Hewett Packard Management Problem
Proper management of organizations is vital for the achievement of the objectives and vision of any company. While organizations may focus on ensuring that they remain competitive and invest a lot of money in employing competent managers, Robbins and Coulter (2011) argue that managerial problems account for most cases of underperformance. Thus, understanding the problems facing the management of an organization and creating policies to solve them goes a long way into ensuring permanent solutions are achieved. This case study focuses on management issues faced by Hewlett-Packard; also known as HP. The firm is one of the biggest IT companies in the world, and its origin can be traced in a rented car garage in the late 1930s. The founders namely Bill Hewlett and Dave Packard were two classmates from Stanford University (Malone, 2007). Through decades, it has grown its software, hardware products and services portfolio. Good leadership and constant innovation have helped the company become competitive in the market. The firm clienteles include both small and medium enterprises ranging from private to public across the globe.
Management Problem
However, despite tremendous growth through the years, HP has been affected by various management strategies. These challenges came in the wake of globalization where markets are becoming saturated with similar products. There is increased level of competition due to fast evolving technology which makes companies to embrace innovation (MacArthur and Barton 2015). Research conducted shows that the major management problem facing the IT giant is the implementation of wrong strategic decisions leading to poor product and service performance (Larcker and Tayan, 2011). This report explores the cause and the depth of the problem and recommend on the probable solution based on the information.
Research questions
The research on the management problems facing Hewett Packard (HP) is based on two questions namely:
- How do strategic decisions by the management affect the company’s performance?
- What measures can be implemented to help improve the company’s performance?
Literature Review
The Effect of Management Strategic Decisions on Company Performance
HP has been rated as one of the leading companies in the world (Malone, 2007). The categories in which the IT Company bagged awards include manufacturing of personal computer, printers, and services provided to consumers (Packard, 2007). However, other firms have mounted a huge competition in terms of product efficiency, speed of service delivery, and innovative technology. The reason for such is due to management issues with the root in the decisions made in the previous decades.
According to Larcker and Tayan (2011), each major division has senior managers tasked with the role of formulating and implementing strategic decisions in the contemporary management. These top-level managers make decisions with the aim of tackling complex issues in the market such as employee relations, logistics, and consumer satisfaction following an evolving businesses environment in the local and global market (Packard, 2007). MacArthur and Barton (2015) add that decisions arrived at in these firms have had far-reaching repercussions that are reflected in years and decades to come. For instance, the company has made acquisitions without proper consultation and adequate knowledge.
In this case, HP is no exception because as Packard (2007) notes, the decision made at the beginning of the last decade continues to affect its growth and competitiveness in this decade. The firm in 2001 acquired Compaq Computer with an objective of leveraging the global PC market and containing stiff competition from emerging giant IT companies from the Asian continent. Later in 2010, it acquired another company hit by a financial crisis, Palm (MacArthur and Barton 2015). The motivation behind these acquisitions was to leverage the companies’ innovation while ignoring other factors such as matured and saturated the market in the globe. On the other hand, it ignored the plethora of issues faced by the organizations in the time of acquisition. In addition, the rate at which the managers were being changed was at an alarming rate because four chief executives have been at the helm of the company in a span of seven years (Larcker and Tayan 2011).
These decisions have had an impact on the product and service line. For example, the company tablet was a blunder because it recorded uncertainty between the central business segments (Larcker and Tayan, 2011). In addition, its personal computers were plagued by internal feuds, unrest, and swindles. These aspects made the product miss business opportunities leading to declining revenues and market share. A blend of extravagant acquisitions and poor product performance led to declining revenue forcing the company to have a massive downsizing initiative because the company focused on cost reduction rather than innovation (Larker and Tayan, 2011).
