HP's New CEO, Mark Hurd: The New Imperatives


Code :LDS0010

Year :

Industry :Engineering, Electrical and Electronics

Region : USA

Teaching Note: Available

Structured Assignment : Available

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HP under Carly Fiorina In 1999 when Carly Fiorina was named as the CEO of HP, the mandate for her was to move HP away from a backward-looking and risk-avoiding culture that had crept in. The culture of HP was, in part, inherited as a legacy of the famousmanagement style of its founders, BillHewlett andDave Packard, – the ‘HPWay’. The company, since its inception in 1939, followed a decentralisedmodel, “In order not to lose the entrepreneurial spirit of a small firm, they created a new ‘product group’whenever an existing one grewtoo big.”6 By 1999 the company was fragmented into 130 different product groups operating under 83 independent divisions. Every division had its own research and development budget, sales staff, and profit-and-loss responsibility and hence tried tomeet its own financial targets instead ofmarketing a newinnovation...

The Initial Benefits and Challenges of the Merger Access devices: this unitwill include PCs, but also handheld computers and other devices, although the PCwill still generatemost revenues.Although the merged company will be the world’s largest PC vendor, with 19% of the global market, leapfrogging Dell’s 13%, HP can catch up with the leader only if it can emulate Dell’s build-to-ordermanufacturing, which has reduced inventory to hours.IT infrastructure: the new firmwould account for 37%of worldwide sales of server computers, the workhorses of corporate IT.Yet both companies have been on the defensive in thismarket.Compaq struggled to beat offDell; and HP never regained the ground it lost to IBM and Sun in themarket for high-end servers running the Unix operating system...

The New CEO – Board’s Expectations “THIS is not a change related to strategy; this is a change...to accelerate the strategy.”17 said Patricia Dunn, chairman HP (After Fiorina’s resignation PatricaDunn, a boardmember ofHP assumed the chairman’s post and BobWayman,CFO ofHPwasmade the interimCEO).She further stated that the board has considered operational strength, focus on execution and accountability, global experience, leadership ability, ability to lead high-performance teams, technology knowledge, investor credibility, shareholder value creation orientation and ability to hit the ground running as requisites for selecting the new CEO...

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Mark Hurd – The Impending Challenges Finally,Mark Hurdwas appointed as the newCEO,who would be facing a herculean task of improving the performance of HP. Some analysts advised Hurd that he should split the company to focus on better performing businesses and those businesseswhich lacked the potential for performance could be spun off.Analysts opined thatHPlacked both the resources andmanagement skills to compete with the best in the global computer industry and that investors were not likely to wait patiently for a gradual turnaround.While analysts advocate spinning off the PCor printer divisions,HP’s board continues to argue that,with the right executive at the helm, the company’s different business lines are better off under one brand...

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