(1) KRA: Business Process Outsourcing (Call Center):
As mentioned earlier, Hewlett-Packard provides best customer supports before and after sales in IT industry and offers its online solution from overseas locations. The net revenue of offshore customer call center declined by 3.5% in the fiscal year 2010. This demonstrates the need to consolidate poor performing centers and enhance training for call center providers.
· Increase net revenue in offshore customer call centre (BPO) segment.
· Consolidate commercial data centers
To recover revenue in service sector HP designs restructuring plan like:
(i) Consolidation of BPO service units: Consolidation includes expected dates of termination of sites like in India, HP offered other IT giant firms to takeover its BPO sectors. Also HP plans to elimination of about 9000 positions and saving severance cost by the 2012. As on October 31, 2010, HP has eliminated about 2100 positions (hp annual report, 2010).
Parallel strategy in BPO sector named as captive center strategies suggested by a group of researchers in global sourcing: recent trends and issues (Kotlarsky, J., Oshri, I., Rottman, J., W., & Wilcocks, L., L., 2009).
(ii) Divestment: Divestment occurs when company wants to close its business unit either when it’s no more profitable or when the management operations changes. HP has considered this option to close down certain locations but which one, it’s not cleared. By selling out non responding BPOs, HP may recover its loss.
(2) KRA: Enhanced Customer Service and Online Retailing
Rapid growth and increased demand for customization drives HP’s consumer market. The consumer is advanced in their needs and as illustrated in Porters Analysis bargaining power of buyers is relatively high and could decrease profit potential. There is strong rivalry in the PC market, Dell out ranked HP in 2010 in the PC segment which was credited to channel support and sales service. The company needs focus on generating a better online sales by using a best cost provider strategy to incentivize consumers to buy HP personal computing systems online direct from the company.
Increase online sales and online retailing globaly.
Extensive training workshops to be held within sales department to grow customer service techniques and skills. Particularly in troubleshooting, software use and other aftermarket services
(i) Add joint venture partners in Asian countries like Tata’s Croma – electronic megastore retailer located in India to provide online distribution and customization of products.
(ii) Best cost provider strategy for online sales to incentivize consumers.
(3) KRA Increase Production to Market Cycle:
In IT industry product life cycle is very short. Continuing evolution in operating system forces hardware manufactures to make more efficient systems. HP is developing new products but sometimes due to supply chain restriction or contract, it sees slowdown in distribution of product to the end users. HP aims to increase sales through inventing more in supply chain management (HP annual report, 2010).
· Shorten product to market time by accelerating production and supply channel
· Increase gross margin through supply chain.
(i) Increasing multiple outsourced manufactures (OMs) for supply chain hence increasing supply chain mix and hence reducing product time to reach the market.
(ii) Investing more in supply chain operations, eliminating complexity, reducing fixed cost and put leverage in scale to see availability of manufacturer’s components at reasonable price to end users.
(4) Improve Research and Design capabilities: As we reported in the dominant economic features, competitive rivalry is a threat and one way to maintain an advantage to exceed competitors’ innovative capabilities. Apple surpassed HP by launching iPad 1 & 2 before HP was able to respond with the Palm Touch tablet computer. HP rates high in the four criteria test in both innovation and knowledge but lacks speed and agility in product launching.
To push new technology from larva to pupa level with aggressive R&D concepts.
To conduct weekly progress evaluations of innovative tasks.
1. Improve inventory management
2. Fixed Asset Ratio
1. Monitor Days in Inventory
2. Monitor Fixed Asset Ratio and compare to time it takes to get products to market
1. Keep fewer inventories on hand by only manufacturing and ordering parts as needed
2. Increase up-to-date equipment on hand
1. Increase net revenue in Business Process Outsourcing (Call Centers) segment
2. Increase online sales and online retailing.
1. Tracking number of call receives by each call center and completion of satisfaction survey.
2. Measure by rate of satisfaction by customer survey and online sales revenue.
1. Elimination of poor performing BPO centers and enhance training for existing.
2. To train international sales force to be culturally competent, multi-lingual and able to assists customers cross functionally.
1. Shorten Product to market time
2. Increase gross margin through supply chain
3. Improve Research and Design capabilities
1. To reduce contracts with third party vendors by 10-20%.
2. Monitoring quarterly earnings.
3. Tracking team performance and adherence to deadline.
1. Increase number of OMs without binding contracts.
2. Investment in supply chain operations.
3. To create more effective timelines for product launch.
Growth and learning:
1. Growing through large deals (mergers/acquisitions)
2. Structure leads to duplicated functions
3. Structure makes coordination between divisions more time consuming
1. Successful merger of 3Com
2. Monitor production cycle
1.1 Increase its competitiveness (larger scale) 1.2 Expanded portfolio offerings
2.1 Cross functional teams (know what each other is doing)
Customer Service: As seen in the four criteria test HP has the skill and resources to further develop customer service relations. The company has above average performance implications in Brand Image, a valuable feature when considering consumer loyalty and satisfaction.
Even though in the year 2009, HP achieved best customer service champ award by Businessweek, the BPO sector showed declined in revenue at the end of the fiscal year 2010 indicating customer call service require improvement.
Increase production time: HP’s strongest segment is PC systems contributing 36.1% total revenues. The four criteria test indicates HP has strong brand image; consumers identify with the products. The R&D division has expanded into the Asia Pacific region with the largest research and design lab. Innovative skills and abilities are not slowing down product market cycle. Efficient production capabilities are strength in the four criteria test but the complicated matrix of third party vendors for components and manufacturing are stifling product to market cycle.
CNBC TV18 Shows. (2009, September 17). [Three BPO units of HP on the block]. Video retrieved on April 30, 2011 from http://www.moneycontrol.com/video/cnbc-tv18-comments/three-bpo-unitshpthe-block_416003.html?utm_source=Article_Vid
Hewlett-Packard Company and Subsidiarie. (2010). HP Annual Report, 2010. (pp. 52, 102-103). Retrieved on March 17, 2011 from http://phx.corporate-ir.net/External.File?item= UGFyZW50SUQ9Nzky MjF8Q2hpbGRJRD0tMXxUe XBlPTM=&t=1
KRA Internal process (2010). HP annual report, 2010. Retrieved on Retrieved on March 17, 2011 from http://phx.corporate-ir.net/External.File?item= UGFyZW50SUQ9Nzky MjF8Q2hpbGRJRD0tMXxUe XBlPTM=&t=1
Kotlarsky, J., Oshri, I., Rottman, J., W., & Wilcocks, L., L. (2009). Global sourcing: recent trends and issues: Guest Editorial. Information Technology & People.22(3). (pp. 192-200). Emerald Group Publishing Limited. DOI: 10.1108/09593840910981400
McConnon, A., McGregor, J., & Kiley D. (2009, February 19). The 2009 List of the Customer Service Champs: Customer Service in a Shrinking Economy. Businessweek. Retrieved on April 30, 2011 from http://www.businessweek.com/magazine/content /09_09/b4121026559235 _page_3.htm
PTI. (2007, March 14). HP to up India BPO staff by 20%. Retrieved on April 30, 2011 from http://www.rediff.com/money/2007/mar/14bpo2.htm