Benchmarking is one of the most effective ways of helping an organization to acquire a competitive advantage over their main competitors. Benchmarking allows the organization an opportunity to understanding how the competitor operate. Business scholars emphasize the need to continuously compare performance against the market leaders.
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Such a measure or attitudes helps towards organizations being informed of the strategy and action that have been designed by the market leaders towards maintaining their massive share market.
Once the firm understands the action of its competitors, it is able to optimally readjust its operations or to better them towards narrowing the gap between them. The essay will assess how Hewlett-Packard (HP) has effectively used benchmarking in managing stiff competition from other computer producers.
HP Company has been one of the most successful computer firms in the world. Since when I came to know of the company, HP has been growing from strength to strength. The firm has improved its operation systems as well as ensured that it has up to date or state-of-the-art technology.
Apart from adopting new technology, the company has also been able to improve its production processes to cut down its production cost. Through such like practices anchored on benchmarking, the firm recently assumed market leadership from the DELL Company; as the chief computer producer.
Types of Benchmarking
Firms use several forms of benchmarking to improve their performance as well as increasing their market share currently. HP has in the past carried out both the competitive benchmarking as well as the functional benchmarking. Competitive benchmarking has been used to help the organization to decipher competitors’ strategies.
Functional bench marking has also been a vital ingredient of HP Research and Development department (R&D). As the organization increased both in size and production-wise, the management strained to handle the increased responsibility. Initially, the organization used a direct line organization that was strained as the organization went regional and then global.
The inherent need to increase its production capacity necessitated for the functional benchmarking. Eventually, the Company has been able to restructure its management to one that supports multi-layer decision-making process.
Recently, Mark Hurd, the then CEO, was forced by circumstances to step down as his management was ineffective in dealing with the ever increasing management demand. After carrying out functional benchmarking, the new CEO was installed on his behalf under a new management structure (Chu).
The two benchmarking processes have been important in helping the organization usurp the supreme position in the computer market from the Dell Corporation. Benchmarking has helped the organization to understand and to anticipate the action of its fierce rivals in the market.
Apart from understanding the action of the fierce rival, benchmarking is also a useful source of information on what the customers really want. In addition, benchmarking is a vital source of information pertaining forging conducive customer relationship. In its deepest sense, benchmarking helps the management in assuming the best practice and performance.
Effects of Benchmarking
The organization has been involved in generic bench marking for several decades now. Generic bench marking has been identified as a vital aspect of helping the organization in improving its weak areas. HP has used generic benchmarking in enhancing its customer relations to march the strong bond DELL had established with players in the market.
The payoff of this venture had been promising, as the firm has started enjoying a firm customer royalty. The existence of a mutual understanding of the firm has been highlighted as one of the most successful area that the firm is working on. Strong customer relationship has proved vital in the scope at which the organization is taking toward future productions (Hewlett-Packard).
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Benchmarking has also been used to designing a better production mechanism. Recently, HP started producing computers according to the orders, which they have received. Apart from meeting the needs of the consumers, the organization has also benefited a great deal from cost reduction because of stock piling.
However, the venture has been very expensive since the organization had first to install a heavy machinery to satisfy thousands of new orders. On the same note, the organization remains vigilant in ensuring that it retains excellent relationship that it currently enjoys.
However, there are some challenges that hamper benchmarking efforts. For instance, the management needs to ensure the projects that it is carrying out are implemented in good time. Timely implementation of the benchmarking outcomes helps to solve the impending problem while ensuring that the effects of the outcome are prompt.
Any delay in implementation may make the competitor to switch to another strategy thus making the attempt futile. In addition, well-timed implementation helps the organization to reduce the gap between its performance and that of the market leader.
The Secret of HP Benchmarking Success
The success of the HP Corporation has been vested heavily on the determination of the organization’s management. First, the management has always facilitated quick responses to counter the action of its main competitor. The resolve to understand where the best practice of other firm can also work on other firms has helped HP a great deal (Moore 147).
Once the management determines the intention of its main competitor, it acts swiftly to take advantage of the situation. For instance, on realization that DELL was planning to produce the notebook computers, HP management produced similar fast enough to be the pioneer. This strategy paid-off well and it helps tame the escalating popularity of DELL.
The other issue that has made HP a powerhouse in computer production is its willingness to take risks. It is worth noting that HP has been making landmark steps that have seen it do the unbelievable in the computer market. The most notable event was its merger with the Compaq Company in 2002 (Chu). This merger elevated HP to the peak of the computer manufacturing industry.
