¶ … Fab Five is to provide a strategic plan for the U.S. based computer hardware designer Hewlett-Packard (HP) in its analysis of the internet technology (IT) hardware industry in South Korea, Russia, India, and China. The Fab Five will determine which country is best suited for HP, as well as, the internet hardware manufacturer in that country that HP should engage in a joint venture to align with HP's strategy for global expansion. This paper has three parts: Part 1 consists of an overall industry analysis looking at the market size and growth potential in each of these countries and comparing this analysis to that of the IT hardware industry in the U.S. Part 2 will examine the risks associated with this venture and any opportunities, taking into account the market potential and structure of the industry in each country, as well as, the overall business climate in these countries. Part 3 will examine multinational and local South Korean IT hardware manufacturers to determine a target company to enter into a joint venture. The main tool that will be utilized for comparison of the industry in each country is Porter's Five Forces analysis and PESTEL. In 1980, Michael Porter identified the five competitive forces that shape every industry. These competitive forces will assist us in analyzing an industry's strengths and weaknesses. The five forces Porter identified are: the competition in the industry, the potential of new entrants into the industry, the power of suppliers, the power of customers, and the threat of substitute products.
To determine HP's growth the Fab Five team needs to tie HP's vision and global strategy to an understanding of the market environment and HP's ideal growth style. From HP's most recent 10k filing, HP's global vision: "Our products and services are available worldwide. We believe this geographic diversity allows us to meet demand on a worldwide basis for both consumer and enterprise customers, draws on business and technical expertise from a worldwide workforce, provides stability to our operations, provides revenue streams that may offset geographic economic trends and offers us an opportunity to access new markets for maturing products. In addition, we believe that future growth is dependent in part on our ability to develop products and sales models that target developing countries. In this regard, we believe that our broad geographic presence gives us a solid base on which to build such future growth."
From HP's most recent 10k filing, HP's strategic focus is explained as follows: "Our strategy is focused on leveraging our existing portfolio of products, services and solutions to meet the demands of a continually changing technological landscape and to offset certain areas of industry decline. To successfully execute this strategy, we must emphasize the aspects of our core business where demand remains strong, identify and capitalize on natural areas of growth, and innovate and develop new products and services that will enable us to expand beyond our existing technology categories. Any failure to successfully execute this strategy, including any failure to invest sufficiently in strategic growth areas, could adversely affect our business, results of operations and financial condition."
To determine the strategic growth needs of HP, it is vital to understand the business environment in which HP currently operates. We will use Porters Five Forces Framework to analyze the business environment.
New Entry Threats -- Low: There is low risk of new entrants threatening the market due to barriers to entry from high capital and resource needs.
Power of Suppliers -- Moderate/High depending on the component: The power of suppliers is high as there are few suppliers for specialized, high quality components. However, for some components that are easy to manufacture at...
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