HP Strategy Analysis: Porter's Five Forces & Industry Economics
This paper examines the strategic position of Hewlett-Packard (HP) within the technology sector by analyzing industry economics and competitive conditions over the past decade. Using Porter's Five Forces Model, it evaluates buyer power, supplier power, competitive rivalries, the threat of new entrants, and the threat of substitutes as they apply to HP. The paper further applies an economic attributes framework and a framework for strategic analysis — covering value chain integration, geographical diversification, and industry diversification — to assess how HP has adapted to shifts in consumer demand, the rise of cloud computing, and mobile devices. The analysis concludes that HP's strategic moves, including the Compaq merger and global manufacturing expansion, have helped it maintain market dominance despite intense competitive pressures.
- Industry Economics and Technology Sector Trends: Tech sector transformation, cloud computing, shifting consumer demand
- Porter's Five Forces Analysis of HP: Buyer power, supplier power, rivalry, entrants, substitutes
- Economic Attributes Framework: Demand cycles, manufacturing costs, HP financial strength
- Framework for Strategic Analysis: Value chain integration, geographic and industry diversification
- Conclusion: HP's Adaptive Strategy: How HP maintains dominance through diversification and strategy
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What makes this paper effective
- Applies well-established business frameworks — Porter's Five Forces, the economic attributes framework, and strategic analysis — to a real company, grounding abstract theory in concrete examples.
- Uses specific evidence, such as the Compaq acquisition, Lenovo's purchase of IBM's PC unit, and HP's financial figures, to substantiate each analytical point.
- Connects macro industry trends (cloud computing, mobile device growth) directly to company-level strategic decisions, demonstrating multi-level analytical thinking.
Key academic technique demonstrated
The paper demonstrates applied framework analysis — systematically working through each component of Porter's Five Forces and then layering in additional strategic lenses. Each framework element is defined, then immediately applied to HP with a supporting example, a structure that keeps the analysis focused and easy to follow.
Structure breakdown
The paper opens with a macro overview of technology sector trends, establishing context for HP's strategic environment. It then moves to Porter's Five Forces, addressing each force in a dedicated passage. The economic attributes framework follows, examining demand cycles, manufacturing, and financial strength. A strategic analysis section covers value chain integration, geographical diversification, and industry diversification. A concluding synthesis ties all frameworks together to explain how HP maintains its competitive position.
Industry Economics and Technology Sector Trends
Over the last ten years, the technology sector has undergone a major transformation, driven in large part by the wave of innovations that have reshaped how consumers use electronic devices. Personal electronic devices have become smaller while gaining the ability to perform numerous applications simultaneously. Products such as the iPod, iPhone, and MP3 players have transformed the way people are entertained and communicate. As a result, a shift has taken place in the kinds of products being delivered, with consumers demanding devices that are smaller and packed with more applications (Cassella).
These two elements — miniaturization and multifunctionality — have driven a shift away from the traditional PC toward more mobile devices capable of storing information online through cloud computing. Simply put, cloud computing is when information is stored remotely on mainframe computers and servers rather than on a user's local device. By storing large amounts of data on mainframes and servers, those devices can support a far wider range of applications ("Cloud Computing"). This means that demand is shifting toward smaller gadgets for end users, large mainframe computers and servers for IT providers, and more routers, switches, and other infrastructure components. Technology companies have needed to expand capacity to adjust to these changes, while consumers simultaneously want devices that are small and versatile enough to use on the go (Robinson).
To adapt to these changes, HP has focused on becoming a major manufacturer of portable devices. The company has also concentrated on addressing demand from technology companies by providing mainframe computers, servers, and related products and services. Together, these efforts represent HP augmenting its current business model to keep pace with industry evolution (Robinson).
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Wilcox, Joe. "US Consumers are Replacing PCs." Beta News, 2010. Web. 3 Mar. 2011.
Yarrow, Jerry. "Best Buy CEO." Business Insider, 2010. Web. 3 Mar. 2011.
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