The first big customer of HP was Walt Disney Studios. The company purchased eight oscillators from HP for their movie Fantasia. These oscillators were purchased in order to develop an innovative sound system for the movie.
HP has incorporated profit sharing and social commitment in the company through its values and corporate objectives that have been with the company since 1957, these principles guide them to be focused and committed to the company and were founded by the co founders and are being followed to this day.
Through trust, team work, innovation and integrity the company has been successful in making enough profits to finance their growth as well as keep all the stakeholders satisfied. They respect customer loyalty and the role of employees and there fore their contribution in the company. They look for opportunities and grow but not at the stake of society, they serve as an asset to the society and country where ever they are doing business.
Dave Packard used a management technique that was incorporated into HP’s corporate culture. He called it “managing by walking around” which later came to be known as “management by Objectives” which had employee involvement, recognition and communication for better management and achievement of organizational goals.
The company went public in the year 1957 and Bill and Dave have always given respect and appreciation for the employee’s efforts. Therefore after going public they gave the stock grants to the employees automatically who have been serving for at least six months in the company. This meant that the employees were given shares of the company, which will give them some form of ownership in the company and motivate them more for the performance and growth.
The first acquisition of the company took place in the year 1958 of a high quality graphic producer company. The name of the company was F.L. Moseley Company of Pasadena, California. This acquisition was not seen as a threat to its flexibility because this gave opportunity to HP to enter into plotters market which was a needed for the company’s printer business. And to counter the problem of growing business the company had practiced decentralization of business divisions which will be responsible for their own products.
Bill was looking for opportunities internationally for Hp to enter foreign markets and he found some in Europe after the Treaty of Rome and also the European Common market in the year 1957. These paved way for starting operation of Hp in the European markets and as Bill visited Europe he found it a viable decision and the company became global in the year 1959.
The first joint venture of the company was in Asia with a Japanese company named Yokogawa Hewlett-Packard (YHP) in the year 1963.
The CEO identified the factors that lead to major acquisitions by HP till the year 2005. HP was performing well in the industry. Its revenue and profits were rising and which made it attractive for the investor’s point of view as the company’s stock value also rose. The company was able to achieve cost control and pay bonuses to the employees at the same time. The company had a strong financial position with an impressive figure of $6.8 billion as an increase in revenue growth. The company wanted to achieve cost competitiveness. The company made some changes in the number of workers and their retirement programmes.
The company consists of a team of dedicated workforce which is willing to put in their maximum efforts to enhance the value and performance. Moreover the company wanted to evolve in the bigger markets. The company had cash and potential to prosper in sales, they had no burden of operational debt. They have a strong customer base with a brand loyalty from them. All these led to the successful acquisitions of the company.
The merger and acquisitions that took place between HP and other companies around the globe made HP a much stronger company in terms of market share as well as sales growth and innovation and created value for the company. The deal with Compaq was seen as an opportunity to grow into the IT sector in the world. One of the long term goals of the company is to become the world’s largest computer company. All these mergers and takeovers were taken in order to reduce the competition, increase market share, share expertise which can be used to produce further products.
The deal between Compaq and HP was seen as a success in the industry after five years of the deal. Compaq was its strong competitive at the same time one of the largest PC makers. The two companies by integrating have took forward the company’s profits and sales to another level altogether. The merger took place at the right time when both the companies were lacking the production of key products.
But after the deal both the companies were able to fill in the gap that they had while operating independently. They were committed to the infrastructure software which helped the company go into the management layer from the commodity hardware. The company was at a stronger position to compete with the global service providers. The deal was able to increase the revenue and profits for the company being in the competitive environment of the industry.
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Topic: Mergers and Acquisitions – The life of Hewlett – Packard
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