HP's Transformation under Carly Fiorina: A Case Study on Strategies and Cultural Shifts

For decades since its foundation, HP has been a reputable and successful company in the field of electronics. HP's company culture and management style are well recognized globally for emphasizing on profits and users. However, the company was dealt a blow in the 1990s by changing market trends and competition in the growing computer business (Hoopes, 2005). The company hired Carly Fiorina and charged her with the responsibility of turning the company around. As the first outsider to lead the company, this paper seeks to examine the strategies she put in place and the impact her decisions to acquire Compaq, among other policies, had on the growth of the company and its culture.

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Her first strategy was to change the company’s name from the traditional Hewlett Packard to initials HP which were inscribed over the words invent then she went ahead to slash the number of advertisers from 43 just two to concentrate on HP as a brand rather than individual products (Beer et al., 2004). Fiorina also reorganized the operational structure to come up with a front-back system where she combined 80 independent structures to come up with two front-end and two back-end structures. The front-end handled customers, and the back-ends dealt with computers and printers. In her first six months as the CEO, Fiorina visited various branches to talk to HP employees and familiarize them with her vision in the company.

Strategically, Fiorina’s put her focus on emerging market trends in the industry and therefore concentrated on selling strategies than productions. She changed the advertising policy to a historical one where she made an advert, including the founders and past CEOs who helped the public to relate the past to the present. She changed the focus of the company from a profit-oriented company to a revenue-oriented one. Fiorina went against Hewlett’s wishes to acquire Compaq in 2002 (Hoopes, 2005).

The acquisition of Compaq led to HP's growth inefficiency in that, by 2003, HP had reduced costs by $3.5 billion and a down headcount of 20,000. The merger also helped HP outsource larger contracts that rarely came their way when it was a single company and was elevated to the third-largest service provider down from seventh. However, this merger and changes led to the departure of "the HP way" culture that was tailored towards commitment. The new culture by Fiorina made decision making easier and helped her achieve the goal of changing HP's fortunes within her time frame (Beer et al., 2004). There was also the ugly side of the acquisition, as HP failed to make it to the top 100 employee preference companies in late 2003. There was a fall in the prices of HP computers by 10%, which made the company go into losses for the first time during the 2002-2003 recession period (Beer et al., 2004).

By 2003, HP's inaugural commitment culture was history, and Fiorina had established her style and management structure at the company that best for her. The company was now headed in the top of the bottom system with Fiorina at the helm. Despite the shortcomings that came with the merger, including employee downsizing, some losses, and poor performance of HP computers in the market, which could be attributed to Dell's decision to slash their prices, Fiorina did an excellent job turning HP around.

References

Beer, M., Khurana, R., & Weber, J. (2004). Hewlett-Packard: Culture in changing times. https://www.hbs.edu/faculty/Pages/item.aspx?num=30824

Hoopes, C. L. (2005). The Hewlett-Packard and Compaq Merger: A Case Study in Business Communication (Doctoral dissertation, Brigham Young University).