Strategic Management HP Inc. Recommendations if HP

Strategic Management

HP Inc. Recommendations

If HP Inc. does indeed manage to acquire Electronic Data Systems the manager and his team must first focus on integrating the acquired company in the company's strategy and activity. In fact, the acquisition was intended from the beginning as an opportunity to strengthen HP's services activity (HP, 2009).

Furthermore, the success of this acquisition would help HP significantly increase its revenues, and becoming the second IT services company in terms of revenues. This opportunity should be exploited by the managers mainly by using the extra revenues for financial relocation in HP's business sectors where the company still needs plenty of improvement.

In other words, HP should develop and expand its activity in areas like IT outsourcing, application outsourcing, and business process outsourcing. This will further have a great impact on reducing production cost and therefore the price for the company's products and services. This would also help the company to expand or strengthen its position on certain key vertical industries.

Given the fact that the EDS acquisition would strengthen HP's financial situation, it is recommended that the company would invest in further research and development. Also, the company's customer base will increase, which means the management team should take into consideration the new segments of customers brought by EDS when establishing its product strategy.

If the acquisition does not succeed, it is obvious that HP will not benefit from the same financial situation. Given the current economic and financial crisis that affects most business sectors across the world, including the IT industry, and therefore HP, it is expected that the company will be forced to face some turbulent times in the future.

In order to counteract the negative effects of the crisis and of the failed acquisition, it is recommended that the company reduces its production costs as much as possibly without reducing product quality. Production outsourcing may be the answer to this equation.

Another recommendation for HP's management team consists in focusing on specific needs and expectations that customers present. The financial crisis that is affecting each individual generates new necessities for each of the company's customers, and therefore, new products to satisfy these needs. Therefore, even if the acquisition fails and even with the effects of the financial crisis, HP could find opportunities that can be exploited.

HP's negative financial situation under Fiorina's tenure that was translated in revenue reduction and market share loss, is connected with the Compaq merger. The reason and the strategy behind this merger were wrong from the beginning. During the merger, both HP and Compaq were going through negative periods.

Since sometimes a company's weakness can transform into another company's opportunity, Fiorina believed that the merger of the two companies would strengthen them and create a more competitive company. But the reality was entirely different. The merger was intended to help HP earn certain operating margins, but these expectations were not met. This is when HP started losing more and more ground in the favor of its competitors (Strukhoff, 2005).