Porter’s five forces analysis of Hewlett Packard

Brief history of Hewlett Packard

Hewlett Packard or HP as it is popularly known was started in a garage in 1939 and its first creation was an oscillator. The company’s first clients were Walt Disney and this helped it to grow in its design and manufacture of different electronic gadgets.

It was not until 1966 that Bill Hewlett and Dave Packard decided to venture into the computers business. This was the beginning of the Silicon Valley and these founders have made a huge impact in the technological world. To date, Hewlett Packard is a renowned computer manufacturer with subsidiary branches in 145 countries across the world. The company also employs 39,000 people and is said to have a growth rate of 20% for every decade it has been in existence.

Porter’s five forces analysis of the company

Porter’s five forces analysis is an evaluation carried on companies like Hewlett Packard with an aim of establishing its competitiveness in the market.

• Competition within the industry. There is stiff competition within the computer industry. However, HP has been able to maintain a lead by not just producing computers but also printers, scanners and ink. This has made it gain more market share because of this diversification that most computer companies lack. The company has also been hiring highly skilled personnel and offering quality training to ensure that the quality of its products remains top notch. In addition, the company has hired consultants who have helped to incorporate changes that are more industry and client friendly.
• Threat of new entrants. Even though it has many companies in place, the computer industry is very penetrable for new entrants. All that an entrepreneur requires is technological know-how and capital. This makes it a very flexible market with many new entrants. Some of the entrants even merge with the more established companies where necessary and this makes the threat of new entrants practicable to companies like HP. However, these new entrants might take time to establish themselves as HP has done. There is still need for HP to carry out innovations and constantly impress customers.
• Threat of substitute products. This market has many demanding clients and a high number of competitors. This creates room for high threats of substitute products. HP has managed to evade falling into the loophole by manufacturing computer accessories in addition to the computers. This has turned the company into a pace setter in the market with a large share of clients.
• Bargaining power of buyers. The buyers in the computer market have limited say in the price of the products. However, the stiff competition in the market makes it difficult for companies to overcharge consumers. HP has manufactured products of different prices to ensure that each consumer regardless of their economic prowess is able to afford certain products.
• Bargaining power of suppliers. Suppliers in the computer market have a high bargaining power because they determine the types of products that will be manufactured. HP has to form solid business partnerships with the best suppliers in order to ensure it produces top quality products.

HP has managed to remain at the top of a highly competitive market with many demanding clients because it produces diverse products and also stays up to date with consumer demands and trends. The fact that it has invested in quality staff and training opportunities has helped it maintain quality productions.

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References

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