...merger between Hewlett Packard and Compaq Local Team 2 Mark Hollenstein Andre Nadjarian Glasson Fonseca Patricio Ducó Jan 8th , 2014 1. What would a SWOT analysis of HP and Compaq reveal? The main takeaway from this analysis is that the macro environment was tough, especially after the 9/11 attack and the technology industry was getting increasingly competitive and ever-changing. Therefore, even though both companies had their strengths, management was aware that the same business model would not last much longer. They were both clinging from very weak businesses: HP from the imaging and printing solutions that was already threatened by other brands and was evolving into digital solutions. Compaq was relying on a PC distribution model that was already showing signs of decay, especially shown by the negative operating margins they had even though they were the leaders in the market. Clearly they both needed a profound change and understood that combining with a company with opposite strengths could be a viable solution to ensure continued growth and the needed skills to adapt their model for the future, where enterprise 2 FGV15-303: Mergers and Acquisitions Case 1: The merger between Hewlett Packard and Compaq services was developing fast (as shown by IBM resurgence) and the PC industry demanded a low-cost distribution model. 2. What are the critical resources at HP? And at Compaq? Does Compaq complement HP? For HP the critical resources were the...
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...management project: The HP merger with Compaq Table of content: • HP- presentation • Subject of change- Hp’s merger with Compaq • Promoters of the change and their motivation • Resisting forces • Critical mass • Trigger. Reducing resisting forces. Results • Change process-dynamics of the forces that promote change and the inertial forces • Analysis of the result. Residual stress • Conclusions HP In 1938, two Stanford graduates in electrical engineering, William Hewlett and David Packard, started their own business in a garage behind Packard’s Palo Alto home. One year later, Hewlett and Packard formalized their business into a partnership called Hewlett-Packard. HP was incorporated in 1947 and began offering stock for public trading 10 years later. Annual net revenue for the company grew from $5.5 million in 1951 to $3 billion in 1980. By 1997, annual net revenue exceeded $42 billion and HP had become the world’s second largest computer supplier. HP posted net revenue in 2009 was $115 billion, with approximately $40 billion coming from services. In 2006, the intense competition between HP and IBM tipped in HP's favor, with HP posting revenue of US$91.7 billion, compared to US$91.4 billion for IBM; the gap between the companies widened to $21 billion in 2009. In 2007, HP's revenue was $104 billion,] making HP the first IT company in history to report revenues exceeding $100 billion In 2008 HP retained its global...
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...November 6, 2001 Carly Fiorina HP CEO announces merger with Compaq. This is the one of the most notable days in HP history and as well as PC industry. It was called Largest merger in the PC industry and dumbest deal of the decade. When analyzing this merger after 13 year picture is changed. HP share price has raised more than 150% after merger. Carly Fiorina is not CEO and HP is still one of the most profitable companies in the world. HP is one of the famous companies found in Pao Alto in the garage. It was founded in 1938 in the year when PC industry wasn’t existing, when Steve jobs and Bill Gates weren’t even born. It is the company from which PC industry giants like Apple and Microsoft inherited corporate culture. Bill and Dave were graduates of the electrical engineering program of Stanford University. They decided to start business on drawing on Bill’s study of negative feedback. So there first product became the resistance capacitance audio oscillator, used to test sound equipment. First client was Walt Disney which used HP product in his animated movie Fantasy. From the day of founding HP was distinguished from other tech companies by it’s corporate culture. They called it HP way. Even Steve Wozniak founder of Apple praises HP corporate culture and says that the Apple seed was planted in Hewlett-Packard cubicle. It was philosophy which emphasized integrity, respect for individuals, teamwork, innovation and contribution to customers. HP grow from garage to world's...
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...HP is one of the largest companies in the world but despite its success and multinational reach, it is still subject to forces beyond its control. Hence, in order to properly defend its empire and plan for growth, management of HP have to understand the way the external world works, where it is progressing towards and how it all affects HP. Three broad and different categories form the external environment of HP and these are the general, industry and competitor environments. The more relevant and significant aspects of each will be delved into for the purposes of this analysis. General Environment The general environment affects HP’s operating landscape as well as the markets it competes in. Attempting to strategise without understanding these forces will be disastrous to HP. HP’s presence around the globe requires a multi-ethnic workforce and this exposes it to different value systems. If HP were to impose its successful Silicon Valley mindset on a subsidiary in a different continent, it might not be able to observe the same performance from employees. Even though there are signs of increased receptiveness to American culture from other countries, a drastic change to centuries of heritage cannot be expected. Moreover, as mentioned in the case, the HP-Compaq merger will also raise organisational culture issues and it will be a complicated process in optimising synergy in two geographically large companies. The origin of HP and its future lies in technological progress...
