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The Emergence and Growth of the Company Hewlett-Packard

Free «The Emergence and Growth of the Company Hewlett-Packard» Essay Sample


Many views on the issue concerning the importance and feasibility of the higher education exist in the present-day society. The modern man has repeatedly destroyed the myth that for having a successful career or founding and continuously developing own business having a diploma of higher education is a mandatory component. Nevertheless, already successful and experienced businessmen have said many times that the solutions of the many questions and problems that are studied in schools for higher education they had to find through trial and error. Every mistake cost them tens and hundreds of thousands dollars. The fact of the advisability of acquiring knowledge as one of the initial steps to the beginning of business activity makes people receive education. After graduation, the alumni have a choice – to use their knowledge, ideas and ambitions and go their own way creating their own business, or to gain experience and begin a career as a dependent worker. Business history is full of examples of successes and failures of those who chose either first or second option. It makes people, who want to engage in the development of their own business, think twice before making a choice, as each of the options has its pitfalls. However, the ability of most recent graduates to establish a viable business still remains a question. Not every person is capable of creating successful business regardless the facts has he/she a higher education or not.

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Emergence and Growth of Hewlett-Packard Company

From the history of the business it became obvious that the start of almost any American IT company typically occurs in the garage with the old drilling machine and a starting capital of a few hundred dollars. The Hewlett-Packard Company is the example of the firm that was a creation of two alumni William Reddington Hewlett and David Pakkard and such scheme for the start of own business was founded by them. In 1934, they were the graduates of Stanford University, where their acquaintance happened. In addition to a bachelor’s degree in 1937, Hewlett received a master’s degree in electrical engineering, and Packard – Master of Science degree in 1939. In 1937, they started to think about the beginning of the work on joint projects and the opening of own company. The official birth of the firm happened on January 1, 1939. At the beginning of the work, they did not have any specific or revolutionary ideas and plans but they were good specialists in the area of engineering and electronic design with its deep understanding and interest in the future work in this field. It should be noted the presence of the risk that stood in front of these young ambitious people who had virtually no business experience but only a strong theoretical base. Nevertheless, the fact that nobody put corporate framework and limitations on the process of creating new ideas gave the businessmen an opportunity to design their own path to the success.


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The audio oscillator, which was used to configure the sound equipment, was the first production of Hewlett-Packard which has become a series. It was called Model 200A. Despite the fact that such products already existed in large quantities, Hewlett found a way to beat the competition. He made changes in the design replacing some of the details with cheaper ones while preserving the quality of the product. This method allowed the businessmen to reduce the price of production for almost four times. The competent marketing strategy that Packard formulated also contributed to the getting of the high sales. In order to make the company known to the potential customers and get orders on its products, he used the mail advertising. It was relatively cheap, affordable and effective way, as a potential client, obtaining the brochure, could make an order with the help of the response letter. Many customers took the advantage of this opportunity. Disney Company was the first and, factually, a wholesale buyer that ordered eight generators at once for filming of the new musical cartoon (Hewlett Packard 2005). Successful cooperation with such a renowned company helped to make the name and create a reputation in the market. After that, the businessmen began to gain momentum and started to expand their business while the number of the workers was still two.

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The beginning of World War II created a demand for the production of specialized equipment related to the work of radars for the Navy. In 1942, the Company, with the help of the friend and mentor from Stanford Frederick Terman, got the state order for the production of this equipment. By creating the signal generators and the radar radiation suppressors, the firm was able to take a place in this industry and earn enough money for its further development. In other words, due to the diversification of production, or rather its operational redirection, the businessman not only did not suffer from the occurrence of the crisis period in the history but were able to win the new target segment and enter a new market. The staff consisted of about 45 people and the profits were almost a million dollars. After a fall in the demand for military equipment in 1950’s, the company changed its profile again. It demonstrated the understanding of the founders that the most important thing in their work was the ability to be flexible and adapt to the changing external environment. By hiring the best engineers from other firms, the company began work in the field of the computer engineering. This step was aimed at bringing new talented scientists, fresh minds, and ideas to work on new developments and technologies. The appearance of the first personal computer HP 2116 A in 1966 became its result. The creating of the world’s first scientific calculator in 1972 and the creation of print devices in the early 80’s brought a real success of the Hewlett-Packard Company (Hall 2012).

