HP at Cultural Crossroads|Human Resource|Organization Behavior|Case Study|Case Studies

HP at Cultural Crossroads

            
 
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Case Details:

Case Code : HROB012
Case Length : 11 Pages
Period : 1990 - 2001
Pub Date : 2002
Teaching Note : Available
Organization : HP
Industry : Computers and Technology
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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"The HP Way is a tricky thing. It's what makes HP great, but it can also be used as an excuse for practices that are no longer relevant. It can be an excuse for not changing. When you boil it down to its fundamentals, it's about keeping core values constant and frequently changing practices - and a lot of people inside HP and outside HP get confused about that."

- Lewis Platt, former HP CEO, in August 1999.

"The HP Way gave me the courage to change it as quickly as we are. Because it really is all about having this company achieve what it is capable of. It is important, and it is worth doing."

- Carly Fiorina, Chairperson, HP CEO, in February 2001.

A Company in Trouble

During the late 1990s, HP, the second largest computer manufacturer in the world, faced major challenges in an increasingly competitive market. In 1998, while HP's revenues grew by just 3%, competitor Dell's rose by 38%. HP's share price remained more or less stagnant, while competitor IBM's share price increased by 65% during 1998. Analysts said HP's culture, which emphasized teamwork and respect for co-workers, had over the years translated into a consensus-style culture that was proving to be a sharp disadvantage in the fast-growing Internet business era. Analysts felt that instead of Lewis Platt, HP needed a new leader to cope with rapidly changing industry trends.

Human Resource and Organization Behavior | Case Study in Management, Operations, Strategies, Human Resource and Organization Behavior, Case Studies

Responding to these concerns, in July 1999, the HP board appointed Carleton S. Fiorina (Fiorina) as the company's CEO.

Fiorina implemented several cost-cutting measures to streamline the company's operations. Some of the measures included forced five-day vacation for the workers and the postponement of wage hikes for three months in December 2000. In January 2001, HP laid off 1,700 marketing employees.

In April 2001, Fiorina announced that HP's revenues would decrease by 2% to 4% for the quarter ending April 30, 2001 due to the decrease in consumer spending. In yet another move to cut costs, in June 2001, employees were forcibly asked to take pay-cuts. More than 80,000 employees volunteered saving the company $130 million.

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1] In an interview with BusinessWeek, 'Lewis Platt on HP's ups and down and the HP way.'

2] In an interview to BusinessWeek dated February 29, 2001.

3] With net revenues of $48.78 billion, HP ranked 19th in the Fortune 500 list in 2001. The company was the market leader in desktop computers, servers, peripherals and services such as systems integration.

4] The first CEO from outside HP, Fiorina had 20 years of experience at AT&T and Lucent.

 

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