Read the case and answer the questions that follow. Studying this case will help you better understand how concepts relating to decision making can be applied in an organization such as Hewlett-Packard.

The days of a bulky computer hard drive, keyboard, monitor, and mouse are behind us, right? Tablets, smartphones, and other devices are the way of the future, or so it would seem. However, one company, Hewlett-Packard (HP), is betting on the continuation of traditional personal computers (PC).

The story of HP is innovative, sometimes tumultuous, and always fascinating. With several prior high-profile CEOs such as Léo Apotheker, Carly Fiorina, and Mark Hurd, the company has ridden the waves of technology with the personal computer and crashed hard with its inability to keep up with Apple’s advent of smart technology. The new CEO, Meg Whitman, is making some key decisions for the company that could affect its future. Formerly CEO of eBay, Whitman brings to the table a strong background that includes experience at Procter & Gamble and Disney. In addition, she made an unsuccessful bid for the governor’s office in California. When she took over the company in September 2011, she faced a recent history of scandals, infighting, and lackadaisical attitudes. Some tough decisions had to be made.

Just a month prior to Whitman’s appointment as CEO, the company had announced that it would sell off its PC business and cease production of its fledgling TouchPad tablet. The PC business was a significant part of HP’s income and history. Though at its founding in 1939 HP offered a wide variety of scientific and technological products, it entered the PC market in the late 1960s and early 1970s. As the company grew during the last decades of the twentieth century, it added printers and scanners to its product line. In 2011, the TouchPad was a very modest attempt to compete with Apple’s iPad. The decisions to end the PC part of its business and stop producing the TouchPad caused HP’s stock price to fall 20 percent (Bandler and Burke, 2012). Upon her arrival, however, Whitman reversed one of those decisions: She announced that the PC division would not be sold or folded; instead, it would be merged with the printer division. The TouchPad, though, was history.

Whitman felt that keeping the PC division was crucial. “HP needs consistency more than anything else,” she said (Heichler, 2012). She argued that losing the PC business would do irreparable harm to the rest of HP’s products and services. In other words, the PC is integral to HP’s survival.

In order to achieve success, though, some changes had to be made. First, more money is being invested in research and development, something that had declined under previous CEOs. “We underinvested in innovation,” she said (Edwards, 2012). Second, sales across the board will have to improve. A steady decline in revenues and a dropping stock price have certainly hurt the company. And finally, HP is considering a reentry into the consumer mobile market. In order to compete with Apple, the company is working on a lightweight PC that has a detachable touchscreen (Edwards, 2012).

In the meantime, though, the company is struggling. Even with severe cost cuttings, margins continue to drop. After profits declined 31 percent in the second quarter of 2012, Whitman announced that 27,000 employees would be laid off, approximately 8 percent of HP’s entire workforce (Worthen, 2012).

Whitman understands that HP is facing a steep uphill challenge. With confidence she states, “I’ve done this a number of times in my career. It’s what great business leaders do” (Bandler and Burke, 2012). The company not only faces a late entry into the tablet market but is also attempting to maintain and innovate in a world where the desktop computer is becoming a nostalgic tool of business from a bygone era. But she is not discouraged. “Strategy is about the art of exclusion,” she says. “If something isn’t working, then you’ve got to do something different. The cost of inaction is far greater than the cost of making a mistake” (Heichler, 2012).51