve as CEO of a company included in
Dow Jones Industrial Average. Fiorina was forced to resign on February 9, 2005.
HP Under Carly Fiorina (1999-2005)

In 1999, the Hewlett-Packard Company hired Carly Fiorina, former senior executive of

Lucent Technologies, as its CEO. It was a striking announcement in many regards. Fiorina

was the first external CEO in the companys history. She was also the first female CEO of HP

and the first without a background in engineering (she oversaw sales and marketing at

Lucent). The decision to bring in an outsider was championed by none other than outgoing

Chairman and CEO Lewis Platt. He believed that the company had grown complacent in

recent years and that an outsider with a fresh perspective was required to bring about needed

change.

Although HPs revenues were increasing at a double-digit rate, this was still below the

hyperbolic growth rates of fellow Silicon Valley companies Cisco, Oracle, and Sun

Microsystems. Fiorina moved quickly to reenergize the company. She reduced the number of

reporting units from 83 to 12 and consolidated back-office functions. She replaced the

companys profit sharing program with a performance-based compensation system to

encourage individual productivity. She revamped the companys sales and marketing

functions. In the process, she drew plenty of attention. Fortune magazine put her at the top of

its list of the 50 Most Powerful Women in Business, a position she held for five years.

To many inside the company, the changes were extreme. One executive explained, The

feeling for Carly who wasnt a long time in the HP culture, who doesnt understand our

business and the HP Way, and doesnt understand our strengths, particularly in businesses that

were viewed as so successful for so long.Another stated simply, The HP we know is gone.

Carly Fiorinas career at HP

July 19 1999 - Hewlett-Packard chooses Carly Fiorina, one of the top business women in the
US and one of the most competitive individuals in the high-technology arena, to become its

chief executive

November 13 2000 - Carly Fiorina is back in the spotlight after HP misses Wall Street

earnings estimates by a wide margin and drops a high-profile $18bn bid for the consulting

practice of PwC.

September 8 2001 - Martyr of the tech boom - Ms Fiorina has been accused by investment

bankers, shareholders and the media of embarking on a foolhardy takeover simply to save her

job and distract attention from her companys weak performance.

November 12 2001 - When she took on the role of chief executive at Hewlett-Packard in July

1999, Carly Fiorina knew that as the first outsider at the helm of HP, she would have to tread

a careful path.

March 20 2002 - After six months in takeover hell, Carly Fiorina may at last be able to turn

her attention to the job of how to turn two ailing corporate giants into a company better suited

to the new, far more challenging phase that the technology industry has entered.

November 11 2002 - Carly Fiorina is thrust back into the spotlight after the departure of her

second-in-command. Investors and industry analysts wonder whether she is up to the job of

single-handedly running a highly diverse computer and printer group amid a broad industry

slowdown, as well as overseeing the complex merger integration.

January 24 2004 - Carly Fiorina takes $400,000 pay drop.

August 13 2004 - Carly Fiorinas credibility gap on Wall Street has rarely looked wider. With

shares trading at 10 times earnings estimates compared to 15 times for IBM, Wall Street has

eloquently expressed its concerns about Ms Fiorinas ability to ensure HPs position as a

lasting contender in the hard-pressed information technology business.

October 13 2004 - Carly Fiorina, says everything from digital cameras to supercomputers is

within HPs sights. In the new world of technology, she declares, the full portfolio matters

more than ever. The big will get bigger and the small will get smaller.

January 24 2005 - HP says it is not planning to make any senior changes in the near future,

playing down a report suggesting the computer and printer makers board was considering a

management reorganisation.

January 27 2005 - Carly Fiorina defends the performance of the company since its merger

with Compaq and plays down reports that its board may shift some power from her to

executives running its main business units.

February 9 2005 - Carly Fiorina steps down from her position as chairman and chief

executive of Hewlett-Packard, citing disagreements with the board over execution of strategy

at the US computer and printer maker.

Severe Decisions Taken

Fiorinas most disruptive move came in 2001, when she announced a deal to acquire Compaq

Computer for $25 billion in stock. At the time, Compaq was the second largest producer of

personal computers, after Dell, and a major supplier of servers. A combination of the two

companies would establish HP as a market leader in computer hardware, which Fiorina

believed would give HP the leverage it needed to compete successfully with Topics, Issues,

and Controversies in Corporate Governance and Leadership.

Through the looking glass competitors such as IBM in the enterprise systems market. The

deal, however, was controversial in two regards. First, analysts were not convinced that it
made strategic sense. HP was seen as doubling down on the commoditized business of

hardware manufacturing at a time when many believed it should focus on higher-margin

activities such as software, services, and printing. According to one analyst, Two losers

dont make a winner. As a result, HP stock traded down by 30 percent on the news. Second,

the deal was controversial in that it drew public opposition from Walter Hewlett, son of

company co-founder William Hewlett and a member of the companys board of directors.

