FREE ESSAY ON THE REORGANIZATION OF HEWLETT-PAKCARD

THE REORGANIZATION OF HEWLETT-PAKCARD

This organizational structure, though very effective in the 1960s and 1970s, didn't fair
well during the early 1980s. The organization was highly decentralized with the divisions
operating much like independent businesses. The organization failed to address the need
for overall coordination. Autonomy had resulted in some overlapping products, customers
complained that products developed in one HP division were not compatible with those from
other divisions. The company's position in the personal computer market, was threatened
by a lack of cohesive effort among three geographically separated divisions, and so it
was time for a change.
There were two main phases in the reorganization at HP in the early 1980s. The lack of
coordination between HP's three separate divisions was the most obvious problem which
lead to phase I. To assess this problem, HP announced the consolidation of the Personal
Computation Group, and the Computer Terminals Group. Each of the two groups now could
make decisions in a more centralized system. For example, decisions about marketing and
R&D could now be made at the group level by a single manager, but before the
reorganization the only common manager was the company's president. Phase II was
implemented in February 1983, when HP announced a realignment of its computer products
organization. The realignment would: provide an improved strategic focus, and strengthen
channels of customer interaction. Top management was not modified within the
reorganization, but specific group names and some responsibilities changed. Paul Ely,
head of all HP computer operations stated, In some ways it follows IBM's restructuring in
October 1981 in that it provides for single sales interface with the customer and common
development and manufacturing for all common products. However, the groups for developing
vertical markets and personal workstations, which HP added, recognize important new
directions in the computer industry. The benefits that resulted from this reorganization
were, that it gave more freedom to divisions to work on new ideas and to be creative and
entrepreneurial which leads to a better allocation of resources, which would also reduce
costs. Another benefit was that HP was in a better position to clearly define jobs, which
helped the employees to see how the pieces fit and what their particular role is. The
reorganization also contributed to Members of the Computer Strategy Council to
concentrate more on what the Council had been established for, discussion of longer-term
strategic issues. In addition to the benefits was also one big cost. This cost was time,
which was a result of the reorganization. Time had to be allocated for the reorganization
of HP, and the restructure of their corporate culture. In this case though, the benefits
outweighed the costs by far.
I believe that this type of reorganization was definitely necessary for the success of
HP. During the early stages of HP, when computers weren't common, besides maybe the
workplace, HP had success with their separate divisions because mainly everything was
custom. More recently computers have become almost identical and so different division
aren't compatible within the industry. HP will experience continued growth because not
only of their reorganization, but because of their past history. Every time they have had
a problem, they have managed to handle the situation correctly and abruptly.