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CASE FACT OF HP

Posted by dadangiskandar on July 1, 2008

As a student I have to read, read, and read a case. And, at this time I finished reading and writing about case fact of Hewlett-Packard when it was successful before changes were made.

CASE FACT OF HEWLETT-PACKARD

I. Existing condition

1. COMPANY: Hewlett Packard

Founded: by Bill Hewlett and Dave Packard in 1939

Product: an audio oscillator

Strategy: higher performance at a lower price

1942 had sixty employees, office in 10,000 square feet

1943 profit $1 million mark

1947 built second building

1955 sales topped $ 15 million

1957 communicated key aspects of HP way, with the statement of “Corporate Objectives”

1960 sales topped $ 60 million

In early year: “Developed a philosophy about how to run a business and a style of operations, called HP way”

2. HP Way had basic values and core values

a. Basic values stressed serving everyone who had a stake in the business with integrity and fairness.

b. Core values gave a priority to self-financing growth, initiative, creativity, and good managers for enthusiasm and teamwork

c. Meaning of HP way:

1. The firm shared its success with its employees, recognizing their individual achievement, offering them opportunities to upgrade their skills and abilities, always showing them trust and respect.

2. Providing the firm’s customers the great test value of products and services

3. Serving the firm’s stockholders with profit as a high priority

d. Practices of HP way

1. Management by wondering around

2. Informal collegial behavior

3. MBO

4. Avoidance of layoffs

5. Innovating

6. Minimizing acquisition, and

7. Not buying market share

8. Creating an open-architecture office structure

9. Fully integrated and autonomous operating units

10. A minimum bureaucracy, and

11. Comfortable work environments

3. Result of HP Way

a. Fitting HP’s environment

b. Motivated great achievement

c. H and P were convinced that the HP culture was one of the important of all

II. Changes in Hewlett-Packard

1. 1970s and 1980s changes in Hewlett-Packard

a. Changing strategic focus from instrument to computers

b. 1990 – 2/3 sales in computer

c. Stand-alone product gave a way to modular systems of interconnected components

d. Moving to more competitive market environment

e. Moving from medium size to big company

f. 1989 revenues $12 billions

g. Founders retired

h. A new management team

2. Consequence of change:

a. Each change was followed by a few cultural changes

b. The computer business caused a new subculture

c. Strategy was set at higher levels

d. Some business functions were not put in the divisions

e. Cowboy entrepreneurs were less valued.

f. Administrative functions were much more consolidated

g. Marketing was getting power

h. Observers’ opinion 1990, the changes made HP a very different company

i. These computer-related shifts represented only one part of the total picture

j. Seat-of-the-pants approaches to business became rare

k. The company became bureaucratic

3. Process of changes:

a. Some changes came easily

b. Protest, “No, that’s not the HP way”

c. Many senior employees are still not happy with what has happened

III. PROBLEM IDENTIFICATION AND SOLUTION

1. WHY wasn’t the old culture more resistant to change?

2. Why didn’t those arguing against abolishing old HP practices win the day?

Additional Selected problem

HP way had dominant culture because it expressed the core values that are shared among employees. Core values at HP gave a priority to self-financing growth, initiative, creativity, and good managers for enthusiasm and teamwork

HP treasurer statement:- George Newman

1. The centralization to the culture was not very specific. Only general philosophy how to be successful.

2. Those principles helped the company to adapt to a changing world

General Management – Ned Barnholt

1. A part of culture has stressed innovation and entrepreneurship

2. Promote-from-within culture – not enough managers to have people who know that business and the customers of that business. So, bring in quite a few people

3. Some previous culture helped adapt to new culture (?)

Process of adaptation:

1. Interviewing managers and employees

2. Created materials concerning HP way

Three aspects of cultures in the materials:

1. Organizational values

2. Corporate objectives

3. Strategies and policies

Other results:

1. From more central to less central and more subject to change

2. Corporate objective changed a little

3. Level of specific strategies and practices had amount of change

4. At last according to CEO John Young proceed with necessary changes

5. And they reflected the basic value of the company

Conclusion:

The change has occurred because of more central aspects of culture

Needed the firm’s constituencies: (customers, employees, owners, and others

The leadership had an important role to develop strategies and practices after the adjustment of the culture

Recommendation:

We began with subculture, and the subculture could be adapted to new changes. Subculture could be defined by department designations and geographical separation.

Since poor cultural fit has reduced the firm’s performance, the HP way should change some culture especially in core value to new culture environment

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