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This report presents the case study for HP in Vietnam. We have followed the guidelines provided for case. The analysis is divided into three parts. Parts 1 & 2 contain the external & internal analysis. Part 3 builds on the analysis by presenting various matrix and recommends a final strategy.
The HP in Vietnam case is HPs attempt to study the feasibility for entering the Vietnamese market is a more formal and structured manner. Till now individual units in HP had appointed different distributors. However the company wanted to decide on a more formal approach. The key factor driving the decision was the recent lifting of the US trade embargo and subsequent quickening of economic reforms and opening of the economy allowing the outside world to trade with Vietnam.
The Vietnamese IT industry was expected to grow tremendously over the coming years. Already it has doubled in size for the past years and it was expected that it would be $300-million market in the next 5-years. In addition the government had launched a aggressive IT-2000 program to upgrade its infrastructure, setup component manufacturing and train its people.
Seeking to capitalize this opportunity HP is trying to make the decision for market entry and the methods. Our analysis uses the case data to make the final strategy recommendations.
1 Vision & Mission
HPs mission & vision is directed towards seven key areas. These are customer loyalty, profit, market leadership, growth, employee commitment, leadership quality and global citizenship.
By focusing on Customer Loyalty, HP strives to produce products & services of highest quality and ensure they deliver value. HP understands that its success is dependent on customer loyalty and its customers success in using and deploying its products which can only be achieved by really understanding what the customer needs. HP strives to achieve sufficient profit to finance the companys growth and of-course create value for its shareholders & owners. The key to this value is the understanding that profit is a function of setting & meeting both long and short term objectives.
It strives to attain and maintain Market Leadership by continuously providing valuable and quality products and services, by tapping newer areas and ensuring it is in the two in its chosen market. Growth is an important component of its mission and HP continuously analyzes the market and its profits to research and develop new, better and ever more innovative products and services as it strives to satisfy the needs of its customers. HP understands that to grow risks have to be taken.
The company recognizes that Employee Commitment is the key to its success and provides employees performance based opportunities to advance while providing a creative, nurturing, exciting and stimulating environment. It seeks to provide leadership to its employees by developing leaders who are accountable and inspire the workforce to turn its vision into reality. Its leaders are trained to coach, relay good news and bad, give feedback eliminate busy workloads and measure people on the results they achieve.
Lastly HP recognizes that it lives in a Global environment and wants to be an intellectual asset in each country it operates in.
2 External Environment
2.1 External Analysis
The modern state of Vietnam came into being in 1945 when Ho Chi Minh proclaimed the independence of the Provisional Democratic Republic of Vietnam. Ho Chi Minh was greatly influenced by Communism and this no doubt led the French to resist this attempt for freedom. He was supported by both China and Soviet Union, themselves committed communist states. The long war led to Americas involvement and defeat of its puppet government in the South Vietnam. This led to the establishment of a communist government in a unified Vietnam which has had profound impact on Vietnams economic, technological, political-legal and socio-cultural environment.
2.1.1 Political Environment
The National Assembly of Vietnam is the supreme body governing the country. It performs functions such as enacting laws, ratifying plans for economic and social development, budget planning, electing top officials and selecting cabinet members. The government is the executive body for enforcing the laws and edicts of the national assembly. Since Vietnam is a communist state all power lies with the people, and all resources belong to the people. Private land holdings are of-course forbidden. The communist party controlled all organs of the state and no political parties were tolerated. Dissent was dealt with in the usual Communist fashion of summary trials and execution. Although Vietnam never descended into the Stalin style large scale persecutions, it was severely restricted in its political development by the outlook of the leadership which viewed itself in a fight against the imperialistic and capitalistic designs of the West. This worldview led to limited contact with the outside world.
The Collapse of the Soviet Union and the end of cold war signaled the beginning of the end of Soviet inspired models of political leadership. The communist leadership grouped into the Vietnam Political Bureau recognized that in order to survive the country must open up and integrate with the outside world. It sought to expand external contacts and cooperation and promoted joint ventures.
This change in world view did not go down well with the old communist guard and the country continues to debate its future as the closed political system conflicts with the need for economic interdependence. This debate could descend into some level of political instability particularly if the state is not able to match the opening up of the economy with opening up of political space for different points of views.
2.1.2 Economic Environment
Vietnam is basically an agricultural based economy which employees 70% of the workforce contributes 40% to the GNP and accounts for 40% of exports. It is the 3rd largest exporter of rice. Other then agriculture Vietnam also has an industrial base comprising of both