The massive acquisition helps the organization to increase its capacity almost by half. In addition, the merger steadily boosted the organization’s market share since it enjoyed the already developed Compaq market.
HP Company has always adopted benchmarking in areas that are in line with the overall objectives of the organization. Mainly, benchmarking has been restricted to the areas, which provide comparative advantage as well as the increasing of the organization’s revenue and strengthening its brand name.
The overall aim of these benchmarking activities is to close the gap between the leading computer producer and itself. Currently the organization is using benchmarking strategies to ensure that the firm retains market supremacy.
The other critical point to note is the ability of the firm to develop realistic goals, which are time bound and attainable. Although, each organization aims at being at the top, attaining or achieving that position is not an easy task. Therefore, many managers become over ambitious in reaching at the top hastily.
However, HP management has been patient enough to the extent of taking each step at a time until the firm has cemented its pole position. In conjunction with this, the organization has reaped positively on its determination to change from its way of operation. Even though many managers are resistant to changes but HP has lead by example by embracing positive changes.
HP Benchmarking Process
HP Company has over time remained focused in carrying out the benchmarking activities. Despite the lengthy and expensive procedure that is involved in preparation and funding the benchmarking activities. HP has been vigilant in following up all the necessary procedures. The procedure includes;
The R&D carries out intensive survey on the areas that needs to be bench marked. Now the management determines the goals and objectives of the benchmark activity. The cost estimates are also provided to ensure that adequate funding is facilitated. The planning phase also ensures that data sources and data collection methods are evaluated keenly.
The other critical issue is to understand the benchmarking partners. Barkley and Saylor (318) point that understanding the situation at hand is only way of finding a dependable benchmark. Previously, HP routinely benchmarked against DELL but currently the trend is shifting to smaller producers such as Toshiba, Acer and Samsung.
This is a tedious activity of ensuring that the management understands the current level of performance of the competitor or market leader. Then the management projects the expected future performances for the two organizations. While doing this keen interest should be given on the behavior of performance gap of the two firms.
Moore (147) asserts that benchmarking should be done in respect to the current operational level of the firm. Should the projected gap assume an increasing trend then there is no need of carrying out the benchmark. Before HP acquired the first position, projected benchmark analysis revealed narrow gap between HP and DELL.
This proactive measure seeks to reduce the current competitive gap. The management therefore analysis all courses of actions to help reduce the gap. Ideally, management highlights all the activities that are relevant in solving the situation. The management weighs the alternatives to pick on the one with much effect.
This may include assuming best practice where the firm decides to embark on innovation to develop quality product compared to those produced by the competitors.
Once the optimal decision is made, the management has the obligation of passing the information to lower administration levels for effective implementation. Once the information is relayed, the management has the obligation of ensuring that all the departments are operating towards meeting the projected performance.
The R&D department coordinates the action plan for implementation of the benchmarking findings. Adoption of the findings often requires adjustments of the organization strategy and short-term goals. The R&D department is also responsible for monitoring results to ensure that it complies with the expected resulted. Moreover, it is the work of the R&D to recalibrate benchmark to allow for fine alternation of the actions.
Maturity is the yardstick used to measure the improvement that has been achieved by the organization after successful implementation of the benchmarking outcomes. The HP managed to oust DELL from the leadership position after a series of successful benchmarking activities. However, this does not mean the firm has reached its climax but plans are still underway to help the organization to produce to its capacity.
Any organization that disregards or fails to learn from its main competitors or the market leaders often looses in the battle for revenue. There is need for management to ensure that it is updated on the actions and strategies that are being used by the fierce rival.
Hence, benchmarking is a vital tool that enables the organization in obtaining the action plan of its rivals, market leaders or other well performing organizations. As in the case of HP, effective implementation of benchmarking results in increased production and improvement in the firm’s capacity.
Barkley, Bruce and Saylor, James, H. Customer-Driven Project Management: Building Quality into Project Process. New Jersey: Mc-Graw Hill, 2001.
Chu, Dian L. HP’s Hurd Crisis Creates a Value Play. 14 Aug. 2010. Web.
Hewlett Packard. About HP. 2011. Web.
Moore, Ronald. Benchmarking 100 Success Secrets-The Basics, The Guide On How To Measure, Manage And Improve Performances Based On Industry Best Practices. New York: Lulu Publisher, 2008.