Dell inc. vs HP

Term Paper , 2006 , 9 Pages , Grade: b

Business economics - General

Hewlett Packard started in 1939 in a garage by two people, Bill Hewlett and David Packard with just $538 of working capital. After a string of failures, their company’s first successful product, an audio oscillator better than anything on the market, earned a U.S. patent and an order from Disney Studios for eight units to help produce the animated film Fantasia.

From 1940 to 1950 they moved from their garage to a rented building on Page Mill Road in Palo Alto and then constructed their first HP-owned building that was 10,000 square foot. In 1957, HP had their first public stock offering November 6, 1957 and net revenues were $30 million with 1,778 employees and 373 products. In the 1960’s, HP was listed on the New York and Pacific exchanges as HWP and had its first listing on Fortune magazine as of one of the 500 U.S. companies.

HP in 1967 started operations in Boeblingen, Germany introducing a non-invasive fetal heart monitor that helps babies by detecting fetal distress during labor. In the 1970’s revenues increased to $365 million with over 16,000 employees. ( HP.com ) In the 1980’s revenues again increased to $6.5 billion with over 85,000 employees. They introduced their first personal computer, the HP-85 and introduced HP LaserJet printers, the company’s most successful single product ever considered a standard for laser printing today. HP moves to the top 50 on Fortune 500 listing - 1 - at No. 49. Finally in the 1990’s, HP opens research facilities in Tokyo, Japan with net revenues of $13.2 billion and over 91,000 employees. ( HP.com ) HP also introduced portable computers that lasted on batteries that would last a flight across the U.S.

Lisa Harvey

Term Paper

Dell inc, vs HP

Hewlett Packard started in 1939 in a garage by two people, Bill Hewlett and David Packard with just $538 of working capital. After a string of failures, their company ’s first successful product, an audio oscillator better than anything on the market, earned a U.S. patent and an order from Disney Studios for eight units to help produce the animated film Fantasia.

From 1940 to 1950 they moved from their garage to a rented building on Page Mill Road in Palo Alto and then constructed their first HP-owned building that was 10,000 square foot. In 1957, HP had their first public stock offering November 6, 1957 and net revenues were $30 million with 1,778 employees and 373 products. In the 1960’s, HP was listed on the New York and Pacific exchanges as HWP and had its first listing on Fortune magazine as of one of the 500 U.S. companies.

HP in 1967 started operations in Boeblingen, Germany introducing a non-invasive fetal heart monitor that helps babies by detecting fetal distress during labor. In the 1970’s revenues increased to $365 million with over 16,000 employees. ( HP.com ) In the 1980’s revenues again increased to $6.5 billion with over 85,000 employees. They introduced their first personal computer, the HP-85 and introduced HP LaserJet printers, the company ’s most successful single product ever considered a standard for laser printing today. HP moves to the top 50 on Fortune 500 listing - 1 - at No. 49. Finally in the 1990’s, HP opens research facilities in Tokyo, Japan with net revenues of $13.2 billion and over 91,000 employees. ( HP.com ) HP also introduced portable computers that lasted on batteries that would last a flight across the U.S.

All these products moved HP to the No. 2 position in the U.S. market. Today HP has ballooned into a multinational company with 104 divisions, 123,000 employees worldwide, 19,000 products and sales over $47 billion. ( HP.com ) Great products ultimately come from the minds of motivated and capable employees, the second key to HP’s success. After the Second World War, the company began to hire talented engineer and scientist that were no longer working in the war that were from other technology companies and government funded labs. These were high priced experienced workers that helped HP’s development of different successful products. ( personal Journal ) The company structure looks like a pyramid. At the top are the board of directors followed by President and Vice President. There are Presidents and Vice Presidents in different divisions of the company. Finally, there are general managers, middle managers, lower managers and employees.

Hewlett Packard ’s Mission statement is to improve the ways individuals and organizations around the world create, access, use and communicate information on the road or from the desktop, in the office and in the home. HP is a worldwide leader in personal computing; setting new standards in such areas - 2- as Mobil computing network management, 3-D graphics and information storage. Computer products include eight manufacturing divisions in North America, Europe and Asia, with sales and support in more than 110 countries. These divisions are separated in Mobile Computer Division, Business Desktop Division, Home Products Division, Asia Pacific PC Division, Workstation Systems Division and information storage group. ( Information Week ) As explained above HP global market place allows the company to expand in different countries and people in two ways. First HP.com allows virtually anyone with Internet access to log on under the URL and actually order online. One problem that some companies are having is that 65% of the Internet cites are only in English. ( www.firstsearch.com ) On Hewlett Packard ’s website you only need to choose the country that you live in and the pages will translate the text into that language. There is product information about you future or present purchases, software updates of the product, and also technical support through email.