Measures to Improve Company Performance
For HP to improve its performance, it should look into the four issues such as employees’ relation, finance, processes, and market trends. These areas are the foundations of a business and essential for the success of the company. All the segments of the organization must function collectively to meet the common objective of making a profit and diversifying the product among others. Further, the firm’s operations are imperative because they determine the quality of the products and timely delivery (Martin and Fellenz, 2010). Many companies fail because of communication breakdown between various sections and poor cooperation. Lastly, strategic planning is essential because it allows assessment of fundamental shifts, competitors monitoring, flexibility, and continuous adaptation to the business environment (Martin and Fellenz, 2010).
Methodology of Analysis
The case study of Hewlett Packard collects data using both primary and secondary sources of data collection. This is to facilitate understanding of how management decisions affect company performance and measures to be implemented. Primary data was acquired from company employees and professionals. Secondary data was collected from published books, journal, articles, and online articles. Only authentic staff and practitioners will qualify to provide information, and authoritative sources will be reviewed to enhance the quality of research. In addition, the information analyzed to help make a precise analysis and recommendation on what to do to improve performance.
Findings of the study
Data was analysed from both primary and secondary sources to find issues facing the firm in relation to the paper objectives. According to Parkard (2007), the company embarked on a strategic mission to develop its product, diversify its market that increased the risks, and thus poor performance. Employees in the company hold that HP management’s expansion strategy was poorly implemented leaving the company in utter dismay. The two acquisitions resulted in massive losses for a short period and market losses (Larcker and Tayan 2011).
On the other hand, there were issues of managing the firm dynamic consumer in a diverse cultural environment. For example, different people in various regions of the world have different product tastes and preferences. The management decision failed to excel in global arena due to lack of market consideration in the age where consumers prefer standardized goods and services (Larcker and Tayan 2011). According to Delivers (2010), consumers are not only looking for the quality of the product but even the pace of delivery and customization. The inability to make decisions on these issues affected all product lines such as tablets, personal computers, printers and others.
Another management problem that affected the company performance includes the inability to deal with cultural diversities of the market and business ethics. The administration failed to completely understand the nature of employee’s diversities prevalent within the firm (Lewis, 2007). The company has a range of employees from all over the world and, therefore, differing cultures exist. Thus, management decisions on how to manage their culture have not been active thereby dragging company’s performance.
The study also revealed the issue of managing the employee’s innovation in relation to entrepreneurship. Being an IT industry at the top of competition ladder exposes HP to business environment dynamics (Larcker and Tayan 2011). Technology and innovation ultimately control the organization’ momentum and, therefore, needs to focus on them. To deal with the market forces the firm needs an understanding of how to handle the issues for business success (Lewis, 2007). However, in various instances, the management has enacted organization policies to minimize the cost while forgetting the issue of innovation.
The result of these decisions significantly reduced the investment directed to research and development. This is complicated by frequent changes of top-level management entitled to make the strategic decision, causing a breakdown of strategic implementation (MacArthur and Barton 2015). Such do not only affect company workers but also other that do business with HP. Some decided to cancel contracts and shed shares held in the firm, and this affects the business financial performance and productivity in many areas.
Alternatives and Recommendations to Improve Company Performance
The paper identifies an alternative to deal with the concerns highlighted. These actions include company realignment and mass customization of its products. Ensuring the organization has an appropriate structure will enhance decision execution and increase its efficiency and effectiveness (Lewis, 2007). This will result to faster and streamlined organizational performance capable of coping with rapidly shifting business environment and trends. The problem of mass customization, fast delivery, and the right cost is an issue for the company as discussed in the paper.
The organizational realignment will help the company to recover the lost grounds and further improve its performance and profitability. The effect will be felt in all company portfolios and also rationalize the global market strategy. Other aspects to be targeted include supply chain, branding, and global customer support. Improving these areas of the firm will lead to excellent customer experience and innovation of products such as printing and personal computing (MacArthur and Barton 2015).
On the other hand, organization realignment helps in providing the opportunities to reduce the cost of operation and that of products. In such an environment, the company will accelerate and increase its capability and return to profitability. The revenues can be reinvested in the business to enhance its infrastructure and grow its market dominance (Robbins and Coulter, 2012). Further, bringing the new structure can help solve the issues of quick decision making; thus, increasing employees and firm’s productivity. It is also essential for improving the efficiency and providing simplified client experience across the world. Therefore, realignment strategy will create a powerful force for company growth.
