Hewlett-Packard is one of the largest players in the industry of computer hardware and software, IT solutions, and office equipment. However, the company mainly focuses on developing and producing personal computer systems (PCs). The industry is currently in decline due to increased attention to mobile devices, a high degree of economic instability, as well as a high level of competition between large brands. In order to increase competitive advantage through superior customer service, companies should develop value-added technical support services, as well as the development of PCs in a lower price segment.
- Political: Political factors have a particular impact on global companies that focus on international operations. An unstable political environment can lead to distribution channel transformations and disruption of supply chains. In markets that are characterized by political instability, there may be a drop in sales, as well as an increase in the cost of operations (Agwu and Onwuegbuzie 2018). Additionally, local country policies to support domestic producers may have a negative impact on a company’s operations.
- Economic: Economic uncertainty and unforeseen changes caused by such global events as a pandemic or local military conflicts have a significant impact on the company’s operations. Fluctuations in currency exchange rates are especially significant for international companies.
- Social: The main social factor is understanding the attention of consumers to personal computer systems. Global events and the development of technologies attract more and more users to mobile devices (Katsumata et al. 2022). Additionally, the need for culturally sensitive marketing is increasing depending on the country of operations (Rokka 2021).
- Technological: The technology industry is characterized by a high level of competition, which requires companies to invest in innovation. Hewlett-Packard is making significant investments in Research and Development and is also working on a wide range of products for personal use.
- Legal: As an international company, Hewlett Packard is influenced by the government laws of various countries regarding business, taxation, labor, intellectual property, and the environment.
- Environmental: Sustainability is currently one of the priorities for the development of international companies (Kemper et al. 2019). Waste minimization efforts necessary to comply with international legal regulations and maintain reputation are the basis of doing business in today’s environment.
Porter’s Five Forces
- Threats of new entrants: The industry of computer hardware, software, IT services, and consulting involves significant investments in technological resources and infrastructure. Thus, the threat of new entrants in the industry is low.
- Bargaining power of buyers: Despite the high competition within the industry, there are quite a few companies with a strong brand image and strong customer loyalty (Walton and Pyper 2019). This aspect limits the bargaining power of buyers, which additionally strengthens the position of Hewlett-Packard as a large company with a developed brand image. However, increased attention to mobile devices may be a factor in increasing the bargaining power of buyers, which is low to moderate.
- Bargaining power of suppliers: This indicator is also low because, within the industry, it is the big brands that set the terms, not the suppliers (Walton and Pyper 2019). It is not easy for suppliers to find another profitable customer, while big brands can easily switch suppliers. Hewlett Packard even has a performance evaluation system, in which the company assesses the benefits of cooperation with a particular supplier (Supply chain responsibility n.d).
- The threat of substitute products: With the development of the mobile device industry, the threat of substitutes has reached a moderate level. Not all consumers currently need laptops and personal computers; more focus is on portability.
- Level of industry rivalry: The competition in the industry is extremely high, as big brands fight for the global market. Competition is based not only on the best design or performance but also on price (Walton and Pyper 2019).
Evaluation and Recommendations
The PCs industry is currently experiencing a significant contraction due to the active development of the mobile device sector. Moreover, although the industry has a relatively low number of brands, competition occurs between the largest of them. In this situation, attention should be paid to the impact of economic factors on Hewlett-Packard’s operations. Due to the unpredictable changes in the international economic environment, a company may experience difficulties in the production and distribution of its products. Additionally, the company focuses on the production of personal computer systems, which also reduces its competitiveness. The PC industry is particularly competitive for the company, as in addition to traditional competitors such as Dell and Lenovo, Apple dominates the market.
Thus, in order to achieve the company’s goal of improving its competitive advantage through superior customer service, it is necessary to provide services that are superior in quality to those of competitors. In particular, in customer choice, price matters within the industry, making the introduction of additional customer support services relevant. Such services may include extended warranties, better user support, and technical consultation options. It is also important that in the current conditions of economic uncertainty, many potential customers may face a decrease in purchasing power. Hewlett Packard may look at the possibility of producing more budget devices that it could have in the face of economic downturns. In particular, compared to Apple, whose premium prices prevent them from actively expanding into the Asian market, Hewlett-Packard could increase its competition against Lenovo in this segment.
Agwu, M. E. and Onwuegbuzie, H. N. 2018. ‘Effects of international marketing environments on entrepreneurship development, Journal of Innovation and Entrepreneurship, vol. 7, pp. 1-14.
Katsumata, S., Ichikohji, T., Nakano, S., Yamaguchi, S. and Ikuine, F. 2022. ‘Changes in the use of mobile devices during the crisis: immediate response to the COVID-19 pandemic’, Computers in Human Behavior Reports, vol. 5, pp. 1-12.
Kemper, J. A., Hall, M. C. and Ballantine, P. W. 2019. ‘Marketing and sustainability: business as usual or changing worldviews?’, Sustainability, vol. 11, no. 3, pp. 1-17.
Rokka, J. 2021. ‘Consumer culture theory’s future in marketing’, The Journal of Marketing Theory and Practice, vol. 29, no. 2, pp. 1-11.
Supply chain responsibility: our approach. n.d. Web.
Walto, N. and Pyper, N. 2019. Technology strategy, Macmillan Education UK.