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One of the main components of the company’s success was its management and its policy of work with the staff, in particular. The company put the human relationships in the first place. Two principles existed in the work of the personnel. First, people had to do only the work that they liked. Second, even the junior employee was respected. The principal objective of this approach was to create such working environment in which people have the feeling that they are the significant part of the company and all that is happening in it. It helped to improve work capacity and commitment of employees.

Today, the company HP is one of the largest players on the market of the information technologies. Its list of the products is wide and meets the requirements of the modern consumer. It includes desktop computers, servers, laptops, PDAs, laser and inkjet printers, scanners, digital cameras, calculators, network equipment and various components. The company’s profit is about $ 7 billion a year, and the number of employees exceeds 140 thousand people. It is difficult to imagine that the two recently graduated from the University men were the creators of such giant as the Hewlett-Packard Company. Studying and receiving the complete higher education has played in their lives an important role, because, in addition to the knowledge and the ability to think unconventionally while looking for answers to their questions, Stanford introduced Hewlett and Packard to each other. The talent, the ability to find alternative ways to solve problems, purposefulness and, of course, the deep knowledge in the field of engineering can be called the main factors of their success that the university gave them. Lack of experience in the field of business and work for the benefit of another firm could adversely affect the establishment of their own businesses. However, perhaps, it was what saved them from getting off the stereotyped thinking and falling into a routine that could create the stability and prevent escape from it in the future.

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The Treats and Opportunities of the Hewlett-Packard Company

Each company has its own strengths and weaknesses. The first can open up new opportunities and prospects before the firm in the future while the second can become a threat to its functioning in market environment. The competent approach to the process of management is capable of using the arisen opportunities in full, and thus to consider and resolve, or, at least, minimize the actual or potential threats.

The Hewlett-Packard Company, despite the presence of talented leadership, was not immune to the external factors which could be dangerous for it. In the beginning stages of the existence, the firm has faced many threats. The absence of the customer base and the positive reputation, which would attract customers, created the threat of the disruption of sales through lack of orders and the credibility of the newly-made company. Arisen threat of closure of production as a result of falling demand for technology for military purposes after the end of war was solved by the changing and diversifying of the firm’s profile. The threat of falling demand for the products after the end of the period of the primary rush among customers was one of the principal risks in the early stages. In the case of stopping the process of the further work on the improvement of the product and the creation of the new ones, company could, at least, lose its present customers because of the lack of conformity of the product to the continuous technological progress.

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Like other IT companies, HP is forced to work in the market with fierce competition which is only getting worse with time. It also affects the process of saturation of the market. Another threat is the rapid pace of technological change, which requires being one step ahead of the competitors not to be left out of the game. Moral obsolescence of the product can be deadly for the life of the HP Company. The numerous crises and economic recession in the US and Europe were and are the impediment to the work of the company, because of decreasing of the demand for products due to declining of the purchasing power of the consumers. These circumstances demand from the leadership to make adjustments to price policy and other elements of the marketing policy. The fact of the active use of price tool by the competitors also requires this. In connection with the increase of economic literacy of people, the threat of decrease in income through people’s desire to save money occurs. Consumers use more conscious approach to the issue of buying this or that product. Among the existing threats that the HP Company faces the disruptions in supply and a trend towards the slowdown in the growth of the PC market can also be called (Blauvelt 2012).

Despite the existence of difficulties and threats, new opportunities are opened up by the company. In the early stages of operation, the chance to displace firms selling goods-analogs at exorbitant prices, and thus take the entire segment of the market appeared for the company. Start of the Second World War brought not only threats to production, but also the possibility of reprofiling. In turn, this made possible to create a strong partnership with the government customers. Occupation of the new segments within the framework of the market of the technologies for military purposes was the opportunity that the company did not miss. Technological stagnation that occurred in the post-war period created the possibility to recruit the highly qualified engineers, who lost their jobs due to the massive closure of the factories. Opportunities that are available for the company at the moment and in the near future are the increased demand for cloud-based services, the possibility of acquiring of the patents for the technically related products, and the opportunity of the market expansion in the BRIC countries (Jurevicius 2013). In addition, the firm has the ability of the development in the field of the printing devices and the image processing. The purchase of “EDC” also offers prospects for growth in the industry of providing services, since it is one of the largest service providers in the world.

