1.1 Strategic Vision and Mission
“The HP Way”
HP was created by Bill Hewlett and Dave Packard and went public in 1957, at the same time crafting the HP Way. HP achieved the longest period of fast-growth in the history of American corporations. (Burrows 2005). The vision was for HP to use its profits to achieve the objectives valued by the company, such as employees and community.
The mission was to grow through profits, by delivering the highest quality of technology to customers, through an engaged and valued workforce. Central to this mission was the involvement of its employees. HP Way had a bottom up consensus when setting objectives and values.
HP provides a diverse range of products from printing, PCs, storage and networking. Comparisons between HP and its rivals questioned whether the HP Way could be sustained in a rapidly developing and price challenging market. (Wiegner, Kathleen K. 1990). While being well positioned there were challenges in a competitive analysis. HP positioning needed to be reviewed and as a consequence trade-off of its activities had to come. (Michael Porter, 1996).
“The Carly Way”
Carly Fiorina was appointed HP CEO in 1999 and implemented a top-down approach to strategy. She created a new Strategy Council and Executive Council with four main divisions replacing 83 autonomous product groups. After the merger with Compaq she realized costs savings of 3.5 Billion and implemented over 17,000 redundancies from the company.
Carly led HP to a new strategy:
– Top down approach rather than bottom up
– Coffee Walks instead of Coffee Talks
– Reduction in Management Walks
– Outsourcing non-core competencies rather than developing internally – Redundancies rather than reassignments for staff
While Carly mission has moved away from the HP Way, she is transforming HP into a leaner and more competitive company. If she is to be successful, she will need to bring her employees with her and for this, she will need to look at a new people/resource based way.
1.2 Crafting a Strategy
The third stage of a 5 stage strategy making process is to ‘Craft the Strategy’, which combined with the previous phases (Vision & Objectives) delivers a Strategic Plan (Thompson et al, 2012)
When crafting their strategy AMD demonstrated astute entrepreneurship and coordination in crafting both emergent and deliberate type strategies (Thompson et al, 2012). This is evident through deliberate strategic initiatives to gain market share: – Age of Asparagus: add proprietary products
– Catch the Wave: attracting talent
AMD’s emergent strategic was crafted during the mid-80s when the industry hit a downturn and new entrants emerged into the market. AMD crafted an offensive strategy to produce diverse products and enter into new markets themselves.
AMD evolved into a recognized and rewarded leader in delivering sustainment development (SD) initiatives through a strategy crafted on Corporate Responsibilities and Employee Development. These have helped promote and successfully develop the company. Examples of these are: – Energy saving programs achieving a 25% reduction is power usage (2003) – Hazardous waste controls and Water Usage reductions
– Investment for developments of local communities ($6.3M in 2003) – Employee Health and Safety Practices
– Workforce development initiatives
– Consistently first to market with new innovative products (AMD, 2012)
AMD’s Strategy making hierarchy is demonstrated on multiple levels: –
o Joint Venture with Fujitsu;
o Cross licensing agreements
– Functional Areas:
o R&D: development of new products and co-development with IBM (Leiblein,Michael J. 2009) o HR: multiple programs for employees: Health screening, workforce development & Catch the Wave. – Operating Units:
o Renewable energy sources for Austin Plant
o Dresden Energy Center: highly efficient facility to provide power to manufacturing facility.
AMD has consistently produced a strong customer value proposition through differentiated, top quality products which at its core is People, Planet, and Profit. AMD have held strong to this intent through downturns in the market. AMD has crafted new strategic moves through acquisitions and strategic alliances to strengthen its position. (AMD, 2012)
1.3 Competitive Analysis
“The job of a strategist is to understand and cope with competition” – Michael Porter.
Amazon are an maturing on-line retailer running a growth strategy while competing against a mix of on-line and retail companies such as Yahoo, Google and Wal-Mart. In order for Amazon to continue to translate strong revenue to profits Amazon need continued focus on its environment and the competitive forces that exist within. When looking at Amazon’s strategically relevant macro environment the main factors would be positive: • The downturn in economic conditions is challenging but there is positive forecast for strong companies where globalization could be utilized (Trends Magazine, 2009) • Technology advances
• Broadband expansion
• Demographic shift to internet purchases,
• Rise of mobile internet & e-business usage (BBC, 2008)
These factors place Amazon in a positive position to grow its revenue.
The five forces of competition: (Thompson et al, 2012)
– Substitute Products: products now available through Amazon has reduced the substitute force. – Buyer’s Power: strong force where buyers can easily switch based on price and convenience. – Barriers to Entry: High entry costs for establishing brand, marketing and technology. – Supplier Power: Not a strong force as internally sourced value chain items such as logistics and technology development. – Rivals: pose a significant threat to Amazon
Amazon have demonstrated a good knowledge of competition and the ability to defend itself. (Kotha, Surech 1998) An order-winning key success factor differentiating Amazon is its resource capability to develop new innovative technology solutions. These have led to new opportunities such as merchant business, Amazon Services and cross selling.
The outlook for Amazon is positive, with convenience and brand name ensuring that it can maintain its online trading presence. But to realize growth Amazon should focus and expand its technology services which are the company’s crown jewels.
1.4 Strategic Execution
Thompson et at (2012) state that “the implementation of a strategy is an operations-oriented, make-things-happen activity aimed at performing core business activities in a strategy-supportive manner.” AMD demonstrate this through it operational sustainable development initiatives which are people focused. AMD’s strategic vision is built on people, planet and profit. “People first. Products and profit will follow”. AMD’s focus on people led to greater differentiated products, customer commitment and a competitive advantage. AMDs strategic execution for people is implemented through two main Sustainable Development initiatives. 1) Social Sustainability: AMD have implemented multiple initiatives in executing its people focused strategy. This ensures skilled and motivated staff with the right culture to execute the strategy.
2) Environmental Sustainability: AMD’s implementation and measurement of these initiatives demonstrate its commitment to executing its strategy. While ensuring Corporate Responsibility, the initiatives have generated a significant number of costs savings and ensure operational excellence. Examples are:
• While ensuring staff were motivated, trained, informed and engaged in the strategy, management ensured operational excellence which demonstrates good strategic execution. (Thompson et al, 2012).
• A measurement of AMD’s strategic execution is in the products and innovation the company have achieved, as well as the financial performance of the company.