Hewlett Packard Essay

680 Words3 Pages
Question 1 Using a SWOT analysis, identify the key strategic fits between the two companies? What are the most important expected synergies? Hewlett – Packard • Strengths: Quality of the workforce with the integrity in production. Outsourced PC manufactures. Strong brand recognition, something that takes time to build. Diluted interests in imaging and printing • Weaknesses: Poor Service And IT business. Poor indirect distribution channels. • Opportunities: ability to divest unprofitable PC division. Can create an integrated end to end business model • Threats: Competitive Industry – Losing market share. Unprofitable division – PC business. Decreasing profit margin. Server market competitors (e.g. IBM, Dell) eroding market share Compaq • Strengths: Good enterprise systems, computing and IT systems. Direct distribution model. Ability to serve customers in lower costs. Strong brand recognition, something that takes time to build. • Weaknesses: Lacking hardware and software manufacture. • Opportunities: To add quality to low cost production offered. Compaq was the market leader in fault-tolerant computing and industry standard servers • Threats: Struggling with the organic growth. Board wants a merger to achieve greater market share. Need more research and development funding. Economies of Scale and Scope HP and Compaq had different production and service strengths that together would provide a complimentary set. Following the lead of the IBM the combined company could more easily have an integrated end-to-end range of products and services. And in doing this the combined company would greatly increase their market share and be able to better compete with IBM and other large players. HP offers a comprehensive range of products and services, as a merged firm it can generate synergies by increasing its portfolio of

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