Throughout the world, Hewlett Packard (HP) is recognised as one of the leading computer providers. To meet the dynamic needs of the customers, the company has developed innovative and creative mechanisms which lead to maximum customer satisfaction. Technology has been the primary tool for the company’s growth and expansion into newer markets. One of the significant challenges faced by companies in the electronics industry is competition. However, customer-oriented business strategies and policies have enabled the company to increase sales and penetration of international markets.
Further, the company’s growth can be attributed to the various marketing strategies adopted, such as online marketing. To reach the global markets, HP Company holds annual securities analyst meetings to develop newer strategies. The report critically provides an analysis of two South American countries: Columbia and Argentina and justifies the attractiveness of Argentina.
2.0. Market attractiveness
According to Pels (2010), market attractiveness is a critical consideration before expanding into newer markets. Therefore, HP needs to consider Argentina and Colombia’s attractiveness before deciding where to expand. The potential profits are higher in more attractive markets. To determine whether or not expansion into a market would be suitable for an organisation, it is also crucial for companies to conduct a series of analyses. Bello (2010) assert that market attractiveness analysis is one of the critical analysis to conduct, which would help in the identification and determination of the profitability of an organisation. Porter’s five forces are an excellent tool that would help determine the Columbian and Argentinian market attractiveness. The power of buyers and suppliers, the threat of substitutes, and new entrants will be analysed to help the decision-making process.
2.1. Porter’s Five Forces
Power of buyers
The buyers play a primary role in the success of an organisation. Therefore, for HP, it is essential to consider buyers’ availability in Argentina and Columbia. The buyers have the power to determine pricing and quality, which consequently affects business operations. Profitability is lowered when the power of buyers is high (Arshed & Pancholi, 2016). The buyer’s price sensitivity and bargaining strength determine the power of the buyers. The power is mainly due to the number of substitute products available in the market and the competition level. In the electronics industry, the power of buyers is high. However, HPs products are differentiated and specific to the particular need of the buyers. In Argentina, the power of the buyers could be higher due to significantly reduced competition in the market. Therefore, HP can easily penetrate the market compared to the Columbian market, which is widely occupied by several companies such as Apple, Samsung, and Sony.
Power of suppliers
The suppliers’ power examines the supplier’s ability to control pricing. Hugh supplier power results in increased input costs for industries. More suppliers within an industry lead to increased bargaining power by organisations. In the electronic industry, there are more suppliers within the market. Thus, the bargaining power of the suppliers is considerably low in different markets (Arshed & Pancholi, 2016). However, in the Columbian market, the power of the suppliers is significantly higher due to the availability of fewer companies. Thus, operations within the Columbian market are costly, resulting in increased product prices.
Thereat of substitutes
Substitute products within the electronics industry include Apple and also Samsung products. Customers switch to other alternative products in a market that different firms concentrate on. For example, in the United States of America, the threat of new substitutes is higher due to the existence of almost all electronic companies in the market. The substitutes negatively affect the profitability of an organisation which consequently reduces the overall performance of an organisation in the market.
Level of rivalry within the market
In the electronics industry, one of the primary challenges faced in competition. Competition lowers the profitability of businesses. However, in the electronics industry, the barriers to entry are high; thus, the rivalry is minimal.
Thereat of new entrants
In the electronic industry, the threat of new entrants is significantly low. The barriers to entry in the industry are high due to the high capital investment required. Therefore, HP controls a substantial market share and enjoys consumer loyalty and confidence.
|Bargaining power of buyers||Low||Low|
|Bargaining power of suppliers||Low||High|
|The threat of substitute products||low||High|
|Level of rivalry||Low||High|
|The threat of new entrants||Low||High|
From the analysis above, it is clear that Argentina is the most attractive market with the low bargaining power of customers and suppliers, low rivalry level, and low threats to new entrants. Therefore, investing in the Argentina market will be favourable and profitable.
3.0. Competitive strength
In the world, HP is one of the leading PC vendors, with a market share of more than 15%. Further, the company also provides service network products. Thus, in nearly all the markets it operates, the company has a significant market reach (Onoren et al., 2017). Thus, a strong brand reputation exists for the company. SWOT analysis would help identify the company’s strengths, weaknesses, opportunities, and threats, which would help expand operations in other countries such as Argentina and Columbia.
3.1. SWOT analysis
HP has retained its position successfully through the years in the market. Notebooks and desktops are the primary sources of the company’s revenue. Further, the company has maintained its position in the printer market worldwide. Over the past three years, the company has witnessed a revenue increase of 58.5 billion in 2018 (Bello, 2010). Further, product innovation is another positive attribute of HP Company, which would increase its competitiveness in the Argentinian market. The consistent focus on research and innovation is one of the primary reasons behind HP’s leadership position in the electronics market. Due to their productivity and performance, the company’s products are the most popular. In 2018, around $1.4 billion was invested by the company in research and development.
Additionally, HP Company offers a wide range of laptops and desktops, which enables it to have a strong portfolio of computing products. The products also have different prices, which helps in the satisfaction of all the needs of the customers. Therefore, the string product portfolio would play a central role in the satisfaction of the varied needs of different customers in Argentina.
