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Hewlett-Packard Case Study Analysis
MGT/521 Version 15
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University of Phoenix Material
Hewlett-Packard Case Study Analysis
Hewlett-Packard Is Counting on Organization Change to Boost Revenue Growth
Meg Whitman became CEO of Hewlett-Packard Co. (HP) in 2011. Since the time HP’s revenue
peaked in 2011 at $127 billion, it has dropped every subsequent year. On the positive side, the
company had two consecutive quarters of growth in 2014. HP also is trying to right-size and reduce
costs by planning to lay off 16,000 employees. HP earlier decided to lay off 34,000 people,
resulting in a total reduction of 50,000 employees.100
Whitman described the job cuts “as an opportunity to streamline the company further and make
it more nim- ble. An expected $1 billion in cost savings in fiscal 2016 would allow HP to invest
in new technologies and skills to revive growth.” Others, like UBS analyst Steven Milunovich,
believe that these job cuts will erode employee morale and may lead to increased turnover.101
“But fixing the world’s biggest tech company—with $120 billion in annual revenues and
330,000 employees— is a herculean task. Bloated by more than 70 acquisitions in the past 15
years, HP isn’t just sprawling and stalled out; it may actually be running in reverse.”102
Whitman decided to change the organizational structure to fuel growth. She created two clusters
of businesses. One focuses on corporate technology customers. This group, which sells servers,
storage, and networking, delivered 43% of the company’s overall operating profits according to
Forbes. Unfortunately, the software and services that accompany all this hardware have not been
as successful. HP tried to build the software side of the business via acquisitions, which according
to Forbes have not been very successful. The magazine noted that “when it comes to software
acquisitions, Autonomy [HP’s enterprise software company] was merely the most high-profit
misstep. All told, over the past decade HP squandered nearly $19 billion to buy myriad outfits that
contribute only 7% to overall profit. The services unit, which staffs other companies’ tech projects,
is barely at breakeven.”103 HP is currently “looking for small to midsize acquisition candidates in
cloud computing, security, and analytics software.”104
The second structural cluster sells printers, PCs, laptops, and mobile devices to people
worldwide. This segment of the business contributed 29% of operating profits in 2013. The
problem here is that the lucrative printer business is shrinking. Technology is simply moving more
toward ink-free photo and document sharing, which benefits companies like Google, Face book,
and Dropbox.
Strategically, HP also is trying to get back into the fast-growing tablet market. The company
attempted to gain entry in this market in 2011 with the TouchPad model, but it was a failure. Since
February 2013, the company has introduced new models, and they are being well received in the
market. In a similar vein, HP has created an overall vice president for design. This was done to
create a strategic focus on product development.
Copyright © 2018 by McGraw-Hill. All rights reserved.
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H-P didn’t stop at just a reorganization or a new tablet strategy, according to Forbes. A survey
of the company’s 20,000 salespeople revealed that employees rated the internal sales tools a mere
“7” on a scale of 1 to 100. For example, it took HP as much as three weeks to prepare a sales quote,
when competitors could do it in a matter of days. The company decided to upgrade its sales process
by using new tools from Salesforce.com.
Whitman also took to the road to reassure custom- ers that HP was doing the “right things.” In
the last year, she conducted “305 one-on-one meetings with customers or sales-channel partners,
aides say, as well as another 42 roundtable chats with small groups” around the world.
It did not take Whitman long to realize that the organizational culture also needed to be changed
to foster consistency between the company’s strategies and culture. According to Forbes, she
eliminated the barbed wire fence and locked gates that separated parking lots for the executives
and the general employee population. “We should enter the building the same way everyone else
does,” she said. She also decided to work from a cubicle, like most employees, instead of from a
larger, more private location. She keeps a picture of her mother in her office. She also role models
when she travels by staying at more modestly priced hotels.
While HP is positive about the changes taking place, some analysts are more skeptical. Bill
Shope, an analyst from Goldman Sachs, concluded that “serial restructuring cannot solve HP’s
secular challenges, particularly following years of underinvestment.” He forecasts that HP’s
revenue might fall to $107 billion in fiscal 2015.
Source: Hewlett-Packard is Counting on Organizational Change to Bookst Revenue Growth. In Kinicki,
A., Williams, B.K. (Eds.), Management: A Practical Introduction (pp. 333). New York, NY: McGraw-Hill.
Copyright © 2018 by McGraw-Hill. All rights reserved.
Hewlett-Packard Case Study Analysis
MGT/521 Version 15
Case Analysis Questions
Answer the following in up to 175- words each:
1. Describe supertrends that are driving HP to change.
2. Assess which forces for change are causing HP to undertake major organizational change.
Copyright © 2018 by McGraw-Hill. All rights reserved.
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Hewlett-Packard Case Study Analysis
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3. Recommend how Meg Whitman could use Lewin’s and Kotter’s models of change to increase the
probability of achieveing positive organizational change.
4. Determine how HP is following the four steps for fostering innovation.
Copyright © 2018 by McGraw-Hill. All rights reserved.
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Hewlett-Packard Case Study Analysis
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5. What has happened with HP since this case was written? Determine whether the implementation
of these changes has been successful. Explain what could have been done differently.
Copyright © 2018 by McGraw-Hill. All rights reserved.
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