HP pursues a diversification strategy operating in multiple industries globally. It has a wide range of computing and printing products. While it has strong brand recognition and innovative products, it faces threats from competitors' pricing and technology. To mitigate risks, HP expands retail stores, pursues joint ventures, and develops easy-to-use products for retirees. It also works to improve technology and compatibility. Overall, HP's diversification strategy provides opportunities for growth but also comes with challenges in managing risks from competitors and changes in different markets and industries.

1. 2014
STUDENT NAME: SUFIAN MOHAMMED ABDO ALBAADANI
ID: 201212239
DATE: 31/01/2015
STRATEGIC MANAGEMENT
BMST5103 Assignment
MBA Program
SEPTEMBER 2014

2. 1
Contents
Why companies choose to venture out of their home country? benefits and outcomes of
international strategy. .............................................................................................................. 2
The Different modes of entry into the international markets and challenges......................... 3
The Internet.......................................................................................................................... 3
Exporting .............................................................................................................................. 4
Licensing............................................................................................................................... 4
Joint Venture ........................................................................................................................ 5
Foreign Direct Investment/ Overseas Manufacture / International Sales Subsidiary ....... 6
International Agents and International Distributors .......................................................... 7
Strategic Alliance.................................................................................................................. 7
Case Study , HP Company ....................................................................................................... 9
Hewlett &Packard, HP Company........................................................................................ 9
HP Corporate Level Strategy............................................................................................... 9
Risk Management............................................................................................................... 10
Vision statement: ................................................................................................................ 10
Mission statement:.............................................................................................................. 10
SWOT Analysis: ................................................................................................................. 10
IFE (INTERNAL FACTOR EVALUATION MATRIX).................................................. 12
EFE (EXTERNAL FACTOR EVALUATION MATRIX)............................................... 13
CPM (COMPETITIVE PROFILE MATRIX) .................................................................. 14
S.W.O.T Strategies ............................................................................................................. 15
SPACE (STRATEGIC POSITION & ACTION EVALUATION MATRIX) .................. 16
BCG (BOSTON CONSULTING GROUP)........................................................................ 18
IE (Internal /External)........................................................................................................ 19
GRAND STRATEGY MATRIX........................................................................................ 20
QSPM (QUANTITATIVE STRATEGIC PLANNING MATRIX)................................... 21
Resources:................................................................................................................................ 23

3. 2
Question A:
Why would companies choose to venture out of their home country? Include the
benefits and outcomes of international strategy for a company in your response.
Few Companies can afford to ignore the presence of international competition. Companies
that seem insulated and comfortable today may be vulnerable tomorrow. A world economy
and monetary system are emerging. Corporations all over the world globalize to seek
customers. Markets are shifting rapidly. Innovative transport systems are accelerating the
transfer technology, shifts in the nature and location of production systems, especially to
China and India, re reducing the response time to market changing conditions. More and
more countries globally compete for foreign investment, capital labor, and human talents.
Many countries become more protectionists during the recent global economic recession.
Global consumer demand has increased tremendously .Shareholders of companies globally
expect better return on their investment.
Companies have many reasons for formulating and implementing strategies that initiate,
continue, or expand involvement in business operations out of their home countries. The
greatest outcome is that companies can gain new customers for their products and services,
thus increasing revenues. Growth in revenues and profits is a common organizational
objective and often an expectation of shareholders because it is a measure of organizational
success. Potential advantages to initiating, continuing, and expanding international
operations are as follows:
a- Company can gain new customers for their products and services
b- Foreign operations can absorb excess capacity, reduce unit costs, and spread risks
over a wider number of markets
c- Competition is less intense in foreign markets.
d- Foreign operations can allow companies to establish low-cost production facilities
in locations near to raw materials and cheaper labor.

