Hp / Compaq Case Study

HP / Compaq CASE Study

Pavis Phkkanasut (z3284637)

1. What would a SWOT analysis reveal?

• SWOT analysis is a strategic planning method used to evaluate strengths, weaknesses, opportunities and threats involved in a business.

• Strengths (HP): IT-services businesses, strong brand image and reputation

• Weakness (HP): Computing and IT-services businesses noticeably lagged the competition, and the company did not have an organic growth strategy for these businesses.

• Threats (HP): imaging and printing was continually being challenged by Lexmark and Epson, which were selling inexpensive, lower-quality printers in a bid for market share.

• Opportunities (HP): Opportunities to expand business in enterprise computing and global services.

• Strengths (Compaq): Enterprise computing, strong brand image and reputation.

• Weakness (Compaq): Direct distribution had helped lower its costs, access still operated at a negative margin.

• Threats (Compaq): Increase in competition of Dell, face price competition which leads to lower profit margin for the company.

• Opportunities (Compaq): Opportunities to expand business in IT services.

2. Was the merger strategy sound?

• The merger strategy sound valid.

• Compaq believed that positive operating margins could once again be achieved through economies of scale. Compaq was also the market leader in fault-tolerant computing and industry-standard servers, where HP did not have a presence.

• Compaq was not strong