Hp RESEARCH STUDY Business Essay

HP RESEARCH STUDY Material 2 1. Explain the notion of a business model. Illustrate your answer using a good example of a broad differentiator. 3 2. Whead wear were the reason why provided by Carly Fiorina to justify HPs acquisition of Compaq? 4

3. Why were Fiorina's quarrels for merger considered to be weak by analysts? 5

4. Discuss briefly Dell's and HP's business models 5

5. Explain why competitive benefit in the Laptop or computer industry was moving away from Dell and toward HP. What was Dell's strategic respond to the rising competitiveness of HP? 7

6. Explain the organization problem and suggest ways to lessen the chance of managers performing contrary to the interest of talk about holders. 8

7. Under what conditions is: 9

a)Is Acquisition appropriate to go into a new market? 9

b)Joint projects appropriate to enter into a new market? 10

Explain the notion of a business model. Illustrate your answer using a good example of a wide differentiator.

Business model explains entire process of creation, delivery, and capturing of organizational principles in both financial and social aspects. It symbolizes core aspects of the business such as strategies, organizational structure, purpose, operational operations, policies, infrastructure, and trading tactics. Entire performing of the business is situated over this business design as it offers guideline to the organization to handle all its activities. Thus there's a need to explain business design of any business at first in an explicit manner to avoid all the discrepancies at first end. Business model directly centers over customer needs as it is this specific aspect along with product differentiation strategy, i. e. to expose new product to make certain that company can capture most effective market show. This model also specifies customer groupings through market segmentation to straight target over those market sectors that provides maximum go back to the associated product. Business model can even be held responsible for determining distinctive competencies of the business that will ensure that the business is put at highly appropriate and differentiated place in the market. Wide differentiator is the USP (Unique Offering Proposition) which allows company to distinguish its product from its competitor's product.

Nokia is one of the top companies functioning at global level in cellular phone market. That is due to its extremely proficient business design which had founded well linked structure within itself that means it is possible for the business to manage its customers in a greatest manner. Its business design is situated over three different features, i. e. creativity, reputation, and associations. It really is these features that lay the foundation for Nokia to get competitive benefits over its challengers. Additionally it is required that Nokia retain a balance in every these facets such that it is able to not only retain its earlier echelon of market share, but also augment it in currently prevailing situations.

What were the reasons provided by Carly Fiorina to justify HP's acquisition of Compaq?

HP's acquisition of Compaq was one of the primary acquisitions that occurred on the market. It was derived by speedily increasing market share of Dell which both Horsepower and Compaq weren't able to manage. It became highly difficult for both companies to tackle competition provided by Dell only. Thus Carly Fiorina took decision regarding acquisition of Compaq as it'll provide several advantages to both Horsepower as well as Compaq which can only help them in strengthening their structure and ensure that they could deal with changing exterior environmental conditions. This was based over clipping of two major bills, i. e. worker durability and administrative costs which are normal to both HP and Compaq and can be eliminated can help them in making certain they are able to form strategies in a combined manner. This acquisition saved both HP and Compaq with a lofty amount of $2. 5 billion per yr. Also they were able to lay off 15, 000 employees therefore of the acquisition. Though it was not accepted by all individuals as some said they are facing problems because of cost strategy of Dell against which this acquisition was providing no solution.

Why were Fiorina's arguments for merger considered to be weak by experts?

Fiorina's decision for merger of HP and Compaq in 2001 was not accepted by all, as some experts described it as a weak decision. This was because of the fact that Dell's business strategy was to provide low priced PCs with the aid of its efficient supply chain management. It was able to remove all the distributors from its source chain and set up a direct link using its customers. This made it possible for Dell to capture sufficient market talk about within virtually no time. But merger of Horsepower and Compaq did not laid its emphasis over this particular aspect and needed only cost reducing into consideration, which has been pointed out by the analysts. Also HP despite to be a market head in printer segment was lagging behind in consultancy area. According to Fiorina, through this offer, they would have the ability to raise their market talk about, but matching to analysts, its market show would still not rise beyond 3% as it was planning on.

Discuss briefly Dell's and HP's business models

Dell's business model is a significant unique and was never seen before when it was brought into the market. It attempts to establish a primary link between the company and its own customers. Linking them straight managed to get highly problematic for the other organizations to match the product cost provided by Dell. This is also highly problematic for HP to ensure that people are able to retain their customer loyalty when they were offered significantly low price for the same product by other company. This removal of company cost was used directly for benefiting customers as it was a new entrant in the market and had to follow a differentiating strategy. A significant facet of Dell's new business model makes an addition of inexperienced technology, i. e. using those recycleables and techniques that cause minimum harm to the environment. This is referred to as Green IT. On this conduct, its business design also complies with the law at both global as well as internal level.

