Business Strategies of World’s Successful Companies: Hewlett-Packard’s Winning Business Strategies

By | October 29, 07

Business Strategies of World’s Successful Companies: Hewlett-Packard’s Winning Business Strategies

A thorough research of the history of Hewlett-Packard, HP, and exposing the winning business strategies of a once small business start up that fired it into a global enterprise.

Business Strategy 1: Find A Way to Make Your Product Cheaper And Of Good Quality

No doubt, one of the reasons for the high rate of failure of start-up businesses is that entrepreneurs wrongly think that as long as there is a need or that the product is of high quality, consumers will buy without minding the price. Others will even argue that selling at a low price automatically connote inferior quality product that consumers will shy away from.

So to these business owners the way to go is create an expensive product and bring to the marketplace at a premium price. And of course the marketplace will do just one thing: kick it hard with a jack boot right back to them.

Understand that consumers, including you, are not looking for where they can pay higher when they know where to get the same quality cheaper. And don’t try creating the ‘best quality product’ if you cannot do so at a cost that will enable you sell at a price below the market leaders.

Yes, your price must be lower than those of the industry giants if you desire success in your business because you don’t have the brand name to be able to lead the industry in price.

Smart business owners coming into a market newly come with a sound business strategy – they will strive to offer a better quality product at a cheaper price – they come with a double-edged sword.

And that was exactly the business strategy of Hewlett and Packard that enabled them to hit their very first business success – the creation of the model 200A precision audio oscillator.

They sought for a way of producing less costly but high quality oscillators, which led them to discover that using a small light bulb as a temperature dependent resistor in a critical portion of the circuit, would greatly reduce the cost of production as well as making the oscillator to be tremendously stable.

This innovation enabled them to sell the Model 200A for $54.40 when competitors were selling less stable oscillators for more than $200.

For 33 years, the Model 200 series of generators was perhaps the longest-selling basic electronic design of all time.

Business Strategy 2: Remain On Top Of the Game by Ceaselessly Improving On Your Product/Service

It is one thing to take your business to the top and another to remain there. In fact, it could even be more difficult maintaining your success than coming up in the first place.

However, by making it a priority to continually improve and increase the value you are offering your customers from time to time can guarantee your business the top position while others are kept behind.

For over three decades, Hewlett-Packard’s model 200 series of generators continued to sell due to repeated improvements that it went through in those years – up to 1972 as the 200AB, still tube-based but well improved design.

Also, from the 1940s to the 1990s, HP ensured their business was well ahead in their industry by making repeated improvements, which put their products way ahead of competitors’. Almost all HP voltmeters and signal generators had at least one more click of their knobs than its competitors.

Its meters could measure down and up an extra 10 to 100 times the units of other meters. HP’s business strategy of maintaining leadership was for their engineers to continue to develop ways of making their equipment measure far more ranges than those of competing businesses.

Again HP ensured its frequency counters, voltmeters, thermometers, and time standards were extremely accurate, precise and stable.

Business Strategy 3: Being Focused Makes Your Business More Effective and Efficient

Without clear focus of what to achieve you will not likely be able to build a successful business. Focus is needed so that all resources and time can be judiciously directed in achieving an identifiable goal.

It is indeed not likely that Hewlett-Packard could have become the successful, multibillion dollar company it is today if it hadn’t made a turn from providing a wide range of electronic products, to being focused.

Though the company started off rather unfocused, providing electronic products for several industries including agriculture, it eventually reversed this unprofitable position by deciding to focus on high-quality electronic test and measurement equipment from the 1940s well into the 1990s.

Business Strategy 4: Strongly Avoid Looking Like the Market Leaders

It is very important that in launching a new business or product you use original names, colors, slogans, features, titles, etc that do not resemble that of the competitors which consumers are already familiar with.

The reason is that your being original creates a fresh spot in consumers’ minds about your business, which you can develop and make strong by satisfying and even exceeding their expectation.

On the other hand, coming out looking or sounding somewhat like the industry giants with the hope of benefiting from their brand name will not only get you into trouble for infringing on their copyrights, consumers will immediately perceive your business as an imitator and may never even get close to trying out your product.

In recognizing how suicidal it could be to give a product a similar name as that of an existing product owned by the market leader, Hewlett-Packard in 1968 skillfully called its new computer, the Hewlett-Packard 9100A, which was the first world’s personal computer (as acknowledged by Wired magazine), ‘desktop calculator’, instead of computer.

According to Bill Hewlett, “If we had called it a computer, it would have been rejected by our customers’ computer gurus because it didn’t look like an IBM. We therefore decided to call it a calculator and all such nonsense disappeared.”

Business Strategy 5: It’s Sure the Best to be No. 1

There is certainly no other position as rewarding as the number one in the market place – here your business is the first on buyers list when they make their purchasing decisions. And this invariably means that you will be dominating and selling more than any other business.

To attain this enviable position therefore requires a business strategy whereby your business makes it a priority to unleash its creativity in identifying customers’ needs and designing products to meet them in unique and effective ways.

The great success and respect Hewlett-Packard has earned over the decades have been more due to its resolute and unrelenting effort at being the first in many product categories.

For instance it gave the world its first handheld scientific electronic calculator, the HP-35, in 1972. It was the first to introduce handheld programmable, the HP-65, in 1974; while in 1979 it produced the first alphanumeric, programmable, expandable (the HP-41C), followed by the first symbolic and graphing calculator HP-28C.

Business Strategy 6: How Are You Growing Your Business?

For a business to remain viable it must continually be grown, otherwise it will gradually become stunted and eventually die off. That means there must be a strategy put in place to ensure its growth annually.

There are different ways you can grow your business by. These include: extending your product line; moving into other market segments, acquiring other businesses; and creating an innovative and effective distribution system.

Hewlett-Packard’s continual growth over the decades has been made possible through a combination of all the above growth methods.

It acquired other businesses in 1989, such as Apollo computer Inc., Massachusetts, workstation manufacturer, Chelmsford, thereby pulling in revenue of $11.9 billion with more than 10,000 products on their stable. It again bought Convex Computer in 1995 and added Compaq in 2002.

It also extended it target market in the 1990s to include individual consumers rather than only targeting institutional consumers like university, research, and business customers.

Then it lunched later in the 1990s, which was renamed “HP Home & Home Office Store” in 2005, and began selling online direct to consumers.

As a result of this strategy HP became a major player in desktops, laptops, and servers for many different markets.



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