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As practice shows, in front of each firm there is a number of threats that with a reasonable approach can be transformed into new opportunities. The importance of the timely identification of their appearance should be taken into account. At the moment, the main problem the company Hewlett-Packard faces is the aggravation of competitive race, the backlog in which may lead to the collapse of the company. Although at first glance it may seem that all the niches in the field of information technology and engineering are busy, but it creates the possibility of entering into the new markets, and, at the same time, optimizing the quality-price ratio. The continuous search for new ideas for new products or ways of the improving of already existing ones would not only help to survive in the competitive environment, but also to take the company to the next level.

The Feasibility of the Setting up a Business Right after Graduation

The stories of Steve Jobs and Bill Gates prove that in order to be successful, it is not necessary to graduate from the university. Many businessmen do not have even a partial education. This fact inspires many graduates to begin the entrepreneurial career because they, unlike the others, in addition to their other advantages have the strong theoretical base and a number of skills that the university gave them. Before answering the question whether the entrepreneurship is a viable option for the majority of university graduates, it is necessary to identify and weigh the pros and cons of this variant.


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It is not a secret that for starting a business one needs to prepare sketches, to formulate the ideas that are generated as the start-up. It can be created either during or after the education under the influence of the received information, the experience that professors shared and others factors. Many graduates who receive a diploma already have an approximate or a specific action plan on the basis of the new ideas and the innovative solutions. At the same time, the exhaustion from the prolonged corporate work does not take away the force, desire and ambition to implement these ideas. The presence of such an important resource as enough time is also a great advantage, with which working people cannot boast. However, in addition to the time and ideas, the presence of the starting capital is needed. If there are no savings or sponsor support (from parents, for example), the alternative is to take a loan, receiving of which from the bank at this stage can be very difficult (White 2013).

The big problem of recent graduates, who have decided to start a business, is the presence of the stereotypes and misconception concerning what a business owner is. Young people often think that even in the early stages they will be strictly the leadership link, which receives only income and pleasure from business. They are not ready for execution of the different types of work, from a designer to a guard, a marketer, or a logistics manager. Many of them are also not aware of the responsibilities that fall on them. One of the not less significant disadvantages is the lack of the work experience in a particular market, the practical knowledge of the work of the market mechanisms, the experience of teamwork and collaboration with counterparties. It makes a person vulnerable to the appearance of unusual, unforeseen or the force majeure situations. However, even in case of failure, a person can get the experience and the necessary skills, see his or her strengths and weaknesses, and learn to work with others. According to this, before making the decision concerning this issue, it is required to weigh the pros and cons, evaluate objectively the moral, material, and including physical readiness of the person.

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William Hewlett and David Packard are an example of those young, talented, ambitious people who were able to cope with the variability of the market, and its unpredictable factors and turn their garage into the company with annual revenues with nine zeros in the end. They were the pioneers of the “Silicon Valley”, who showed the world that nothing is impossible for those who want and do. Their story became an inspiration to many people, but it is worth to remember that universal laws and regulations of the success do not exist. Everyone has his/her own unique path to achieve the goal.

Based on the foregoing, to assert that entrepreneurship is a viable option for the majority of university graduates would not be reasonable. Referring to the statistics, which shows that 9 from 10 businesses collapse within the first five years, one can see that not every even a very talented person can create a successful business (Blaskie 2011). It proves the fact that doing it is comparable to the game of lottery, where not every player is capable to win regardless his/her game experience and knowledge of its rules. A successful entrepreneur is not just smart, educated individual who knows how to make big money. It is goal-oriented person who is ready to meet the difficulties, has the rational structure of the mind and the ability to generate own ideas, is resistant to the stresses and has strong spirit. For the most part, to be a successful entrepreneur one needs to have the appropriate personal characteristics and a bit of luck. Business is always connected with great risk, awareness and readiness for which are the main requirements. Therefore, only a few from many people who tried to create own business were able to stay afloat. It does not mean that graduates should not even try to start their own business right after graduation or after a short time, but they should realize that only a few of them will be able to build a viable company.

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