4. 3
e- Joint ventures can enable companies learn the technology, culture, and business
practices of others people and to network with participants of supply chain in
foreign countries.
f- Economies of scale can be achieved from international operations.
g- Company’s power and prestige in domestic markets may be significantly
enhanced.
h- Companies can capitalize on core competencies
Question B:
Companies may select different modes of entry into the international markets.
Discuss some challenges of the different modes of entry.
Expansion into foreign markets can be achieved via the following mechanisms:
- The Internet - Exporting
- Licensing - Joint Venture
- Direct Investment
- International Agents & International Distributors
- Strategic Alliances
The Internet
• The Internet is a new channel for some organizations and the sole channel for a
large number of innovative new organizations
• The eMarketing space consists of new Internet companies that have emerged as
the Internet has developed, as well as those pre-existing companies that now
employ eMarketing approaches as part of their overall marketing plan
New Internet Companies:
• New online retail brand e.g. Amazon, Lastminute.com
• Online Auction e.g. eBay
• New online manufacturer brand e.g. Dell.com

5. 4
Exporting
• Exporting is the marketing and direct sale of domestically-produced goods in
another country
• There are direct and indirect approaches to exporting to other nations
• Direct exporting is straightforward. Essentially the organization makes a
commitment to market overseas on its own behalf
• if you were to employ a home country agency (i.e. an exporting company from
your country - which handles exporting on your behalf) to get your product into
an overseas market then you would be exporting indirectly
Examples of indirect exporting include:
• Piggybacking whereby your new product uses the existing distribution and
logistics of another business.
• Export Management Houses (EMHs) that act as a bolt on export department for
your company. They offer a whole range of bespoke or a la carte services to
exporting organizations.
• Trading companies were started when some nations decided that they wished to
have overseas colonies. They date back to an imperialist past that some nations
might prefer to forget e.g. the British, French, Spanish and Portuguese colonies.
Today they exist as mainstream businesses that use traditional business
relationships as part of their competitive advantage.
Licensing
• Licensing essentially permits a company in the target country to use the property
of the licensor
• Such property usually is intangible
• The licensee pays a fee in exchange for the rights to use the intangible property
and possibly for technical assistance.

6. 5
• Because little investment on the part of the licensor is required, licensing has the
potential to provide a very large ROI
• Licensing includes franchising, Turnkey contracts and contract manufacturing
• Franchising involves the organization (franchiser) providing branding, concepts,
expertise, and infact most facets that are needed to operate in an overseas market,
to the franchisee. Management tends to be controlled by the franchiser. Examples
include Dominos Pizza, Coffee Republic and McDonald’s.
• Turnkey contracts are major strategies to build large plants.
• They often include the training and development of key employees where skills
are sparse - for example, Toyota’s car plant in Adapazari, Turkey.
You would not own the plant once it is handed over.
• Contract manufacturing firm is that which manufactures components or products
for another "hiring" firm. It is a form of outsourcing
• The practice of utilizing contract manufacturing relies on the manufacturer's
ability to drive down the cost of production through economies of scale
• It also allows the hiring company to obtain the needed components or products
without needing to own and operate a factory.
Joint Venture
• There are five common objectives in a joint venture:
- market entry
- risk/reward sharing
- technology sharing
- joint product development
- conforming to government regulations
Such alliances often are favorable when:

7. 6
• The partners' strategic goals converge while their competitive goals diverge;
• The partners' size, market power, and resources are small compared to the
industry leaders; and
• Partners' are able to learn from one another while limiting access to their own
proprietary skills
Potential problems include:
• Conflict over asymmetric new investments
• Mistrust over proprietary knowledge
• Performance ambiguity - how to split the pie
• Lack of parent firm support
• Cultural clashes
• If, how, and when to terminate the relationship
Foreign Direct Investment/ Overseas Manufacture / International Sales Subsidiary
• A business may decide that none of the other options are as viable as actually
owning an overseas manufacturing plant i.e. the organization invests in plant,
machinery and labor in the overseas market
• involves the transfer of resources including capital, technology, and personnel
• through the acquisition of an existing entity or the establishment of a new
enterprise
• The key benefit is that your business becomes localized - you manufacture for
customers in the market in which you are trading
• downside is that you take on the risk associated with the local domestic market

