HP's competitive advantage in the technology market

Hewlett-Packard SWOT Analysis

Hewlett-Packard has gone through one of the most significant and successful corporate turn-arounds of any technology-related company in the last ten years. The intention of this paper is to complete a strengths, weaknesses, opportunities and threats analysis (SWOT) specifically targeting the period of time since Mark Hurd has taken over as CEO of the company.

Mark Hurd, CEO of HP who replaced Carleton or Carly Fiorina, has revitalized accountability, incentives for exceptional performance, while re-architecting the management structure to get rid of the highly matrixed organization structure that Ms. Fiorina had put into place and allowed to flourish during her years running the company. Gone also are layers of management both in Sales which made it nearly impossible for just one sales representative to sell an enterprise customer hardware, software, and services.

Ann Livermore, who runs the corporate computing business, has stressed the need for having a single point of accountability throughout the organization, ensuring that products and services offered by her division can be made available to enterprise customers who want to purchase them (Business Week 2006). This sounds like common sense yet for an enterprise customer to purchase hardware, software or services from the company they would need to talk to multiple sales representatives. Mark Hurds' re-organization of HP has specifically been aimed at overcoming the selling and service challenges that the corporate computing division found in trying to sell into larger, enterprise accounts. Mr. Hurd specifically created an operating framework for managing and guiding the strategy decisions of the company as well. As part of this framework he is also including a disciplined and highly metric-driven approach to evaluating progress towards targeted growth, operational efficiency and return on invested capital-driven strategies. During his first years as CEO, Hurd has made significant progress on each of these objectives, and together they form the foundation of how HP is capitalizing on its strengths and opportunities, how it is working to strengthen its weaknesses and also address its threats.

Hewlett-Packard SWOT Analysis

Strengths

Exceptionally strong balance sheet - for the many organizational challenges the company has had in aligning its sales force to the needs of the market, HP has been very successful in increasing its liquid assets to a level of $16.4B, leading the high tech sector it competes in. IBM is second at $8.2B in the same financial reporting period of 2006. In addition, HP has been very successful in reducing their long-term debt in recent years, from a high of $6B in 2002 to 2.4B in 2006, HP continues to aggressively manage its balance sheet so they can be prepared for global growth well into the future. Their liquidity and lack of relative debt are major competitive strengths.

Excellent market position in imaging and printing - Having invented and holding many of the patents in both small format and large format printing technologies, HP is considered both the market and financial leader in both imaging and printing. The breadth of the imaging and printing product lines through the consumer and commercial or business sectors is considered one of the most recognized and respected in the world.

Highly respected brand with high brand equity - While the quantification of brand equity is an inexact science, many estimates but the value of the HP brand at nearly $21B in 2006, up from $18.6B in 2005. This is considered remarkable given the fact that the company spent $1.1B on advertising on 2006, the same amount in 2005 according to the company's 10K form filed with the Securities and Exchange Commission (SEC 2007).

Weaknesses

Conflicting internal controls - the pretexting scandal where HP authorized private security agencies to impersonate senior members of the management team to find out where information leaks were originating from the board has resulted in a Securities and Exchange Commission investigation. There have also been other instances where the company has backdated options and also appeared to be monitoring its detractors or critics and taking action to silence them through campaigns to discredit them. The lack of oversight and internal controls is a major weakness.