The External and Internal Environment of HP

1. Introduction

Hewlett Packard (HP) is an American multinational information technology company headquartered in Palo Alto, California. It develops and provides a wide range of hardware components as well as software and related services to consumers, small- and medium-sized businesses (SMBs) and large enterprises, including customers in the government, health and education sectors.
HP has been going through some difficult times in recent years. In 2015, the company announced that it would split into two separate companies: HP Inc. would focus on personal computing and printers, while Hewlett Packard Enterprise would focus on enterprise technology, software and services. This was seen as a way to try to improve the company’s competitiveness. In 2017, HP appointed a new chief executive officer, Dion Weisler, who has said that he wants to transform the company into a “modern” company.
In this essay, I will firstly do an external analysis of HP using the PESTEL framework and Five Forces analysis. Secondly, I will do an internal analysis using the VRIO framework and core competencies. Lastly, I will do a SWOT analysis and give my conclusion.

2. External analysis

In this section, I will do an external analysis of HP using the PESTEL framework and Five Forces analysis.

2. 1 PESTEL framework

The PESTEL framework is a tool used to analyse the macro-environment in which a company operates. The acronym PESTEL stands for Political, Economic, Social, Technological, Environmental and Legal factors.
Political factors:
– The Trump administration’s policies on immigration and trade could have an impact on HP’s business. For example, if the Trump administration’s policies lead to a reduction in the number of immigrants coming to the US to work in the tech industry, this could lead to a shortage of workers for HP.
– HP is also affected by government regulation concerning data protection and privacy (e.g., GDPR in Europe).
Economic factors:
– The global economy is slowing down and this could have an impact on HP’s business as businesses may cut back on their spending on information technology products and services.
– The US-China trade war is also having an impact on HP as it is making it more expensive for HP to manufacture its products in China (which is where most of its manufacturing takes place).
Social factors:
– Social media platforms such as Facebook, Twitter and Instagram are important channels for marketing HP’s products and services to consumers (both private consumers and corporate customers).
– The way people work is changing as more people are working remotely or flexibly. This means that there is a potential market for HP’s products and services designed for remote working or flexible working.
Technological factors:
– Technology is changing rapidly and this presents both opportunities and threats for HP. For example, the rise of artificial intelligence (AI) could lead to HP developing new products and services using AI technology. However, AI could also lead to job losses at HP as AI technology can automate tasks that are currently done by human workers (such as customer service tasks).
Environmental factors:
– As climate change becomes more of a concern for people, HP’s products and services that are designed to help reduce a company’s carbon footprint (such as its “ Carbon Neutral Printing” service) could become more popular.
– HP is also working on making its products more energy-efficient and recycled materials are used in some of its products.
Legal factors:
– HP is subject to laws and regulations concerning data protection and privacy (e.g., GDPR in Europe).
– HP is also subject to laws and regulations concerning the environment (e.g., emissions trading schemes).

2. 2 Five forces analysis

The Five Forces framework is a tool used to analyse the competitive environment in which a company operates. The five forces are:
– Threat of new entrants
– Bargaining power of buyers
– Bargaining power of suppliers
– Threat of substitute products
– Rivalry among existing competitors
In the following paragraphs, I will briefly discuss each of these five forces in relation to HP.
Threat of new entrants:
The threat of new entrants is low as the barriers to entry in the IT industry are high. For example, new entrants would need to have access to significant capital to be able to develop the necessary technology and they would also need to establish relationships with key suppliers. In addition, HP has a strong brand name which gives it a competitive advantage over new entrants.
Bargaining power of buyers:
The bargaining power of buyers is high as there are many alternative suppliers of IT products and services (e.g., Dell, IBM, Microsoft). This gives buyers the power to choose from a wide range of suppliers and to negotiate on price. In addition, buyers are becoming more aware of the importance of data protection and privacy and they are increasingly choosing suppliers that offer products and services that meet their data protection and privacy needs.
Bargaining power of suppliers:
The bargaining power of suppliers is high as there are few alternative buyers for their products and services. For example, there are only a few companies that manufacture computer chips and this gives them the power to negotiate on price. In addition, suppliers are often reluctant to switch to another buyer as it can be costly and time-consuming to establish new relationships.
Threat of substitute products:
The threat of substitute products is high as there are many alternative products available that can perform the same or similar functions as HP’s products (e.g., Apple’s MacBooks). This gives consumers the power to choose from a wide range of substitutes and to switch to another product if they are not satisfied with HP’s products. In addition, the price of substitutes is often lower than the price of HP’s products, which makes them even more appealing to consumers.
Rivalry among existing competitors:
The rivalry among existing competitors is high as there are many companies competing in the same market space as HP (e.g., Dell, IBM, Microsoft). This means that companies are constantly trying to outdo each other in terms of product innovation, marketing and price. In addition, companies are always looking for ways to expand their market share by poaching each other’s customers.

3. Internal analysis

In this section, I will do an internal analysis of HP using the VRIO framework and core competencies.