8. 7
International Agents and International Distributors
• agents are individuals or organizations that are contracted to your business, and
market on your behalf in a particular country
• They rarely take ownership of products, and more commonly take a commission
on goods sold.
• Agents usually represent more than one organization
• Agents are a low-cost, but low-control option
• They tend to be expensive to recruit, retain and train
• Distributors are similar to agents, with the main difference that distributors take
ownership of the goods
Strategic Alliance
• Astrategic alliance is a term that describes a whole series of different
relationships between companies that market internationally
• Essentially, Strategic Alliances are non-equity based agreements i.e. companies
remain independent and separate.
• There are many examples including:
• Shared manufacturing e.g. Toyota Ayago is also marketed as a Citroen and a
Peugeot
• Research and Development (R&D) arrangements
• Distribution alliances e.g. iPhone was initially marketed by O2 in the United
Kingdom
• Marketing agreements
• Several streams of thought are discernible in the discussion of cooperative or
collective strategy
• alliance has been considered as a strategy of behavior contrasted with competitive
strategy

9. 8
• “if you can’t beat ‘em, join ‘em.”
• Alliance has been posited as a systematic response to promote areas of common
interest between two firms
• Alliance has been theorized as a particular value system with emphasis on
humanism and fairness.
Examples:
• SAIL and TATASteel: SAIL signed an agreement with Tata steel for joint
development of coal blocks
• Xerox and Fuji: These two multinational giants, located in U.S. and Japan,
respectively, joined hands to explore new markets in Europe and in Pacific Rim
countries.
• AT&T, IBM, Motorola, and Loral: A giant alliance between AT&T, IBM,
Motorola and Loral was formed to develop an advanced computer chip
manufacturing technology.

10. 9
Question C:
Select ONE public listed company, local or multinational. Identify the international
corporate level strategy (multidomestic, global or transnational strategy) that the
organisation has undertaken to grow its market (in products or services) as a
strategic competitive advantage. Take into consideration that such a firm would
operate in multiple industries in multiple countries or regions for which they
operate multiple products. Refer to any journal articles or case studies to support
the company’s strategy to go global. Identify possible risks that the company could
be facing and how it can mitigate or minimize such risks. Provide a critical
evaluation of the strategy and conclude based on your understanding.
Hewlett &Packard, HP Company
Bill Hewlett and Dave Packard are two students who graduated in electrical engineering
from STANFORD University in 1935.The Company originated in a garage in nearby
Palo Alto, California, USA during a fellowship in 1939 with initial capital investment of
$538.
Hewlett Packard company commonly referred as ‘HP’.HP company became an American
multinational information technology corporation headquartered in Palo Alto , California
, USA Nearly in each country.
HP product lines are personal computing devices, enterprise servers, related storage
devices, and diverse range of printers & imaging products.
HP markets its products to household, small to medium size consumers and enterprise
directly as well as via online distribution.
HP Corporate Level Strategy
HP is pursuing the diversification as a corporate level strategy. It is obvious from the
variety of products and services the company produce. HP operates in nearly every
country in the world, which gives them market exposure to even the most rural areas. The
recent big news about HP has come from their printing products. The book publishing

