Hewlett Packard (HP) is one of the largest technology companies in the US that sells its products and services worldwide. The company’s field of activity is characterized by high competition due to the growing consumer demand. Therefore, to determine strategies for obtaining a competitive advantage for Hewlett Packard, it is necessary to analyze the external and internal environment of the company.
General Environment
Sustainable Physical Environment Segments
Today, the environmental component of the company’s work is of great importance. This segment is characterized by the possible changes the company’s activities can bring to the environment and global business processes (Hitt, 2020). In general, most companies direct their resources toward environmental sustainability. For example, Hewlett-Packard has specific strategies to eliminate contamination during production (Pastrana et al., 2022). As the global climate and environmental situation worsens, the company has focused its efforts on reducing the carbon footprint of its activities. In addition, the company is working towards increasing the energy efficiency of its products by using recycled materials wherever possible.
Economic Segments
The economic segment is the economy in which the company operates. A stable economy creates opportunities for the sustainable development of organizations, so most businesses tend to work in such conditions (Hitt, 2020). For example, the inflation rate, the interest rate, and the business cycle determine the profitability of a company’s operations and profit opportunities. In addition, the established norms of competition provide an opportunity to gain a competitive advantage. Since HP sells its products and services globally, it needs to consider factors such as the type of economy in different countries, the level of government intervention in the market, the level of inflation, the unemployment rate, and the qualifications of the workforce. The development of a strategy based on these factors is the guarantor of stable performance and growth of the company.
Forces of Competition
Bargaining power of buyers
Buyers usually want the goods and services they want at the lowest possible price. Since the HP industry is highly competitive, the bargaining power of buyers is quite high. Buyers can “bargain for higher quality, greater levels of service, and lower prices” by choosing between different suppliers (Hitt, 2020, p. 58). That creates high competition among companies, each of which strives to offer the client a unique product to increase their profits.
Rivalry among competing firms
In addition, the threat from competitors is one of the biggest problems in this area. Technology is developing very rapidly, and each company strives to be the first to introduce innovative products to the client to gain an advantage. In addition, competition is reinforced by the “lack of differentiation” between the products of competing companies (Hitt, 2020, p. 60). That forces Hewlett-Packard to develop distinctive features that differentiate its products from Dell, Apple, and other competitors. However, this creates a competitive environment that promotes the active development of the company and technology.
Future Improvements
Based on the identified forces of competition, it is possible to set the main directions for future improvements. The tech industry does not provide much opportunity for companies to lower prices while maintaining product quality. Consequently, companies are forced to look for other ways to gain a competitive advantage and avoid losses. For example, due to low differentiation between companies in the field, HP may not focus on creating a unique product but on improving the quality of services or additional factors that can attract customers. A company’s environmental sustainability stance creates opportunities for competitive advantage through proper company positioning (Pastrana et al., 2022). This approach will raise buyers’ interest in the company’s products since environmental protection issues are very relevant today.
Greatest External Threat
One of the key global threats to HP is rapid technological change. To be competitive in the current market, companies are forced to develop and release new ones faster and more often. At the same time, the speed of technology development should not affect the quality of products and not significantly impact the price. In addition, the development of technology leads to a transformation in customer needs. Samsung, Apple, Lenovo, and other companies actively pursue new technologies to meet customer needs. On the other hand, Hewlett-Packard’s flagship product is laptops and software (HP Development Company, 2023). That significantly reduces the company’s target audience and threatens its profitability.
Greatest Opportunity
Nevertheless, despite the existing threats, HP has significant development opportunities. The most profitable aspect of the company’s activities is cloud technologies and the provision of servers and storage for corporate clients (HP Development Company, 2023). Demand for these technologies is growing among large and small businesses, as they significantly help automate processes and optimize work. Consequently, the company has significant potential for the development of cloud and computing technologies, which is a major opportunity for development.
Strengths and Weaknesses
One of the company’s strengths is its presence in the global market. Moreover, HP has several branches in different countries with emerging economies, which ensures the company’s stability (HP Development Company, 2023). In addition, today, the company has significantly diversified products and services for customers, which provides opportunities for development in related areas. Moreover, the company has existed for more than 80 years and, during this period, has taken a strong position in the market (HP Development Company, 2023). Therefore, another real strength is the company’s fame and reputation.
Among the weaknesses of HP is the comparative backlog of technology for personal use. The company focuses on producing personal computers and laptops, which are being replaced by smartphones and tablets. Therefore, in this area, the company does not have enough competitive advantages and is significantly inferior to competitors offering a wider choice for individual buyers. In addition, the company often invests in different directions, which are not always successful and lead to losses.
Strategy or Tactic
The product diversification strategy chosen by the company is a good opportunity to gain a competitive advantage. However, given the low competitiveness of some of the company’s products, a reallocation of budget and funding could be a profitable solution. The company is actively developing in 3D printing, microfluidics and systems technology, cybersecurity, and digital manufacturing (HP Development Company, 2023). These areas are characterized by less competition and greater potential to attract corporate clients and large partners. Therefore, one strategy could be to increase funding for this segment of HP’s activities to build up its production capacity.
Resources, Capabilities, and Core Competencies
Even though the demand for HP computers and notebooks has decreased, the company’s activity in the field of high technologies ensures the availability of sufficient material and financial resources. In addition, over its history, the company has accumulated intangible resources such as the trust of employees and customers, “scientific capabilities, the capacity for innovation, brand name,” and others (Hitt, 2020, p. 82). In addition, the company’s core competencies include the smooth interaction between divisions, understanding its technological potential, and the development of innovative technologies. Thanks to this, the company has a significant potential for development in the technology industry, subject to the correct allocation of resources and setting goals.
Sources
HP Development Company. 2023. About Us. Web.
Michael A. Hitt. 2020. Strategic Management: Concepts and Cases: Competitiveness and Globalization. 13th ed. Cengage Learning.
Felipe J. Pastrana, Paul Dargusch, & Genia Hill. 2022. How is Environmental Sustainability a Key to Innovation? Advances in Environmental and Engineering Research, 3(2), 016. Web.