3. 1 VRIO framework

The VRIO framework is a tool used to analyse a company’s resources and capabilities. The acronym VRIO stands for Value, Rareness, Imitability and Organization.
Value:
HP’s resources and capabilities can be divided into three categories: physical, human and organizational.
– Physical resources: HP’s physical resources include its manufacturing plants, research and development centres and sales offices. These resources give HP the ability to produce its products and to market and sell them to customers.
– Human resources: HP’s human resources include its workforce of over 300,000 employees. These employees have the skills and knowledge necessary to develop, manufacture and sell HP’s products and services.
– Organizational resources: HP’s organizational resources include its brand name, reputation and customer base. These resources give HP the ability to attract new customers and to retain existing customers.
Rareness:
Some of HP’s resources and capabilities are rare while others are not. For example, HP’s brand name is rare as there are only a few companies that have a brand name that is as well-known and respected as HP’s. In contrast, manufacturing plants are not rare as there are many companies that have manufacturing plants.
Imitability:
Some of HP’s resources and capabilities are difficult to imitate while others are not. For example, it would be difficult for a new entrant to establish a brand name that is as well-known and respected as HP’s. In contrast, it would not be difficult for a new entrant to build a manufacturing plant.
Organization:
HP has the organizational structure and processes in place to make the best use of its resources and capabilities. For example, HP has a research and development department that is responsible for developing new products and a marketing department that is responsible for promoting its products to consumers.
From the above discussion, it can be seen that HP has some valuable, rare and difficult to imitate resources and capabilities. These resources and capabilities give HP a competitive advantage over its rivals.

3. 2 Core competencies

A core competency is a skill or capability that is essential to the success of a company. HP has three core competencies: engineering, manufacturing and marketing. These core competencies give HP the ability to develop innovative products, to manufacture those products at a high quality and to market those products effectively to consumers.

4. SWOT analysis
In this section, I will do a SWOT analysis of HP.

Strengths:

– HP has a strong brand name which gives it a competitive advantage over its rivals.
– HP has a wide range of products which gives it the ability to cater to the needs of a variety of customers.
– HP has a strong workforce which gives it the ability to develop, manufacture and sell its products and services.
– HP has a well-established supply chain which gives it the ability to get its products to market quickly and efficiently.
Weaknesses:
– HP is heavily reliant on the US market and this makes it vulnerable to economic downturns in the US.
– HP’s product range is not as up-to-date as its rivals’ and this could lead to customers choosing other brands over HP.
– HP’s workforce is not as skilled as its rivals’ in some areas and this could lead to HP losing out on some contracts to other companies.
Opportunities:
– The global economy is slowing down and this could lead to businesses cutting back on their spending on information technology products and services. This presents an opportunity for HP to increase its market share.
– The Trump administration’s policies on immigration and trade could lead to a shortage of workers for HP. This presents an opportunity for HP to recruit skilled workers from other countries.
– The way people work is changing as more people are working remotely or flexibly. This presents an opportunity for HP to develop products and services designed for remote working or flexible working.
Threats:
– The Trump administration’s policies on immigration and trade could have an impact on HP’s business. For example, if the Trump administration’s policies lead to a reduction in the number of immigrants coming to the US to work in the tech industry, this could lead to a shortage of workers for HP.
– HP is also affected by government regulation concerning data protection and privacy (e.g., GDPR in Europe).
– The global economy is slowing down and this could have an impact on HP’s business as businesses may cut back on their spending on information technology products and services.
– The US-China trade war is also having an impact on HP as it is making it more expensive for HP to manufacture its products in China (which is where most of its manufacturing takes place).
– Social media platforms such as Facebook, Twitter and Instagram are important channels for marketing HP’s products and services to consumers (both private consumers and corporate customers).
– The way people work is changing as more people are working remotely or flexibly. This means that there is a potential market for HP’s products and services designed for remote working or flexible working.
– Technology is changing rapidly and this presents both opportunities and threats for HP. For example, the rise of artificial intelligence (AI) could lead to HP developing new products and services using AI technology. However, AI could also lead to job losses at HP as AI technology can automate tasks that are currently done by human workers (such as customer service tasks).

FAQ

HP is a leading technology company that offers a range of products, services, and solutions in areas including personal computing, printing, enterprise servers, storage, and cloud computing.

HP has significant opportunities in the global market for personal computers, printers, and enterprise servers and storage. The company is also well positioned to capitalize on the growing demand for cloud computing services.

HP has posted strong financial results in recent years, with revenue and earnings growth across all major business segments.

HP's competitive landscape includes a number of large technology companies such as Dell, IBM, Microsoft, Oracle, and SAP.

The challenges facing HP include intensifying competition from rivals, declining demand for certain products and services (such as personal computers), and the need to invest heavily in new growth areas such as cloud computing.

HP sees itself as a leading provider of technology solutions that help customers increase productivity, drive innovation, and improve their overall competitiveness. In 5-10 years time, the company plans to continue to grow its businesses in existing markets while also expanding into new geographies and adjacent markets