11. 10
industry has evolved in a way that books are being printed more effectively and more
rapidly. With nearly the whole world as HP's market, printing books to the masses are
resulting in tremendous success. Now HP is considered the leading book printer in
Europe. The printing machine delivers high productivity with low operating costs which
offers more revenue opportunities.
In the last decade, HP has made several acquisitions in many related areas including
Software companies, personal systems, and even imaging & printing firms. However, the
main acquisitions and mergers in the past decade began in 2001 when HP and Compaq
merged which created the two companies into one giant computer products manufacturer.
One company that many people might recognize is Snapfish. Snapfish is a website where
people have the ability to store their picture albums on the internet and even order prints
for a small fee. The most recent acquisition by HP was last July when they bought out
IBRIX, a company that focuses on file serving software and data protection. Studies have
shown that network storage industry has grown by 20 percent each year and that the
acquisition of this company shows HP's leadership in this emerging market
Risk Management
HP uses its environmental management system (EMS) to identify environmental risks
throughout the company’s operations. Sites undergo regular aspect identification analyses
and policies and procedures are developed to manage key risk areas. One of the primary
roles of the Internal Audit group is to assess risks throughout the company and to evaluate,
monitor and improve the effectiveness of controls and governance processes that support
corporate objectives. The group audits global citizenship issues and management systems,
and provides regular reports directly to the Board Audit Committee on its findings
Vision statement:
“To view change in market as an opportunity to grow, to use our profit and our ability to
develop & produce innovative products , services and solutions that satisfy emerging
customers need”
Mission statement:
“To provide product, services and solution of highest quality and deliver more value to
our customers that earn their respect and loyalty ”
SWOT Analysis:
STRENGTHS
Ø Brand name
WEAKNESSES

12. 11
Ø Low debt
Ø Wide range of innovative products
Ø Developing of own hardware and software
Ø Web technology used for product
awareness & sale
Ø Lack of in-house management consulting
division
Ø Intellectual capital is underestimated
Ø No aggressive investment in R & D
Ø No good people retention policy
OPPORTUNITES
Ø Expansion of retailed stores for customer
convenience
Ø Participation in joint venture
Ø Make easy to use product for upcoming
retirees
Ø Computer and cell phone software &
hardware
THREATS
Ø Competitor’s technology & pricing
Ø low compatibility with non- HP product
Ø Availability of substitute
Ø Less global coverage than competitor

13. 12
IFE (INTERNAL FACTOR EVALUATION MATRIX)
Table (1): Internal Factor Evaluation Matrix

14. 13
EFE (EXTERNAL FACTOR EVALUATION MATRIX)
Table (2): External Factor Evaluation Matrix

15. 14
CPM (COMPETITIVE PROFILE MATRIX)
Table (3) :Competitive Profile Matrix

16. 15
S.W.O.T Strategies
S.W.O.T Strengths - S
1. Brand name
2. Low debt
3. Wide range of
innovative products
4. Developing of
own hardware and
software
5. Web technology
used for product
awareness & sale
Weakness – W
1. Lack of in-house management
consulting division
2. Intellectual capital is
underestimated
3. No aggressive investment in R
& D
4. No good people retention
policy
Opportunities – O
1. Expansion of retailed stores
for customer convenience
2. Participation in joint venture
3. Make easy to use product for
upcoming retirees
4. Computer and cell phone
software & hardware
SO - strategies
v (S1, S3,O1,)
(must open new retail
stores throughout the
world to take advantage
of financial strength)
v (S4, O3)
(develop easy pc and cell
phone for old generation)
WO – strategies
v (W1,W5,O2)
(develop new HR policy in order to
retain human capital by taking
advantage or other firm
management )
Threats - T
1. Competitor’s technology &
pricing
2. low compatibility with non-
HP product
3. Availability of substitute
4. Less global coverage than
competitor
ST – strategies
v (S4, T1)
(developed low price and
innovative pc & cell
phone than competitors )
v (S5,T2)
(developed such
hardware and software
for computer & cell
phone which are
compatible with other
companies software and
accessories)
WT – strategies
v (W1,T1)
(give attention to management
consulting division to have more
focus on technology improvements)

17. 16
SPACE (STRATEGIC POSITION & ACTION EVALUATION MATRIX)
Internal Strategic Position External Strategic position
Financial Strengths (FS) Environmental Stability (ES)
Return on Investment
leverage
Working Capital
Liquidity
Price earning ratio
Total
Average
+5
+3
+4
+5
+4
+21
+4.2
Technological changes
Rate of Inflation
Price range of Competing
products
Competitive pressure
Barriers to entry into market
Demand variability
Total
Average
-3
-2
-3
-5
-4
-2
-19
-3.17
Competitive Advantage (CA) Industry Strength (IS)
Market Share
Product Quality
Customer Loyalty
Technological know-how
Control over suppliers and distributors
Total
Average
-2
-3
-2
-2
-4
-13
-2.6
Growth Potential
Profit Potential
Financial Stability
Labor cost
Technological know-how
Total
Average
+5
+5
+4
+3
+4
+21
+4.2
Table(4): Strategic Position& Action Evaluation Matrix