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...1. FODA HP: Fortalezas: Alta participación de mercado de imagen e impresión, calidad, valor de la marca HP, participación de consumibles. Debilidades: No contaba con servicios integrales de negocios end to end como su competidor IBM, no tenía canales directos de distribución y estaba muy integrado en su nicho de mercado Oportunidades Mercado cambiante y creciente, con necesidades de servicios más personalizados. Amenazas Competencia Mercados volátiles (emisión de acciones cercana al evento del 11 de septiembre) IBM dominaba el mercado de end to end services, sacando del mercado los productos de HP 2. No se tenía una estrategia tan sólida detrás de la fusión, ya que la estrategia de HP de poder incursionar en un mercado de soluciones empresariales de IT como lo que ofrecía IBM, no era el core del negocio de Compaq, este último era más bien un creador de hardware a bajo costo. No ofrece valor para los accionistas. La suma de esta fusión es de 1+1=2, porque además ambas compañías tenían productos que se traslapan entre sí. 3. Acuerdo a la valuación presentada por la CEO de HP, las sinergías iban a generar valor de entré $5 y $9 por acción en la nueva compañía. 4. No, porque la estrategia no tenía un trasfondo sólido. Esta fusión obedece más bien a la necesidad de HP de buscar una asociación con algún competidor que le permitiría incursionar en el nicho de mercado que aún no había podido penetrar, sin embargo como se comenta en el punto 2 esta asociación...
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...responsibilities and reporting relationships, been slowed down by the search for consensus decisions, and found it hard to get all the different units to work constructively together. In fact, CEO Carly Fiorina was so preoccupied with immediate issues that she lost sight of her ultimate objectives. Fiorina and her staff consider that the HP Way is an anachronism of a different, slower time, and that for the company to survive and succeed in the future it must be driven purely by a rational business strategy. After all of the layoffs, organizational changes, assertion of executive hierarchies and the destruction of traditional company rules of behavior, the HP Way that the old-timers are fighting to save is probably already dead. Fiorina and her team appear not to believe in the Way, they are now reduced to appealing to it in order to get enough shareholders votes to win. What this means is that, contra-Carly, the HP Way really did exist, it remains as powerful and useful as ever, and that its last use will be to destroy itself forever. So, What Is the Strategy? Fiorina did not believe in the HP Way, and she just followed its dictates. But the heart of the HP Way is the notion of trust, and the...
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...customers as well as a consulting services segment that offers information technology integration solutions for a range of technology issues. After its merger with Compaq, it became the world’s biggest computer hardware company, ranking number 20 in the Fortune 500 list. HP is doing business in more than 170 developed and under-developed countries. Being a large company gives HP many advantages such as dominating the market for printers (laser and inkjet), both for consumers and businesses using the economies of scale. The company is also taking an active role in developing the capacity of new markets all around the world, engaging with other multinational corporations, non-governmental organizations, and other world governing bodies to reignite the competitiveness at home and abroad through policies and strategies that can support free-market economies. This is one of the reasons HP a leading technology company in the growing IT markets (HP Annual Report, 2003). (S) Strengths Hewlett-Packard generated nearly $6.1 billion in cash flow from its operations and increased its cash and equivalents by 3 billion in 2003 (Datamonitor, 2004). Debt levels in this year were also very low which was significantly lower than in the previous year. This is a great advantage which enables the company to increase its investments. HP always recognized the need to compete in global markets. Product diversity of the company is another big advantage that enables the company to hold its position even...