Finally HP has 24 hours a day 7 days a week of customer support throughout the countries that have operators to assist you on the product. People are more willing to buy products and services from a manufacture that can provide both the support and the opportunity to buy easily from Hewlett Packard, and HP provides this!

One example is that Dell a online company that build computer as they are order from the customers and the business offer one of the best support and - 3 - warranties in the computer industry. HP is following their online strategy closely to Dell’s way of operating the sales and customers. As this company expands in growth it leaves other smaller companies behind that can’t compete with this computer giant. These smaller companies have trouble to match HP’s prices and customer support. One example of this is a local owned family shops in a country that are not able to compete with they type of products and services offered by HP and these companies either have to stop selling or move away from the competition.

With communication and technology growth, it will be easier to climb the cultural boundaries that other companies had trouble overcoming in the past. This would be in having other countries buying an American made product. The Internet is helping in crossing those boundaries by offering global support and products. With the support and products offered by HP, other companies may have troubles trying to match or outperform. This leads to closing down of shops and other smaller retailer that can affect jobs in that country. People of other diversities may have problem accepting these changes and may not want to make the change. The older generation that is not ready or unable to use computers may have troubles adapting to buying over the Internet. Another problem is not all people from other countries are financially able to pay for a computer like people in the U.S.

This could be another problem that HP is not yet ready to overcome. Eventually as time goes on technology will be - 4 - available to all and these problems might be solved but new problems will replace the old and there will be other obstacles to avoid. Hewlett Packard ’s Response to a Globalizing Economy HP now has a strong commitment to women's advancement. One prime example of this would be its biannual Technical and Women's Conference, which last year brought together 2,000 female HP scientists, engineers, professionals and managers from 26 states and 12 countries, in order to discuss business issues, especially as they relate to gender.

HP picked up the tab for employee travel expenses, too. Work and family issues remain on the front burner as well. Last year the company was listed as an ABC Champion, leading to the funding of 25 child and elder care projects in HP communities. The other news here is the ongoing redesign of work schedules to provide more flexibility. Managers have been trained to be receptive to these needs while employees have been encouraged to try new options.

As a result, HP has some big numbers to show for its efforts. Nearly 3,000 people work at a "virtual office"; 500 share jobs and 1,450 employees are on compressed workweeks. HP announced on February 28, 2000 that it would be supplying computers for its “Wired Workforce” program in which computers are made available for all Delta Air Lines employees at a substantial discount through PeoplePC. - 5 - The Wired Workforce program was announced February 4 in a joint presentation with PeoplePC.

The San Francisco based company will be responsible for order fulfillment and technical support for the program. Over the next few months, Delta Technology and PeoplePC will work closely to test all aspects of the program, including secure access to the airline's intranet. HP will provide multiple configurations from its HP Pavilion desktop line, the No. 1 selling retail PC.

HP is moving rapidly forward with implementation of their 'Wired Workforce' program and look forward to the advantages their people will gain. In 1997, the HP established a dedicated task force to address the issues raised by the introduction of a European single currency (the Euro) for early performance as of January 1, 1999 and during the transition period through January 1, 2002.

HP’s primary focus has been on the changes needed to deal with a mix of Euro and local denomination transactions from the first day of changeover - January 1, 1999. Since the beginning of the transition period, product prices in local currencies are being converted to Euros as required.

At an appropriate point during the transition period, product prices in participating - 6 - countries will be established and stored in Euros, and converted to local denominations. System changes were implemented to give multi-currency capability to the few internal applications that did not have it yet, or to ensure that external partners facing systems processing euro conversions be compliant with the European council regulations. ( Advertising Age )

The HP has developed plans to support display and printing of the Euro character by impacted products. Most products are currently able to do these functions while plans are still in process for a few remaining products. HP does not presently expect that introduction and use of the Euro will materially affect the Company 's foreign exchange and escaping activities or the Company 's use of derivative instruments. HP management does not expect that the introduction of the Euro will result in any material increase in costs to the Company and all costs associated with the introduction of the Euro will be expensed to operations as incurred.