One of the company’s weaknesses that would significantly affect its operation in Argentina is growing operational costs. In 2018, the company recorded growth in operational costs from $48.5 billion in 2017 to $54.4 billion (Pels, 2010). Growth in operational costs would thus negatively affect the company’s operations in Argentina. Also, another weakness is the steady decline of PC markets over recent years. Thus, the sales and revenue of PC products have been negatively affected.
To effectively and efficiently exploit the market in Argentina, diversification is one of the opportunities to help grow sales and revenue. Further, diversification would help in eh growth of the customer base. Further, marketing and customer engagement would also help build a consumer base. Exploiting digital technology and AI would help connect with customers within the market.
According to Arshed and Pancholi (2016), the main threat that HP would face in Argentina’s market is competition from rival companies such as Lenovo, Dell, and Apple. The existing regulatory pressures also threaten the business, mainly from the government. The regulatory pressures would also lead to high operational costs. Likewise, the rising cost of raw materials is also a threat to the company’s performance.
From the SWOT analysis, it is clear that HP laptops would effectively and efficiently compete in the Argentinian market.
4.0. Business Environment Risk Intelligence (BERI)
For the fourth quarter of the fiscal year 2021, HP Company reported a revenue of 16.7 billion. Finance and corporate represent 38% of the total 32 risks identified for the stock, according to the new TipRanks risk factors tool (Asturias, 2016). The company’s profile was recently updated with five new risk factors. The company’s share repurchase program may be suspended at any time: thus, the company cautions investors. The timing of the repurchases can further be affected by tax laws, cash flows, and stock price changes. HP maintains that even though the share repurchases program is intended to enhance long-term shareholder value, the intention might still need to be achieved.
To strengthen its gaming products business, in addition to Teradici, HP Company recently acquired HyperX. HP, however, cautions investors that even though acquisitions are a part of its business strategy, it may still need to achieve the anticipated benefits of the acquisitions. The businesses that no longer align with its objectives may also be divested by HP (Asturias, 2016). However, the major hindrance is finding buyers for the businesses, which would lead to selling at fewer prices.
|Latin American desktop, notebook and workstation shipments (market share and annual growth)
PC Market Pulse: Q2 2022
|Note Unit shipments in thousands. Percentages may not add up to 100% due to rounding.
Source: Canalys PC Analysis (sell-in shipments), August 2022
5.0. Recommendations and conclusion
One of the market entry modes that HP can use in expanding operations in Argentina is exporting. Exporting is one of the traditional and most effective methods of reaching foreign markets. No investment in foreign production is required since it does not require the manufacture of goods in the target country. Therefore, exportation would enable HP Company to sell already manufactured electronic products in Argentina (Bello, 2010). Further, exporting would be more advantageous to HP since it is the easiest way to enter foreign markets. Other established businesses often use exportation for international expansion. Firms also avoid the costs of establishing operations in a new country. Contractual agreements with domestic distributors and marketers help in increasing and maximising sales.
Secondly, acquisitions is also another entry strategy that HP can utilise. Acquisitions would enable HP Company to purchase and control another foreign company in Argentina. Recently, cross-border acquisitions have risen dramatically. 60% of all acquisitions completed worldwide in recent years are through acquisitions (Arshed and Pancholi, 2016). Through this strategy, HP would receive quick, well-established access to markets in Argentina. The laws in the target country highly influence the decision to use this strategy. In Argentina, favourable laws exist for foreign ownership.
6.0. References list
Arshed, N., and Pancholi, J. (2016). Porter’s five forces and generic strategies. Enterprise and its Business Environment. Available at: https://doi.org/10.23912/978-1-910158-78-4-2922
Asturias, L. R. (2016). Business development opportunities and market entry challenges in Latin America. Business Development Opportunities and Market Entry Challenges in Latin America, 256-271. Available at: https://doi.org/10.4018/978-1-4666-8820-9.ch012
Bello, D. C. (2010). International marketing channels. Wiley International Encyclopedia of Marketing. Available at: https://doi.org/10.1002/9781444316568.wiem06006
Chen, F., and Kodono, Y. (2012). SWOT analysis and five competitive forces of Chery automobile company. The 6th International Conference on Soft Computing and Intelligent Systems, and The 13th International Symposium on Advanced Intelligence Systems. Available at: https://doi.org/10.1109/scis-isis.2012.6505053
Kurniawati, N., Utari, P., and Sudarmo, .. (2017). Communication marketing company and social Responsibilityas market strengthening strategy. Proceedings of the International Post-Graduate Conference on Media and Communication. Available at: https://doi.org/10.5220/0007325301120116
Önören, M., Arar, T., and Yurdakul, G. (2017). Developing competitive strategies based on SWOT analysis in porter S five forces model by DANP. Journal of Business Research – Turk, 9(2), 511-528. Available at: https://doi.org/10.20491/isarder.2017.282
Pels, J. (2010). International relationship marketing. Wiley International Encyclopedia of Marketing. Available at: https://doi.org/10.1002/9781444316568.wiem06054