Ending Case Part 4 – HP buys EDS

• Was the merger successful – for the employees, management, board of directors, and / or the shareholders?

The merger between Hewlett-Packard (HP) and Electronic Data Systems (EDS) worth $13.9 billion was successful in many ways. The merger between the two firms brought stability to the partnership and their individual standing business in the markets. The competitive position of the Hewlett-Packard (HP) improved against its long term competitor IBM. The industry standing of Electronic Data Systems (EDS) that was affected by the previous year’s loss and recession was stabilized and renewed. The impact of merger was in advantage to both firms because of the individual business industries and the perks they got with each other customer range and industry products.

The board of directors considered this merger a success given that the operation of Electronic Data Systems (EDS) were improved with the new engineering system offered by Hewlett-Packard (HP) and also that the customers noticed the Hewlett-Packard (HP) logo when the products were sold and that highlighted the position of the Hewlett-Packard (HP) in the market and brought revenue for Electronic Data Systems (EDS).

The changes in the management that took place showed more collaboration and healthy competition in the business operations. The two companies matched their individual skills set and hat improved their overall operations strengths. CEO Hurd underwent serious lay off that cut down the costs of the mergers and the operations of combined facilities. The projects in the research unit were reduced to the number of 20 to 30 from 150 that improve the system of research and also improved the way the research project were entertained and followed up with the research projects through better system. The money and man power became the resources for which these project teams fought and made sure their projects were completed in time to gather in more resources and continue with their research.

The competitive position of the Hewlett-Packard (HP) was not good enough to face against the Dell and IBM. In order to improve the competitive place in the market the HP CEO worked hard to improve the business for the stakeholder interest and future investments. The margins of the printer business were running thin that were the major part of the HP revenue. The CEO tried to match up the operational units of the two companies in order to improve the system and the process of operations and most importantly the competitive position.

The merger only had one prominent issue that was the merger of the culture and management style in the companies. The management style in Hewlett-Packard (HP) was easy going and frees of strict control limits. The employee enjoyed their work and was collaboration in their work. The Hewlett-Packard (HP) operations were very different from the operation in the Electronic Data Systems (EDS) that was more close to the military style of operations. The management and the employees were used to the control environment and system.  The HP management the am however tried to infuse the system of management and their style in the new merger to improve the standing of the business and make employee and management the am more accountable. This positively affected the company and the employees in the new management approach. The management style of employee empowerment and engagement were encouraged by the employees as well. The engagement the am with merged together found difficulty in managing the employees from two different previous organizational cultural background to work together and find a middle ground in operations. The cultural clash and the layoff affected the employees and the future standing of the company as a successful employer in the market.

• What method of managing the culture change was chosen?

The culture clash between the two companies, Electronic Data Systems (EDS) and Hewlett-Packard (HP) was an issue. The management teams of the two companies previously managed the culture differently under their different leadership styles. The leadership styles in the two companies after merger could not have been merged as well. Through the two companies proved to provide competitive and financial support, the issue was to retain the employees that were still in the company after layoff. The Hewlett-Packard (HP) is known for its engineering excellence and that is why the system was based on the engineering management. The CEO of the company managed their organization and their human resource through trust and respect. The values that were continued in the leadership of the company included respect for individual at work, trust in the leadership and teams, high level of achievement focused and targeted the contribution and collaboration at work place to improve the operational efficiency of the organization. The values that Hewlett-Packard (HP) had strongly stemmed in its system also included the high level of business with uncompromising integrity along with the am work excellence that provided the company to edge in its operational and engineering efficiency.

Even with the low control and more collaboration in the workplace, the employees and management both were found happy and content.  The company chose to continue infusing this cultural approach and values in the merger and encouraging innovation in the work place. The new management system encouraged employees to be accountable and empowered in their wok tasks and that helped bring new product and improved version of pervious individual company product in the market.

• What lessons learned did HP consider from their previous purchase of COMPAQ?

In September2001 Hewlett-Packard (HP) announced it acquisition of Compaq. The announcement was met with mixed response. There were few who considered that with the merger the companies would draw out maximum market and enjoy more market share while also remain competitive in the industry, others thought us was cynical and they two companies were soaking up the industry main market of server, service and computers all together.

The merger between Hewlett-Packard (HP) and Compaq did reach its track but before that it faced financial and stakeholder trust crisis. The companies were near clasped when the financial record showed that the Hewlett-Packard (HP) was failing to meet its financial goals in the future. With the merger and the lessons that followed, Hewlett-Packard (HP) learned to keep the business of their own track straight and not indulge much in the EDS system and these values of products. The two issues that are highlighted in the lessons here are the management of the merger and the merger itself. Though the merger with the Compaq and with EDS both sound attractive enough to be successful in the future, the company needs to understand the values through with these changes are to be arranged and implemented. Hewlett-Packard (HP) has been able to maintain its management and engineering excellence in the merger with EDS to improve the merger situation from the previous experience.

There has been debate on the Hewlett-Packard (HP) strategies to reduce the impact of two different cultures clashing together in the Hewlett-Packard (HP) – EDS merger. These strategies influence the replacement of the EDS staff members with the machines to reduce the impact of the errors in the human resource and the cultural issues that were faced by the merger in the beginning. The Hewlett-Packard (HP) yearns to become the most successful service company needs a lot of work still. The companies form the entirely different background and different perspectives towards their future of competitive and challenges need to be served accordingly. The services of the EDS has been rooted and highlighted with the name of Hewlett-Packard (HP) attached with its services but that is not enough for Hewlett-Packard (HP), for it needs better response from the customer market and surely more market share in the services industry.