18. 17
SPACE Quadrant Chart
Analysis:
According to the space matrix score, HP falls in the “AGGRESSIVE quadrant” . Their
strategies should be one of the following:
• Vertical and horizontal integration
• Market penetration
• Market development
• Product development
• Diversification

19. 18
BCG (BOSTON CONSULTING GROUP)
ID SEGMENTS
REVENUE
%
PROFIT
%
GROWTH
RATE %
MARKET
SHRE %
A ESS 19 2 11 0.8
B HPS 17 20 8 0.1
C SOFTWARE 1.4 5 14 0.6
D IPG 29.2 30 8 0.8
E PSG 32 42 -10 0.7
F HPHS 2.2 2 -14 0.2
Table (5) BCG Matrix HP divisions

20. 19
IE (Internal /External)
IFE Total Weighted Score 3.02
Analysis:
HP falls in first region of IE matrix and there main focus will be on “GROW AND
BUILD” and they will mainly focus on strategies which are:
• Market development
• Horizontal integration

21. 20
GRAND STRATEGY MATRIX
Analysis:
HP has rapid market growth and strong competitive position so it falls in first quadrant
and the most suitable strategies for HP are:
• Market development
• Horizontal integration

22. 21
QSPM (QUANTITATIVE STRATEGIC PLANNING MATRIX)
Key Internal Factors HORIZONTAL
INTEGRATION
MARKET
DEVELOPEMNT
Strengths Weight AS TAS AS TAS
Brand name 0.14 3 0.42 4 0.56
Low debt 0.13 3 0.39 2 0.26
Wide range of innovative
products
0.13 4 0.52 3 0.39
Developing of own hardware
and software
0.11 4 0.44 3 0.33
Web technology used for
product awareness and sale
0.10 2 0.20 3 0.30
Weaknesses
Lack of in-house management
consulting division
0.10 2 0.20 3 0.30
Intellectual capital is
underestimated
0.08 -- -- -- --
No aggressive investment in R
& D
0.11 3 0.33 2 0.22
No good people retention
policy
0.10 3 0.30 2 0.20
Total weight 1.00

23. 22
Key External Factors HORIZONTAL
INTEGRATION
MARKET
DEVELOMENT
Opportunities weight AS TAS AS TAS
Expansion of retailed store for
customer convenience
0.11 3 0.33 4 0.44
Participation in joint venture 0.20 4 0.80 2 0.40
Make easy to use product for
upcoming retirees
0.09 3 0.27 2 0.18
Computer and cell phone
software and hardware
0.12 3 0.36 2 0.24
Threats
Competitors technology and
pricing
0.14 4 0.56 3 0.42
Low compatibility with non-HP
product
0.13 3 0.39 2 0.26
Availability of substitutes 0.10 4 0.40 3 0.30
Less global coverage than
competitors
0.11 3 0.33 2 0.22
Total weight 1.00
Total Attractive Score 6.24 5.02
Table (6): Quantitative Strategic Planning Matrix

24. 23
Analysis:
According to the total attractive score of QSPM HP should go for
“HORIZONTAL INTEGRATION”
Resources:
· Chiara Franco, F. R. (2008). Why do firms invest abroad?An analysis of the
motives underlying Foreign, Direct Investments.
· David, F. R. (2011). Strategic Management Concepts and Cases. Pearson
Education, Inc., publishing as Prentice Hall, One Lake Street,.
· Pok, D. C. (2012). STUDY GUIDE Strategic Management.
· Rizwan, D. P. (2012). Different Modes of entry into international business.