While the HP will continue to evaluate the impact of the Euro introduction over time, based on currently available information, management does not believe that the introduction of the Euro currency will have a material adverse impact on the HP's financial condition or overall trends in results of operations. - 7 - Hewlett Packard ’s Response to a Globalizing Political Environment Economic, political and other risks associated with international sales and operations, particularly in Korea and Japan, could negatively affect HP sales. They sell products worldwide, their business is subject to risks associated with doing business internationally.

HP’s net revenue originating outside the United States, as a percentage of our total net revenue, was 54.4% in fiscal year 1998 and 54.9% for the nine months ended July 31, 1999. They predict that revenue from international operations will continue to represent a large portion of our total revenue. In addition, many of their manufacturing facilities and suppliers are located outside the United States.

HP does a substantial portion of their business in Korea and Japan, which have been subject to increased economic instability in recent years. Their business has declined in 1998 when Korea and Japan experienced economic difficulties. The return of weakness in these economies or weakness in other international economies could and may have a significant negative effect on HP’s future operating results.

HP is dealing with various rules and regulations, in particular is its compliance with the Food and Drug Administration regarding regulations on a wide variety of product activities from design and development to labeling, manufacturing, promotion, sales and distribution. - 8 - The medical device products produced by Hip’s healthcare solutions business are subject to those standards given by the United States Food and Drug Administration (FDA) and similar international agencies.

HP has received a warning letter from the FDA in 1996 alleging non-compliance with the FDA's quality system regulations at one of our facilities. The FDA's quality systems regulation includes elaborate design, testing, control, documentation and other quality assurance requirements. HP had to apply considerable resources to address the FDA's concerns.

HP has resolved the issues identified in the FDA's letter and the FDA is satisfied with our assessment If HP fails to keep up acceptable compliance with the FDA's quality system and other regulations, HP will be forced to recall products and cease their manufacture and distribution. ( Hoovers.com ) The Global Industry The worldwide personal computer industry grew 21 percent last year, led by strong demand in the United States. Increasing affordability of PCs and the growing demand to get “ online “, the percentage of U.S. homes with PCs advanced from 38.5% in 1995 to 52.7% in 1999.

As a computer Industry as a - 9 - whole had to compete for DRAM in late 1999 because of the Taiwan earthquake. Prices doubled 100% in August and then again in September. This suspended the demand in PCs during the holiday season. In entry-level computer HP was again behind IBM with 12% of market share compared to IBM’s 21%.

HP has gained market share in the midrange PCs with 21% compared to IBM’s 23%. ( Standard & Poors ) HP grew in market share during the end of 1999 from 6.2% to 8.4%. HP’s growth rate worldwide is 39.6%, which is the second fastest growth rate behind Dell computer. In revenues HP is 2nd behind IBM with $47 billion and 2nd again in net income behind IBM with $2.9 billion. Under operating profit margins HP ranked 6th with 8.16%and with return in capital of 15.51% also 6th in the industry. ( Moody’s Industry Review ) One thing that HP does lack in is in computer sales in other countries outside of the U.S., like Canada where they are not even ranked in the top 5. Globally HP leads the printer market with their HP inkjet printers and is gaining market share in the PCs. HP is growing rapidly into the worldwide market and is growing at a faster rate than before because of the global access offered to business and customers over the Internet. - 10 –

Bibliography

Global Computer Industry, New York Times, New York; Jan 29, 1999; Late Edition; pg.C.18 Hoovers Online Business Network; computer industry analysis; hoovers.com

Tobi Elkin; Advertising Age, Chicago; Jan 31, 2000; Vol. 71, Iss. 5; Midwest region edition; pg. 32, 3 pgs Laabs, Jennifer J. (1993), “Hewlett Packard ’s core values drive HR strategy, “Personal Journal, 72, 9 (February) 38-48 “ History, “ (2000),

http://www.hp.com (accessed 2-9-00) “Hewlett Packard Company “ (2000),

http://www.firstsearch.oclc.org (accessed 2-9-2000) Korzenowski, Paul (1999), “

Hewlett Packard Makeover Starts Turning Heads, ” InformationWeek, 761, 9 (February) 189-192 Moody’s Industry review (1999), “ Comparative Rankings. “ “

Computer Hardware, “ (1999), Standards and Poors Lazich S. Robert; Market Share Reporter, (1999) pg 190-192 - 11 -

• Course: Finance
• Grade: b
• Author: Lisa Harvey (Author)
• Publication Year: 2006
• Pages: 9
• Catalog Number: V110488
• ISBN (eBook): 9783640086573
• Language: English
• Tags: Dell, Finance