Duysters and Lokshin (2015) argue that many companies especially in the IT industry face myriad of predicaments when dealing with mass customization, delivery, and manageable friendly price. This comes in the wake of shifting consumer preferences and tastes where many customers desire customized orders to be delivered at fast pace. The company may customize the products but fail to send them swiftly and at a friendly price to the clients. However, it is possible for Hewlett-Packard to confront the issue in its entire product portfolios such as printers, tablets, and personal computers. This combination has been proven to be possible in other sectors.
The key to the strategy is adopting a piecemeal method where HP should rethink and integrate product designs. The same should be applied to the technique of delivering these products in the supply network (Kersten, 2008). By adopting such strategy, it will be possible for HP to operate at maximum efficiency thus making it quickly to satisfy customer preference, taste, and desired price.
Another approach includes Modular Product Design that will create supply chain flexibility due to product customization (Kersten, 2008). The management should utilize the model because it can maximize the speed of manufacturing the product. Additionally, Kersten (2008) notes that this model can also be of great importance because it will be fast to produce parts that are common to all products and those specific to some consumer products as requested by the client.
Recommendations
The above alternatives for improving company performance require coordination of the management team from all the company sections. This is because it is not easy to make decisions that involve the marketing, distribution, manufacturing, research and development, and finance departments. The five areas must coordinate to form a team that will solve the issue of mass-customization and realignment. The marketing team will help determine how mass customization can suit customers’ requirements.
Research and development department need to redesign the computers, tablet, and printers among others to be most efficient in the supply network. On the other hand, manufacturing and distribution require to be situated in strategic locations to ease delivery. Finance department facilitates the plan to other section alternatives because mass customization, and organization realignment requires resources.
When evaluating the outcomes to determine the efficiency of realignment and mass customization, each department should be treated separately to understand the inherent challenges. For instance, the marketing section should be assessed based on the revenue growth, research, and development based on the cost of components and product’s functionality. Manufacturing and distribution should be assessed based on the price of delivering to the products and assembling the products.
Therefore, the focus should be on the objective of each segment in bringing organization performance. The joint group of managers should make the product attract consumers, multiple possible functionalities, reduced price, and product stability regarding volume. Coordination and negotiation when making a critical decision and strategy should be cultivated to make the company more efficient and ahead of competition.
Bibliography
Delivers, F.P., 2010. Insights from Remarkable Businesspeople (Collection). Pearson Education.
Duysters, G. and Lokshin, B., 2015. Determinants of alliance portfolio complexity and its effect on innovative performance of companies. Journal of Product Innovation Management, 28(4), pp.570-585.
Kersten, W. 2008. Global Logistics Management: Sustainability, Quality, Risks. Berlin: Schmidt.
Larcker, D.F. and Tayan, B., 2011. Leadership Challenges at Hewlett-Packard: Through the Looking Glass. Rock Center for Corporate Governance at Stanford University Closer Look Series: Topics, Issues and Controversies in Corporate Governance No. CGRP-21. Available at https://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/cgri-closer-look-21-hp-leadership-challenges.pdf [Accessed 17 August 2016]
Lewis, P. S. 2007. Management: Challenges for tomorrow’s leaders. Mason, OH: Thomson/South-Western.
MacArthur, J.B. and Barton, T.L., 2015. A teaching case on strategic and tactical decision-making at Hewlett-Packard Co. Journal of Business Cases and Applications, 14, p.1.
Malone, M. S. 2007. Bill and Dave: How Hewlett and Packard built the world’s greatest company. New York, N.Y: Portfolio.
Martin, J., and Fellenz, M. R. 2010. Organizational behaviour and management. Andover: Cengage Learning.
Packard, D. 2007. The HP way: How Bill Hewlett and I built our company. New York, NY: HarperCollins.
Robbins, S. P., and Coulter, M. K. 2012. Management. Harlow. Pearson
