On July 31, 2010, Hewlett Packard purchased Palm Inc. Palm exclusively makes handheld devices such as smartphones, and mini-computing devices. Palm is a mobile operator system that would allow Hewlett Packard to compete with operating systems such as Symbian, iPhone, and Linux (Berry, p.1). The following organizational analysis will examine the organizational outputs of the combined company after the merger.
When HP acquired Palm Inc., it allowed them to combine a leader with a global economy of scale with an award winning Web OS. This allowed HP to expand its outputs to include the many product lines offered by Palm, including the highly profitable the $100 billion Smartphone acquisition (HP, 2010). Prior to the acquisition, HP was a leader in many PC based applications. The acquisition of Palm Inc. allowed it to the increase its outputs. As far as Palm Inc. is concerned, its core business of the remains of the many different product lines that it offers in the Smartphone series. The acquisition helped HP to increase its organizational outputs, but it did not necessarily do the same for Palm Inc. However, Palm Inc. benefited from the acquisition by the gaining the resources of a global giant.
The combined organization is divided into the HP and Palm Inc. In addition, these two major sectors of the organization are further divided according to product lines. Group outputs for HP include notebooks and PCs, whose sales continue to climb. Groups within Palm Inc. include the Treo ™ Pro, Smartphone, Palm® Centro™, and Palm Treo 500 Smartphone as well as groups for the other products that they market.
Prior to the merger, Palm Inc. was in danger of going out of business. Palm has new products under development that will not be released for twelve months. Palm has a standard twelve month release cycle for new products. Each new product in the pipeline represents a new group of products and increases their group-level outputs. Palm's survival depends on the ability to continually produce new products and to introduce new groups into the corporate structure. Palm will operate as a separate business unit within HP's corporate structure.
Corporate culture plays a key role in the ability of groups, and the organization, to reach their goals. In this merger, the corporate culture of HP will overshadow that of Palm's (Kessler, p. 1). This is not a merger of equals and Palm is being absorbed by a larger corporation. The larger entity comes with its own set of corporate culture and rules. Palm will have to conform to the culture of HP and its individuals will have to learn to work within that framework.
The palm has been supportive and accommodating to developers. Currently, HP seems interested in retaining Palm's culture. However, they will be reducing some redundant jobs within the business unit. It is expected that as the merger continues to operate under the new format, that Palm's culture will eventually be absorbed into that of HP. The corporate subculture at HP is more stringent then that at Palm. Palm is known for an open culture that promotes creativity and innovation (Kessler, p. 1). Palm of allows developers outside of the company to create an apps. All development at HP is strictly internal and often under a highly secretive cloak. These differences in individual outputs are one of the key differences that resulted from the merger.
One of Palm's main goals is to be able to use the leverage provided by a giants such as HP to cut their independence of on independent carriers. Palm allows the user to have many of the functions of a PC with them at all times. HP will not sell smartphones, but will leave them to Palm, Inc. HP saw the value in the products that were being offered by Palm, but it knew that it needed to boost up Palm if it were to be able to continue business. Smartphones fill a gap in HP's product lines to include both corporate and consumer markets.
In April of 2010, Palm stated that its goal was to become a leading global mobile device company. In order to achieve this goal they focused on product differentiation through innovative design and highly integrated services. The focus of their operation was on user experiences (Palm Inc., p. 1). These goals are similar to HPs strategic objectives, only HP operated in a slightly different market sector.
The acquisition of Palm by HP allowed HP to increase its product lines and revenue streams. It did not have the same affect on Palm, Inc. For this company, its sale to HP meant its mere survival. It needed the cash flows from HP to continue to grow and expand its line of services. The symbiotic relationship formed by the two companies provided something for each of them. Palm intends to use the leverage provided by HP to increase its share of the mobile lifestyle solutions market. HP intends to benefit from the innovation and continual creative juices that Palm has to offer.
HP stands to benefit from the acquisition by the ability to compete aggressively with Apple and Google in the WebOS market (Seigler, p. 1 ). One of the key concerns about the ability to utilize these outputs is concern that Apple would sue HP over patents. The acquisition of Palm means that HP will gain over 1,500 patents that Palm currently controls (Seigler, p. 1). The acquisition of Palm allowed HP to enter the WebOS sector of the market aggressively, as it desired.
The acquisition of Palm increased the organizational outputs of the companies to achieve some of their long-term growth goals. In terms of operations, there are still many factors that need to be worked out. For instance, the HP has different strategies and requirements in terms of profitability, growth, and market share. Although it has not been stated, it is assumed that Palm will have to adopt HP's strategy on these items. Due to Palm's disadvantaged position in the acquisition, it does not have enough bargaining power to make the rules after the acquisition has been completed. This acquisition meant the survival for Palm and it will have to comply with the rules that HP sets for its division.
Both Palm and HP measure their success in terms of the revenue growth. The companies have different objectives and goals for their different products. Specific information on the planned sales targets is not available to the consumer, as this is corporate sensitive information and could affect their competitive advantage. HP has been known as an aggressive company with aggressive sales goals and strategies. Palm has also been aggressive and relies on innovation and product diversity to derive its sales success.
HP has traditionally been associated with the business segment of the computer and PC industry. The HP name has been respected in this sector of the market for many years. Palm targeted its devices towards the consumer. This merger allowed both companies to change their outputs and to capture part of the market to which they had not previously been aggressively exposed. The acquisition of Palm by HP allowed both companies to gain the benefit of a different sector and target market. Although both companies will continue to focus on their core product lines and customers, they will be able to expand their outputs and target market through their association with each other. HP's business customers will come to know about Palm's products through cross promotion and advertising. Palm's consumer market will also learn about HP's traditional business lines and how they can help the consumer as well. Through cross marketing to each of the companies' traditional markets, they will gain access to a wider market than they would if they were operating separately.
Output integration will be the key effect that the merger will have on both companies. Palm has many different divisions according to their product lines. HP also has many different divisions according to various product groups. The combination of the two companies will mean greater product group integration. HP intends to keep many of the groups intact and to operate as if Palm is their own entity. However, it will also reduce redundancy in areas that overlap in order to improve the operational efficiency of both divisions.
Individual outputs are closely tied to group and corporate outputs. The structure of HP allows it to operate as if each of the groups is its own entity. Organizational outputs are a conglomeration of group outputs. Not much information was available on individual outputs within the organization. Corporate culture plays a key role in individual and group outputs through the promotion of individual innovation. Both HP and Palm have relied on strong innovators within their organization to drive the development of new products and to increase growth. Individual outputs are the key to group growth, which in turn affects organizational growth.