Merger One of the Greatest Term Paper

Pages: 6 (2315 words)  ·  Bibliography Sources: ≈ 4  ·  File: .docx  ·  Level: College Senior  ·  Topic: Business

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[. . .] This permitted them to do multiple tasks. This is an instance of dual branding strategy and under the HP personal Systems Group there were two desktop computing organizations and these are based on the divisions within Compaq and HP. This led to the HP Omnibook line of notebooks becoming a part of the Compaq brands, whereas in workstations, the HP brand of IA32 workstations as also Itanium workstations and other workstations based on McKinley chip of Intel was still to be a part of HP. In certain areas, both the brands of HP and Compaq were to remain as they had different brand equity in different parts of the world. This has led to the retention of both the Compaq Presario line and the HP Pavilion line. Wireless products lines have now been connected to the HP brand. (HP and Compaq Get Down to Brass Tacks)

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Many new policies also had to be started and the thousands of locally set policies on mundane items like rebates for customers and dental coverage for employees had to be aligned. A single set of rules had to be set up for 160 countries. Savings had to be taken care of and the previous expenditure by HP was $90 million a year for documents, and of that, $50 million was unused brochures and manuals. The expenditure has now increased to $130 million, but only $1 million is on unused items. The manufacturing costs for PCs have been reduced by 26%, and this has increased the profitability to 10.7% average and pretax. This is more than the 9.7% that is being achieved by IBM. The supply chains have been simplified and all vendors are in one of five chains. Many are connected through the Internet and they get the consumption data real time and also automatic orders for replenishment. This is expected to result in savings of another $1 billion. (We Did It)

Term Paper on Merger One of the Greatest Assignment

The changes in financing has reduced inventory from 48 days' worth to 40 days and this has freed up $1.2 billion of working capital. The receivables were reduced by 4 days and this has freed another $800 million. Out of the total purchases of $50 billion, the plans are now to buy as much as $6 billion worth on electronic auctions. These are expected to save money as in one of them for purchase of PC disk drives saved $25 million. They are now participating in such competition and one of these was the deal with P&G, where the bidding specifications were for 10,000 pages. The competition was with IBM and Electronic Data Services, and HP was not expected to win it. Yet the contract was won on the first round through emphasis on cost savings, data virtualization and roles for 2,000 P&G techies to be taken on by the company. The only problem is with the employees, and they have only given the management high marks in seven of the 15 categories that they have asked them to evaluate in. The employees feel that they do not understand the adaptive strategy and are not comfortable about their new roles. (We Did It)

The merger has not been a great success immediately, and in the first quarter after the merger, the joint entity recorded total revenues of $16.5 billion and this was a reduction of 9% on the previous year's figure of $18.2 billions that was the total turnover of both the companies, and also a drop of 9% from the turnover had by the two companies a quarter before. The combined organization also had a loss of 67 cents per share and this was due to one-time charge figure of $3 billion and of this $1.6 billion was related to the cost of the buyout. Yet according to the joint company, it was on track to achieve an operating saving of $500 million in the first year, $2.5 billion during the second year and a total of $3 billion in 2004. In the first quarter itself, it had reduced the workforce by 4,720 staff members and would achieve a reduction by 10,000 people shortly.

There were also reductions in total office and facilities space by 2% and the final reduction expected was to be 19%. Revenues of the company in the imaging and printing system segment, including printer hardware, digital imaging devices and publishing equipment, together with associated supplies had also increased by 10% from the previous year. The weaknesses of the company were related to the general weaknesses of the IT market spending. The drop was continuing in the area of PC sales. (HP Releases First Earnings Reflecting Merger) thus it is clear that there are positive aspects to the merger, but one does not really know whether it will be successful in the long run.

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https://www.essaytown.com/subjects/paper/merger-one-greatest/2541193.