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...operation in 1939 to a present-day IT powerhouse, HP has experienced a remarkable journey .Nowadays, Hewlett-Packard is a global enterprise and especially after its merger with Compaq, the company became world’s biggest computer hardware and peripherals consort in the world and has ranked 20th in the Fortune 500 list in 2009. This led to general revenues of $118.4 billion, HP announced the acquisition of 3Com with the deal closing on April 12, 2010. On April 28, 2010, HP announced the buyout of Palm for $1.2 billion. On September 2, 2010 won its bidding war for 3PAR with a $33 a share offer ($2.07 billion) which Dell declined to match. At HP, it is believed that diversity is a key driver of their success. Putting all their differences to work across the world is a continuous journey fueled by personal leadership from everyone in their company. HP’s aspiration is that the behaviors and actions and actions that support diversity and inclusion will come from the conviction of every employee in the company making this diversity and inclusion a conscious part of how HP runs its business throughout the world . HP leaders have an advantage that enables them to learn and adjust as few others can. The depth, and vitality that come alive on a daily basis through the firm’s values “the HP way” are assets from which most of the silicon Valley continues to learn. Their general managers regularly discuss and assess the vitality of the HP way, a process , which inevitably results in corrective...
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...Initiators of Organizational Change Nic Pedersen Management 380 November 13, 2012 Wayne Ellis Initiators of Organizational Change Every company faces a time when an organization change will happen for the good or bad of the company. Organizational changes can be a profitable venture for a company and organizational change can lead to the demise of a company. A change to a company’s organization is a process discussed, decided on, and conducted during a hallway meeting of upper management. Tough decisions are made before an organizational change is made and the outcome of the decision is only known after the completion of the organizational change. The reasoning behind organizational changes varies from company to company, but organizational changes are initiated by two driving forces, internal and external forces. The following paragraphs will address the initiating forces behind organizational changes and provide an example of one of the initiating forces. Internal and External Forces Companies have various reasons whether good or bad to commit to an organizational change, but all companies share the two initial initiators behind organizational change, internal and external forces. External forces are defined as,” The forces compels from outside the organization, (on which organization normally have no or minimal control) are termed as External Change Forces” (Rawat, 2008). External forces contain...
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...Fortune magazine. Prior to joining HP, Fiorina spent nearly twenty years at AT&T and Lucent Technologies, where she held a number of senior leadership positions (Cara Carleton Fiorina. (2014). In 1999, Hewlett-Packard hired Carly Fiorina, former senior executive of Lucent Technologies, as its Chief Executive Officer. Carly brought nearly twenty years of knowledge and expertise in sales and marketing to the company, which was seeking to reverse a declining market position relative to its competitors such as Apple. Her successes included recreating HP's image from that of an ordinary printer manufacturer to one as a supplier of a variety of Internet products. Fiorina overcame a number of challenging hurdles in undertaking the merger of HP with Compaq Computer Corporation, while enduring the public-relations uproar associated with a proxy fight initiated by the Hewlett family, who strenuously objected to the acquisition of Compaq. She bolstered HP's image as a state of the art American engineering company while taking the company into what was becoming known as the Internet Age. However, Fiorina had material obstacles to overcome. She was considered by many at HP as an “outsider”, since she had never worked for HP. Unlike the company's founders, she was a marketing/salesperson, not an engineer. Fiorina was also chastised for the mismanagement of the merger between Hewlett-Packard and Compaq, an acquisition which led to major losses for HP shareholders. Her relations with...
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...Managing the strategic Dynamics of Acquisition Integration: Lessons from HP and Compaq Suggala Indraneel 012513187 Aim of the paper: This article discusses about the Hewlett Packard company and Compaq merger and analyzing the final result of the acquisition of the companies. The aim of the paper is to examine the operational integration process, process of formulating the integration logic, and strategic integration processes of two large high technology companies, HP and Compaq, which are well established in a highly dynamic competitive environment. Introduction: In 2001, HP CEO proposed to acquire the high technology computing company Compaq. They expected to have a longer term revenue and profit goals after merging the companies as both of the companies are already grown computing companies. But many of the analysts were against this idea. Even HP board members showed opposition towards the merger leading to a proxy fight. They argued that the integration risk was eventual as there was never a success in big companies acquisition the two companies have their own way of strategies and plans for the development of organization. This varied cultures create integration difficulties, revenue risks offset cost synergies, financial risks etc. This way, proxy fight was severe and success seemed narrow. But finally the organization integration was successful with...
