Company Analysis
The analysis of the activities of the HPE corporation is carried out on the basis of its growth potential, financial ratios, competitive advantages, and investment opportunities. Some gaps in its monetary policy are noted compared with the previous work periods. The possibilities of expanding the business and increasing the organization’s market positions are possible by investing in innovations, but this activity should take place in the context of the close monitoring of costs and establishing partnerships as a strategy to improve operational safety.
Growth Potential
Based on the data on the development of the financial industry of the company in question, its growth potential is hampered by current problems with asset management. According to the information provided by Press Release (2019), the corporation increases its cash contributions and aims to innovate. However, in order to expand the boundaries of the business and create more sustainable production, HPE has to overcome the existing threshold of unstable development. The data from the consolidated income statement confirm that in 2019, the company’s revenue was 5.6% less than that in 2018. The cost of goods sold decreased by 9.1%, which indicates the loss of the target audience and fall of market positions. Therefore, the company has growth potential, which, however, can only be realized if it intervenes in the financial matters of the business.
Financial Ratios
When analyzing HPE’s financial ratios, one can assume that this aspect of the company is the most vulnerable and problematic. Compared with 2018, in 2019, the total assets parameter decreased by 6.5%, according to the standardized annual balance sheet. The return on equity, in turn, was 6.14%, and this figure was also lower than the indicator of 2018 by more than 2%. At the same time, the cash flow for the last quarter was higher, which indicates biased costs (Press Release, 2019). It is difficult for the company to generate capital in conditions of low income. Therefore, the parameters of financial ratios are a topic that deserves particular attention in HPE.
Competitive Advantages
Despite customer loyalty due to brand awareness, HPE may have problems with a competitive advantage in the market, and the aforementioned factors may cause a failure. However, the analysis of the financial industry proves that, despite some deteriorating performance, the company’s management draws conclusions regarding errors, for instance, by coordinating cash flow indicators (Press Release, 2019).
Gross profit grew by 2.3%, and this parameter confirms the possibility of developing the business and expanding sales in case of competent investments. Competitive risks are high due to progress in the technology industry, and in order to maintain a high position, it is crucial for HPE to provide consumers with an opportunity to purchase modern and advanced products while maintaining their quality.
Recommendations Regarding Investment
In accordance with the development outcomes, HPE should invest in innovation but, at the same time, monitor all financial flows carefully so that costs could not exceed profits. The conviction of the company’s management that innovation is mandatory for business growth is objective in this industry. Nevertheless, engaging new tools for work and updating the technological base should take place in the conditions of establishing partnerships to increase the security of deposits and expand the sphere of influence as a factor of competition.
Conclusion
Engaging innovation may be a potentially successful competitive strategy for HPE that has to hold its market positions and enhance the brand value. At the same time, financial barriers and problems with asset management necessitate the introduction of additional control over all financial flows. The leaders of the organization can expand their business due to strategically important partnerships that, in turn, may contribute to securing the corporation’s money.
Reference
Press Release. (2019). HPE reports fiscal 2019 fourth quarter and full-year results. Web.