Although he had originally voted with other board members to approve the deal, he

subsequently changed his mind. In a written statement, Hewlett said that, Given the lack of

stockholder benefits, I believe the extensive integration risks associated with this transaction

are not worth taking. Shortly thereafter, David Packard Jr., son of second co-founder David

Packard, also came out in opposition to the deal: For some time I have been sceptical about

managements confidence that it can aggressively reinvent HP culture overnight a culture

that developed over many years and was thoroughly tested under all kinds of business

conditions. While change is necessary and inevitable, it does not follow that every innovation

is an improvement. Opposition by these two men was significant not only because they were

sons of the companys founders but also because the two foundations which they controlled

the William and Flora Hewlett Foundation and the David and Lucille Packard Foundation

together held 15 percent of HPs stock. In an escalation of the matter, Walter Hewlett led a

proxy fight to terminate the deal.

The controversy led to a rare, public squabble between the company and its major

shareholders, with HPs directors joining the fray. Richard Hackborn, former executive vice

president of HP and board member, defended the deal, stating, The board thoroughly

analyzed this transaction and unanimously concluded this is the very best way to deliver the

value our shareholders expect. He admitted, however, to originally sharing Walter Hewletts

skepticism: We all had reservations. None of us was convinced that Compaq was the exact
right answer at the start. Philip Condit, another director, said that the merger is certainly not

without risk, but I think the opportunity outweighs the risk. Director Robert Knowling said

that at first he was neutral to the idea, but over time came to believe it was an important

way to improve HPs competitive position. Following several months of vigorous lobbying of

institutional shareholders by Fiorina, the merger was ultimately approved by a thin margin,

with 51.4 percent of shareholders in favor and 48.6 percent opposed.

The Compaq acquisition, however, did not prove to be the transformative event that Fiorina

and the board envisioned. HP had forecasted in the merger prospectus that the PC division of

the combined entities would generate an operating margin of 3.0 percent in 2003. The actual

figure came in at 0.1 percent; in 2004, it was 0.9 percent.

Following a string of disappointing earnings reports, the board of directors asked Fiorina for

her resignation. Robert Wayman, chief financial officer of HP, served as interim CEO while

the board undertook a formal search for a successor. Fiorina made the statement, While I

regret the board and I have differences about how to execute HPs strategy, I respect their

decision. She left the company with a severance package valued at $21 million.

Challenges faced by Hewlett Packard

Lack of Innovation

HP is not unique, they should be more innovative in order to become a market leader

and not a market follower. HP invests less money in R&D than its main competitors,

so it needs to increase and accelerate R&D investments. HP needs to focus on more

than creating new products, they should be innovative in all company divisions and

also in the way the reach customers and employees. The difficulty for HP is that they

need to catch up with the profits lost previous years, so an extra contribution is

necessary. Poor presence in the tablet market and less investments due to
restructuring last years havent done anything good for the company. They lost

competitive advantage.

Poor Customer Image

The relationship between HP and its customers is below the companys potential.

The brand name HP is one of global recognition however, not one necessarily

associated with instant intrigue and excitement in the eyes of the public. The

corporation currently facilitates limited direct interaction between informed HP

employees and their eager customers. This shortfall of communication and synergy

leads to poor customer knowledge and comfort with products, services, and the

brand itself. The improvement of customer image leads to stronger brand loyalty

through the expansion of a dedicated customer following that would support HPs

actions and innovations. In a consumer world that is shifting away from purchasing

technology from retail stores such as Best Buy and Staples, HP needs to gain a

stronger position to sell its products to consumers and reach new customers.

Gender gap in the Employee Environment

By 2020 partner with 20 elementary schools, 20 middle schools, and 20 high schools

to bring HP technology into the classroom through their products in order to instill a

positive image of the company in a future market. This strategy will create

relationships and foster the growth of diversity for HP. The corporation should

recruit at colleges with a high percentage of female students in IT programs. As

well as offer a new scholarship each year in a variety of technology fields.

Lack of Diversity
 32.5% of the HP workforce is female. This number has gone down from 32.9% in

2009. It is important to have diversity in a company, as diversity leads to more

creative ideas and open minds. Studies have shown that women in the workplace are

more empathetic and spark more creativity in everyday tasks. HP has already taken

some steps to narrowing this large gap such as offering a scholarship to women who

major in and graduate with a degree in IT security. While this scholarship is a step in

the right direction, HP needs to reach out to women who havent already decided on

a career in technology.

Low Profitability

HP has significantly lower profitability than its competitors. It is not getting enough

money back to reinvest or payback in dividends for the amount that it put into its

business. Part of the problem results from unstable management. Stable management

creates shareholders trust, transparency and reliability. Without it, employees work

inefficiently towards unclear and shifting goals. HPs current strategy is not achieving

acceptable profits and is not being executed well by HPs employees. Since HP has

many investment needs currently, its debt-equity ratio does not need to be fixed until it

has extra profits.