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...Hewlett Packard (HP) is a leader in the computer industry. HP started as a test and measurement company, however, the company began selling computers and printers in the 1970. The computer industry started to grow in the 1990s due to the growing popularity of personal computers and the introduction of the internet. While the test and measurement equipment remained one of HP’s business products, computers and printers became HP’s main source of revenue because of the rapid growth in the computer industry. HP’s products are all innovative and fairly new to the public market. This allows HP to have a large market share in its industry. However, HP is also vulnerable because competitors will start making competing products. HP could lose market share if it does not continue to be innovative with its current products and creating new products. This is shown throughout HP’s history. Age of Organization and History Bill Hewlett and Dave Packard created HP in 1939. Quickly, HP became known for its management procedures and innovative products. Mr. Hewlett and Mr. Packard created a cultural norm called the “HP Way” that focused on “profits more than revenue growth, teamwork, open-door management, full employment, egalitarian pay practices, and flexible work hours” (Beers, 2005). The first 40 years of HP’s existence focused on test and measurement equipment. HP was innovative and a leading company in the industry, therefore, HP was seeing high profit margins. In 1970, HP started selling...
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...Like Campbell’s (1993) hero who faces many obstacles in his path to win the true treasure, Carly persevered to transform HP through the Compaq merger, arguing for synergies in products and services. She even believed a successful meld of the two companies’ very different cultures would occur. Each had elements the other did not, so combined they would create a great new culture. This view was shared by all board members, save Bill Hewlett’s son, Walter. He opposed the merger believing the end company would make little impact in the PC business and that the cultures could not be integrated. Former HP marketing manager, Theresa Wilcox, supports this, finding that Compaq people were more aggressive and boastful than the humble and honest engineers of HP. Compaq was more autocratic and much less collaborative, with an “us and them” attitude, which would perhaps terminally damage the HP Way. While Carly had been hired to renew the culture, its risk-aversion and past-orientation resulting from the leadership style of previous CEOs again meant she faced resistance from employees. This supports de Vries’ (1988) argument that leaders can unwittingly disrupt the company for the successor and explains why employees may have idolised Walter, as he represented the past and was perceived as trying to preserve the current culture. In addition, the models in Fig.6 suggest that the level of national collectivism during this time may have seeped into the corporate culture (as employees are...
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...The HP-Cisco Alliance In early 1997, the first HP-Cisco alliance was first formed. HP was Cisco’s first publicly announced strategic alliance partner. The agreement between the two companies focused on technology collaboration, product integration, professional services, and customer support. The first contract lasted until February of 2002, when both HP and Cisco decided to further formalize and expand their alliance by signing a new contract. Shortly afterwards in March of 2002, HP merged with Compaq Computer, Inc. This temporarily slowed alliance activities between HP and Cisco. The “new HP” needed a few months to reorganize with the addition of Compaq. A few months later, in August of 2002, the alliance activities began to move forward once again. The alliance was a win-win for both HP and Cisco. Both companies were widely respected global technology companies. At the time, Bill Russell and Jim Heal of HP and Steven Steinhilber and Mike Thomas of Cisco Systems were at the forefront of the management teams responsible for forging a stronger, more formal alliance between the two companies. The original mission of the alliance formed in 1997 was to provide co-marketing enterprise networking solutions to HP and Cisco’s join customers. Through this alliance, HP and Cisco developed and sold four joint solutions – IP telephony, service and network management, mobility/wireless, and Utility Data Center. All four of these ventures were successful. Revenues generated...
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...Time for an Upgrade Who would think that all those empty plastic bottled water bottles lying around your house come from a global operation that relies on their data networks in all parts of the manufacturing process? Riordan Manufacturing is the leader in the plastic molding and injection business operating globally with 5 state of the art facilities in San Jose, California, Albany, Georgia, Pontiac, Michigan and Hangzhou, China. Riordan manufacturing is proud to be one of the leading manufacturers of heart valves, medical stents, fans, and of course plastic bottles. In order to keep up with the competition and be able to supply a superior product for their buyers at in a timely manner, their telephone and data networks need not only to be up to date, but to be able to withstand the network load for years to come. Current Topologies Each of the 5 locations operates on their own network with a satellite connection to the corporate offices in San Jose, California. Though a couple facilities are not as far back in the stone ages of networks as others, all locations need to be analyzed separately to help build the backbone of what’s to come. Over all, the main focus in this summary is to be able to access any information at any time from any location. This can and will be done with careful planning and lots of network expertise. San Jose, California With 250 employees working out of San Jose, it is one of the better sites network wise. Being the company’s corporate headquarters...
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