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HP SWOT Analysis 2016

SWOT Analysis of HP (2016)

 

This is a SWOT analysis of Hewlett Packard (NYSE:HPQ).

Introduction:

Full name – Hewlett Packard

Year Founded: 1939

Name of CEO – Deon J Weisler

Industry Sector – Technology

Industry – Computers, Office Equipment

Headquarters – Palo Alto

Number of Employees: 287,000

Competitors: Dell, Lenovo, Acer, Compaq, IBM, Canon, EPSON

HP SWOT Analysis
                                                                                          HP SWOT Analysis

Hewlett Packard is a provider of products, technologies, software, and services to consumers including individuals, small and large businesses, large enterprises and the government. Year 2015 meant the end of the old and the beginning of a new era for HP.  During most of 2015, the company remained busy with what was one of the biggest separations in corporate history. HP is definitely a large company. However, the problem occurred with the rise of cloud computing.  As the PC and printer market grew weaker, it took a toll on HP’s sales. The sales kept falling each quarter. CEO Meg Whitman decided to give the company a leaner structure and divide into two.

 

The decision was mainly based on the idea that separate divisions would focus better on their specific areas and react faster to the changing market situation. Now HP is split into two – HP and HPE. HPE led by Meg Whitman sells data center hardware and business software.  HP, on the other hand led by Dion Weisler sells PCs and printers. Unfortunately the sales decline that started in 2015, has continued into 2016.  Whitman, however believes the two units are going to function more efficiently. The decline in the laptop & PC market has forced HP to change its structure. HP has also tried to survive the challenge through product innovations and  by focusing on the Asian markets.

 

Revenues ($M) $ millions % change
 $103,355  

-7.3%

Profits ($M) $4,554 -9.2%
Assets ($M) $106,882
Total Stockholder Equity ($M) $27,768
Market Value — as of March 31, 2016 ($M) $21,272

Source: Fortune 500

                    Strengths:

    • International Presence (Brand Awareness)
    • Financially strong
    • Wide range of products and services
    • New range of premium products

     

 

HP’s international presence is an important strength. Especially, it is the Asian markets that the company has looked forward to in the face of weakening PC sales. The company expects its PC and printer sales in China to grow again this year. Last year, economic slowdown in China had shrunk the buying power of corporate customers there. However, sales in Chinese market are expected to be back on track soon. The company is financially strong. It is ranked at the 20th position in the Fortune 500 list for 2015. This is one point lower than its previous years’ rank. The brand has a wide range of products and services in its portfolio.

 

From laptops and printers to software and business solutions, it offers a wide range of products and services. It caters to the needs of a wide range of customers including individuals as well as large and small businesses plus the government. HP is also present in the tablets and smart phone market. These were the most important strengths of HP. Its brand image has grown strong in the market based on good quality and reliable products that  it sells. It is also why it enjoys high customer loyalty. HP has also increased its number of products in the premium segment. Its SPECTRE and ENVY notebooks have generated both publicity and profits.

 

Weaknesses:

 

    • Poor acquisition decisions
    • Heavy dependence on PC and printer sales
    • Poor presence in smartphones and tablets
    • Struggling IT services business of HPE

 

2000 onward, HP has made a large number of acquisitions. Not all of them have proved profitable. While its previous acquisitions of Compaq and Palm had not worked well, Autonomy’s acquisition proved to be an even bigger failure. Apart from it, HP has depended heavily on PC and printer sales for revenue. So, the decline in their sales is bound to hit HP hard.  The mobile technology market is growing fast. However, HP’s presence in this area is weaker compared to several competitors like Samsung and Lenovo. HP Enterprise’s  (HPE’s) IT service business  has remained in a poor condition and has struggled to make its presence felt. Recently, it merged with Computer Sciences Corp. in an effort to revive the IT services section of HPE.  Also, HP had to lay off a large number of workers because of the falling sales and revenue.

   Opportunities:

    •  Cloud business
    • Expand its range of smartphones and tablets
    • Diversification

 

The cloud computing market is growing rapidly. While it has proved a major threat for HP’s main business (PC and laptops), it can also be an opportunity. HP is financially strong and could benefit from these trends. The range of tablets and smartphones offered by  HP is small. It recently introduced its Elite X3 which comes equipped with various business and productivity features. HP could further expand its product portfolio to include more tablets and smartphones and benefit from the growing use of mobile technology. Apart from it, the company can gain by diversifying into newer areas. Moreover, diversification can help the brand reduce its dependency on PC and printer sales.

   Threats:

    • Declining PC and laptop sales
    • Intensifying competition

 

The biggest threat for HP comes from the declining PC and printer sales. While the cloud industry showed a fast rise, the demand for laptops and printers slowed. This was a major blow for the technology giant. Its sales and profits each quarters  fell sharply. Moreover, the competition against HP from Samsung, Lenovo, Apple and other rivals also grew intense. HP was forced to depend on its sales outside US to beat the threat. While the Asian markets still hold potential for HP, falling sales in other parts can become a major trouble.

  Recommendations:

HP’s position in 2015 was weakened due to the falling PC and printer sales. These are its traditional strongholds. HP should look into  new areas and particularly focus on the Cloud business to earn higher profits in the coming years. The growth of mobile technology can also be an opportunity. HP could focus on this area to gain from increasing tablet and smartphone sales globally. It can use its brand image in this area to drive up sales. Instead of depending upon its existing strengths, HP could diversify into new areas to grow its business and revenue.

 

[SWOT’ is an acronym for Strengths, weaknesses, opportunities and threats. It is a powerful strategic management tool that can help to know one’s important strengths and weaknesses and to exploit the opportunities. It can also help counter the threats. Strengths and weaknesses are internal factors and opportunities and threats external. So basically, SWOT is a tool designed to help you reduce your weaknesses and counter the threats. This can improve the business’ chances of success.  Companies conduct a SWOT before they embark on a new strategy or before they make an important business move like investing in a new project.]

SWOTs of other top brands: COSTCO,  Apple, Nike, Walmart, Microsoft, Coca Cola, Toyota, BMW, PepsiGoogle, Dabur, McDonalds.

Written by Abhijeet Pratap

Abhijeet has been blogging on educational topics and business research since 2016. He graduated with a Hons. in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers.

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