Hewlett Packard Environmental Scan
Research and describe the internal and external environment of Hewlett Packard (HP) using environmental scan. Determine what competitive advantages HP has and what strategy the company is using. How does HP create value and sustain competitive advantage through business strategy? What measurement guidelines is HP using to verify its strategic effectiveness? How effective are the measurement guidelines HP is using?
- Student: Smith
- Textbook: Not Provided
- Course: MGT/498 Strategic Management
Importance of Environmental Scanning
Environmental scanning is the process of developing knowledge about the operational threats and opportunities that a company faces. The results of the scan will enable executives to make well-informed strategic decisions related to both the internal and external environment. There are four main forces present in an environmental scan, including economic, technological, political, and sociocultural (Wheelen, T.L., & Hunger, J.D. 2010). The following paper will analyze the environmental conditions of Hewlett Packard (HP).
Internal and External Environment
Hewlett Packard Inc is an industry leading technology firm that produced computer products for business applications. Externally, HP must contend with an array of complex technological, legal, and competitive factors to sustain its industry position. Of particular importance to HP is the threat of legal changes that will make its technologies less profitable. In the 2013 annual report, HP states the following regarding legal issues, “legislators may make legal and regulatory changes, or interpret and apply existing laws, in ways that make our products and services less useful to our users, require us to incur substantial costs, expose us to unanticipated civil or criminal liability, or cause us to change our business practices.” (Hewlett Packard Inc 2013). A second major factor in the external environment is the threat of new competition. Currently, HP controls approximately 20% of total computer product, but growing competition from Samsung, Apple, and Leveno could take away from this total. HP has put a strong focus on generating positive relationships with its employees. In order to produce cutting edge technologies, the company must attract top talent from around the world. It achieves this goal by creating a culture that allows people to be creative and contribute openly. Considering sociocultural aspects of customers, HP must be prepared to rapidly change its business model based on the evolving morals and values of society. For example, the recent launch of HP ProLient Server, which is an server computer that displays web-based data, has received considerable scrutiny from the public due to privacy concerns. While HP is trying to push the limits of technological progress, it must able to considerate of the perceptions of the general public. If people stop trusting the brand image, the company will experience a loss in revenue. Above all else, the brand image of HP gives the company its competitive advantage. The general public has embraced the HP brand and considers it the most trusted method of finding information on the web. Companies like Microsoft have invested heavily in technologies in the industry, but none have succeeded in making a meaningful threat to HP. Next, HP maintains a competitive advantage with its constant focus on technological innovation. Producing new products that disrupt established industries is made possible by the company’s impressive amount of financial and human capital. Being the first company to develop a significant product can be extremely lucrative. HP has recognized this fact and is constantly releasing new hardware and software products that it hopes will become mainstream.
An important strategic measurement for HP is its total search engine share, relative to competitors. Currently, the company commands approximately 20% of the total market. This is important because computer sales accounts for over 83% of HP’s total revenue (HP Inc 2013). If the company’s total market share declines, its revenues will follow a similar path. Another important measure it the success rate of new technologies that are released to the commercial public. While some HP products end up being failures, those that are successful greatly outweigh the failures from a financial standpoint. Monitoring the adoption trend of new technologies will help the company predict which products will be commercially successful in the future.