HP on the other side follows a company strategy of decentralization being straight commanded from middle at the same time. It has varied domains of functions that help in making it easy for the company to make maximum use of the marketplace opportunities. HP also ensures that it relate all its product line in such a manner that this serves in a constructive manner for the organization. Enjoy it is market leader in printer section, so that it try to assimilate it with its PC selling which can only help it in utilizing its image in a single segment to make revenue in another section. HP is also seeking to expand its business model by getting into a new segment, i. e. surveillance cameras. Along with it, Horsepower is initiating Printing 2. 0 strategy which is completely structured over three aspects,

Providing next technology digital printing which reduces the cost and increases swiftness.

Making web printing easier.

Making publishing program to all or any customer segments by extending its digital content creation.

Explain why competitive gain in the Personal computer industry was leaving Dell and toward Horsepower. That which was Dell's strategic response to the rising competitiveness of Horsepower?

Competitive gain in Personal computer industry was shifting from Dell towards Horsepower as HP experienced achieved its goals of cost trimming by recognition of redundant cost within the business. This step increased its profit percentage that increased company's revenue beyond pre-defined restrictions. It also made it possible for the business to make further investment in other assignments to get competitive edge. Also Dell's entrance into printer and different other electronic items was not considered to be a great decision as it had not been in a position to attain market show except PCs. All these parameters resulted in moving away of competitive gain in PC industry from Dell towards HP. Another factor that contributes to this change was that Dell's main competitive benefit was cost efficiency and without it Dell didn't possessed any extra USP. After the acquisition, Horsepower also started cost success in its development, which provided stiff competition to Dell and therefore HP could increase its market share beyond certain pre-defined level, i. e. broaden its supremacy from printers to computer systems and notebook section.

In response Dell broadened its echelon of differentiation in order to raise its market penetration and deal with its prime opponents, i. e. HP and Apple. Dell bought Alienware Laptop or computer maker to improve its differentiation along with making a move towards physical retailing industry by opening Dell PC stores at various locations. Finally Dell also adopted a cost keeping strategy by using cheaper chips created by AMD rather than Intel with which it was previously coping with. Along with each one of these cost cutting measures, Dell also got into into printer segment, which was ruled by Horsepower. But Dell was not in a position to attain success in that portion. Also initiations like breaking up of deal with Intel were considered to be as wrong decisions in business aspects corresponding to experts as Dell had not been able to accomplish its long-term business commitments due to its immediate needs.

Explain the firm problem and suggest ways to lessen the chance of managers operating resistant to the interest of show holders.

Agency problem identifies conflict arising credited to different interests of shareholders, lenders, and management associated with an organization. Such kind of issue general comes up when there's a discrepancy that how the business should be run. This problem occurs as shareholders tend to be interested in making the most of their earnings without related to much about the long-term benefits that they could gain, but management is more enthusiastic about long term revenue rather than short term revenue along with enjoying a number of perks which is normally not satisfactory by the shareholders. Best way to sort this issue away is by maintaining a balance between long-term and short term profit with which both management and shareholders are worried.

There are several ways that firm problem could be solved, like

Proper compensation programs should be followed by the organization in order to ensure that management is not deprived of the profits that are made by their functional efforts. This will also be approved by Mother board of Directors in a way that all the ambiguities could be avoided at later periods of organizational performing.

Auditors could be appointed to discover a managing position between management and shareholders of the business such that negotiation could be justified for both the ends.

Specialist monitoring can also be employed by shareholders as it'll ensure that all the management activities are taking place according to the planned manner without making any deviation during their execution.

Under what conditions is:

Is Acquisition appropriate to enter in a fresh market?

Acquisition identifies integration of any acquired company by another company. Whenever acquisition occurs, only an individual entity is kept with no name of other entity. But acquisition may create problem if initiated in new market as acquirer is completely new to the market while acquired company has lost its personality. This may create operational problem for the producing entity as they don't have much experience in this site. Also there's a likelihood that already existing staff is laid off from the organization, in such a case if some problem comes up, management may not be able to deal up with the problem. But if no major changes are created in operational areas of the business, acquisition to go into new market won't totally be considered as an incorrect decision. Like acquisition of Compaq by HP lead to a good resulting entity as both of them were functioning in the same sector. This task could be advantageous for the company also as an organization is getting into another sector which operates as hedging its risk due to investment in two different domains. But downside associated with it is the fact that company which is acquiring doesn't have any connection with the new sector, thus there might be difficulties in working with new problems arriving in front of management.

Joint endeavors appropriate to enter a new market?

Joint endeavors can be referred to as best possible option to enter the new market just as this type of merger, both the entities sustain their id and ensure that both the merging systems are making maximum use of the agreement. When this happens, a corporation though new in a specific market will get total support from its spouse regarding its deficit areas. In this manner, they could accentuate one another by gratifying each other's need and ensuring decisions taken are beneficial for both the entities. Thus joint projects are highly appropriate to enter into new market. Primary advantage of an organization entering into new market with a jv is the fact that risk associate with it is significantly low as its spouse already have got certain market share and with extra resources provided by other company it will lead it towards capturing of more market share with proper management. Best disadvantage associated with it is the fact risk associated with the market will not get reduced. Like, if whole sector is not carrying out well, venture would not have the ability to take care of their earnings as they have single earnings source.

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