Leadership Strategy

Defining and Agreeing on the HP Values and providing the framework for setting

corporate objectives and establishing standards for HP employees in dealing with their

co-workers and customers. Also setting and agreeing on the objectives like getting

everyone to agree on corporate objectives and to understand what the company is trying

to achieve.
Empowering Employees was done by turning everybody loose, so that people could

move along in a common direction. HP Developed Cross-functional Individuals which

most of the companies tend to recruit, train and promote people within functional

corridors. But Hewlett-Packard (HP) broke the wall by creating a carrier network that

begins with the recruitment of diverse people in terms of their skills and personality and

then promote them horizontally as well as vertically throughout the company.

HP founders based their corporate culture on the integration and reinforcement of

critical opposites. This became known as the Hewlett-Packard Way. HP has achieved

this by creating an environment that celebrates individualism, but at the same time, one

that is also wholly supportive of teamwork.

Competitors

IBM

International Business Machines Corp (IBM) is a large American information

technology company. They work with clients to solve business problems and create

value for the businesses. In October of 2014 IBM sold x86 server business to Lenovo

for $2.1 million. This will give IBM more opportunities to work on their software and

service sectors.

Lenovo
Lenovo is a multi-billion dollar Chinese personal technology company. Lenovo is

currently the largest personal computer vendor in the world. Lenovo also creates tablets,

smartphones, and smart TVs. With the acquisition of IBMs server business, Lenovo

will have the perfect opportunity to expand its own product base.

Apple

Apple is a fast growing company that manufactures and markets smartphones, tablets,

PCs, and software. Their popular products include the iPhone, iPad, and Macbook.

Apple designed its own operating system for their products, which links all the devices

owned by a customer together through their own personal Cloud

Failures of HP

1. Failure in Acquisition

HP and Autonomy

Autonomy was acquired by HP in October 2011. HP paid $10.3 billion for 87.3% of

the shares, valuing Autonomy at around $11.7 billion (7.4 billion) overall,

a premium of around 79% over market price. However, after a few months, HP

management argued that Autonomy was overpriced. CEO Meg Whitman said

Autonomy was "smaller and less profitable than had thought," leaving open the
question of how convincingly a company could overstate its size to a sophisticated

bidder. Legal threats notwithstanding and as you can imagine, Autonomy's

founders said they didn't do anything wrong and that HP was just covering up its own

ineptitude Hewlett-Packard ending up taking a $8.8 billion write-off.

HP and Compaq

Fiorina announced a deal to acquire Compaq Computer for $25 billion in

stock. At the time, Compaq was the second largest producer of personal

computers, after Dell, and a major supplier of servers. A combination of

the two companies would establish HP as a market leader in computer

hardware, which Fiorina believed would give HP the leverage it needed to

compete successfully. The deal, however, was controversial in two

regards. First, analysts were not convinced that it made strategic sense.

HP was seen as doubling down on the commoditized business of hardware

manufacturing at a time when many believed it should focus on higher-

margin activities such as software, services, and printing. According to

one analyst, Two losers dont make a winner. As a result, HP stock

traded down by 30 percent.

2. Product Failure

Mobile

HP's mobile division never had a chance to grow into a stable, profit-generating operation. Its

product were boring and not attractive and also failed in design. One of the biggest mistakes

HP made was not accepting Android. Like it or not, in today's mobile market, Android is the

operating system that every vendor (except for Apple and Microsoft) should be using. It's a
mobile OS that people know and trust, and it has been proven to sell quite well in the mobile

space. But they went on with WebOS as operating system. WebOS itself simply wasn't all

that appealing. The operating system lacked enough third-party applications to attract

consumers, and its functionality was simply too different from iOS and Android for

customers to give it a second look. HP erroneously believed that it could be Apple. The

company decided that in order to be successful in the mobile market, it would need to offer

both hardware and software, but the plan backfired.

Touchpad

Introduced in July 2011, the TouchPad was Hewlett Packards attempt to compete with

Apples iPad. With powerful video capability and impressive processing speeds, the

TouchPad was widely anticipated to be among the only products that could give Apple a run

for its money. Despite large scale press events and promotions, the HP TouchPad was a

colossal failure and was discontinued almost immediately. As a result of the TouchPads

failure, the company wrote off $885 million in assets and incurred an additional $755

million in costs to wind down its webOS operations, ending all work on the TouchPads failed

operating system

Conclusion

Over the years, HP has been one of the leading IT company. It has vast variety of products

under its portfolio. HP has strived hard to achieve its corporate goal and as well as its social

goals. It has tried to bring change in life of the people with the help of technology and every

time tried to give them new experience. Their aim was to invent and reinvent again and

always try to push themselves ahead.

Since its incorporation, HP has experienced a lot of positive and negative consequences. It

has faced a lot of challenges and failures but always tried to overcame them with full efforts.

It looked for opportunities in every aspect and tried to defend itself from numerous

obstacles. Through its leadership it always made effort to bring innovation, empower

employees and integrate the critical opposites.