Hewlett-Packard Company’s Strategic Matrix Analysis Case Study
Internal External Matrix
The internal factor evaluation (IFE) shows that the total weighted score is 2.65, while the external factor evaluation (EFE) weighted score is 2.85. A comparison of the scores in the internal-external matrix indicates that HP’s strategic position is in the fifth division of the 9 divisions of the matrix. The fifth position depicts that HP has an average internal weighted score and a medium weighted score. In this view, HP should employ strategies that organizations in the fifth position of the matrix need to employ so that they can overcome their threats and weaknesses, as well as enhance their strengths and optimize opportunities present (Cassidy, Glissmeyer, and Capps 1523). Evidently, the fifth cell of the matrix is in the major region of the matrix, which requires the HP to hold and maintain its position in terms of strategies. According to Capps and Glissmeyer, organizations that fall under the third, fourth, and fifth positions on the IE matrix should hold and maintain their strategies (1060). Therefore, HP should employ strategies such as penetration of the market and development of products.
In the strategy of market penetration, HP should improve its online presence. From the internal factor evaluation, HP has a score of 0.30 in online marketing, which is quite low. Thus, to penetrate markets effectively, HP should consider marketing its products using the online platform. Jones asserts that online marketing offers companies an avenue of penetrating into global markets, where potential customers have money, power, and intellect (72). In this view, HP should advertise products such as tablets and textile printers because they have low weighted scores in both IFE and EFE. Blythe argues that market penetration enables companies to gain a competitive advantage in both local and global markets (22). Hence, market penetration is an appropriate strategy that would enable HP to expand its market share and gain a significant portion of global markets
Product development is also a strategy that HP should utilize in holding and maintaining its position as suggested by the IE matrix. From the IE matrix, it is evident that the weighted score for the tablet market is 0.30. In this case, HP should develop tablets that have unique features so that it can attract a great number of customers in the global markets of tablets. Since printing products also have low weighted scores, HP should ensure that the deigns of these products meet the unique needs of potential customers, as well as offer a competitive advantage in the market. The new design of the printing products would ensure that there no product gaps in both printing devices and materials.
Since HP has a solid financial base as its strength, yet there are lucrative opportunities such as a server, storage, and networking business, and an increase in the demand for the textile products, HP should venture into these opportunities. The business of server, storage, and networking is a growing business because diverse organizations require these services and products. Schulz argues that server, storage, and networking businesses are growing in the modern world because companies transition from analog to digital ways of storing and retrieving data (67). Hence, HP should utilize its immense financial base to venture into the server, storage, and networking business. Concerning the rise in textile demand, HP needs to use its solid financial base in capitalizing on the textile market. Textile investment requires a huge capital because the products must be durable, quality, and washable (“HP Products: Textiles” par. 2). Thus, the huge financial base gives HP an impetus to capitalize on increasing textile markets.
Owing to the decline in the personal computer markets due to the availability of substitute products, HP should use its innovative capacity and solid financial base in designing innovative and affordable products, which would compete effectively with substitute products. Moreover, HP should use its innovations and resources in designing new printers to reverse the downturn of its printers in global markets. As one of the threats, the global economic crisis is affecting product development and market penetration strategies of HP. Shiller states that the financial capacity of organizations determines their susceptibility to global economic crises (34). In this case, since HP has a solid financial base, it can cushion itself from impending economic crises. In overcoming the challenge of personal computer decline due to substitutes and structural downtrend of printer markets, HP should employ its online marketing strategies in promoting its computers and printers.
Given that HP has poor competency in the acquisition, yet it has lucrative opportunities, improvement of acquisition competency is essential. Fundamentally, HP must develop effective acquisition strategies, which would enable it to venture into the server, storage, and networking business, textile products, and tablet production. Moreover, to eliminate product gaps, HP should produce quality products and services in areas such as a server, storage, and networking, textile products, and tablet production. Likewise, since overreliance on personal system divisions is a weakness, HP should diversify its products to include server, storage, and networking business, textile products, and production of tablets.
|IFAS EFAS||Strengths (S)
Given that HP has poor acquisition competency, it should improve the acquisition of market share for both personal computers and printers because they are facing stiff competition and experiencing a decline in their markets. As the existence of product gaps explains the decline in the use of personal computers and printers, HP need to promote creativity and innovation for it to product competitive products in global markets. Additionally, diversification of product designs is essential to overcome threats such as decline in markets due to substitutes, global economic crises, and structural downtrends of printers. According to Nayak, diversification of products enables companies to alleviate the impact of global economic crises (261). Hence, diversification of products would enable HP to overcome all of its threats.
Blythe, Jim. Essentials of marketing communications. New York: Prentice Hall, 2006. Print.
HP Products: Textiles. 2012. Web.
Capps, Charles, and Michael Glissmeyer. “Extending the competitive profile matrix using internal factor evaluation and external factor evaluation matrix concepts.” The Journal of Applied Business Research 28.5 (2012): 1059-1062. Print.
Cassidy, Christopher, Michael Glissmeyer, and Charles Capps. “Mapping an internal-external (I-E) matrix using traditional and extended matrix concepts.” The Journal of Applied Business Research 29.5 (2013): 1523-1528. Print.
Nayak, Satyendra. The Global Financial Crisis: Genesis, Policy Response, and Road Ahead. New York: Springer, 2013. Print.
Jones, Susan. Business-to-business Internet Marketing: Seven Proven Strategies for Increasing Profits through Internet Direct Marketing. New York: Maximum Press, 2009. Print.
Schulz, Greg. Cloud and Virtual Data Storage Networking. New York: CRC Press. Print.
Shiller, Robert. The New Financial Order: Risk in the 21st Century. New York: Princeton University Press, 2009, Print.