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Wasiq Hamid Sindhu
In 1886 Herman Hollerith, for the US Bureau of Census formed the Tabulating Machine Company and Thomas J. Watson became its leader in 1915 and made the company slogan “Think”. It changed its name to International Business Machines (IBM) in 1924. During the period between 1910 and 1960, it developed products from punch-card tabulating machines to room-sized calculators In the 1970s and 80s, IBM product lines expanded from its traditional mainframes to minicomputer In 1981, the company introduced the IBM Personal Computer or PC, allowing the use of computers in schools, homes and businesses. Components for the computer were sourced from outside the company. The processor chip came from Intel and the operating system, called DOS (Disk Operating System), came from Microsoft. IBM introduced the ThinkPad in 1992, In 1995, IBM acquired Lotus Development Corporation and Tivoli Systems.
The sale involved the creation of a joint venture called Hitachi Global Storage Technologies.INTRODUCTION IBM sold most of its hard disk drive operations to Hitachi in December 2002. IBM Research launched On Demand Innovation services. which teamed customers with a team of researchers who specialize in business transformation and technology consulting Today. IBM is by far the largest information technology in the world and the eighth largest company in the worldwith approximately sixty percent of revenues generated outside the United States. In 2003. which was 70%-owned by Hitachi. .
” MISSION STATEMENT “At IBM. . development and manufacture of the industry's most advanced information technologies”.VISION STATEMENT “Breakthrough microprocessor architecture that puts broadband communications right on the chip. we strive to operate in the invention.
However.PORTER FIVE FORCES The threat of entry is low because manufacturing. and distribution are very high and IBM is one the oldest company in this industry. The buyers can easily switch from one company to another if they are not satisfied with the price. The number of suppliers in the chip supplying is very few so they have high bargaining power but the suppliers of other raw materials are large in numbers so they have low bargaining power. . The power of buyers is high because the switching costs for buyers are low. the power of supplier for other low required materials and parts is lower than the main suppliers. there are also many product choices for the buyers.
regional. they compete with international.PORTER FIVE FORCES The business of other companies and some advanced devices and computers could cause threat of substitutes. The strength of competition in this industry is very high. the main rivals are HP. and Fujitsu Siemens Computers. . The competitors are working overall the world and competing with each others all over the world. national. Customers can easily switch to other available substitutes that increase the threat of substitutes. Dell. and local market. Microsoft.
ECONOMIC • • National growth rates. Heavy taxes in some countries make IBM increase its products price. Fuel Prices .PESTEL ANALYSIS POLITICAL • • Companies in this industry are working all over the world so they have to adopt and implement the policies according to the political condition of the country so political factors effect the company a lot.
Internet Increase numbers of companies that need ERP systems . TECHNOLOGICAL • • • Advanced technology development.PESTEL ANALYSIS SOCIAL • • Positive customers' perception toward new technology around the world. Increase in population and internet users.
germanium. LEGAL • • • Cyber protection and the chemical the use in making hardware. and silicon Currency exchange Legal registration for their business outsourcing facilities. like carbon. .PESTEL ANALYSIS ENVIRONMENTAL • IBM made the some of the major technologies like to trace weather throughout the world.
30 0.30 1.20 0.88 0.66 0.30 0.15 3 3 0.36 0.40 0.12 0.30 4 3 2 3 3 0.40 0.66 0.30 3 2 0.30 2 2 2 3 3 0.36 0.10 2 4 3 4 3 0.48 0.00 3.30 0.09 0.30 3 3 4 4 3 0.44 0.45 3 3 0. 22 0.35 2.44 0.22 0.10 0.25 3.20 0.36 0.66 0.(CPM) COMPETITIVE PROFILE MATRIX IBM Critical Success Factors Price Weight Rating Weighted Score Rating MSFT Weighted Score Rating HPQ Weighted Score Rating EDS Weighted Score 0.34 .88 0.40 0.45 4 2 0.88 2.44 0.30 Financial Position Advertising Innovation Market Share Management Global Expansion TOTAL 0.
10 0.45 Handheld computers markets are expected to grow in future 0.45 THREATS Competitors are strong 0. India.40 Economic fluctuation could crimp consumers’ spending Small & Medium business demand fails to accelerate 0.15 3 0. and China are expected to grow twice as fast as in the rest of the world Mobile phone markets are expected to grow in future 0.20 0.15 3 4 3 0.(EFE) MATRIX KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE OPPORTUNITIES Video game console market revenue is projected to increase in future The IT market in Russia.30 TOTAL 1.10 0.20 0.10 2 3 0. Brazil.60 0.40 0.80 .00 2.20 2 0.
40 0.10 0.48 .billion A unique approach to engage their employees in an online intranet using its Jam technology Strong strategic planning to be an innovation-centric globally integrated corporation IBM operates in 170 countries with about 60 percent of its revenues being generated outside the US IBM concentrated on becoming stronger in high value added businesses 0.40 IBM ranked number 1 hosted service provider in Western 0.40 0.40 0.(IFE) MATRIX KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE STRENGHTS IBM revenues increased 7 percent to 69.10 Europe IBM is supercomputing leader as provider of 35 of the world's 100 most powerful supercomputers 0.18 0.18 0.10 4 3 3 4 4 0.06 0.92$.10 0.12 4 4 0.06 0.
7% 0.16 0.10 2 2 2 2 0.20 0.6% Decline in revenues in Asia Pacific area by 5. industrial.00 3.16 0.08 0. small and medium business industries in 2006 by 9.(IFE) MATRIX KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED SCORE WEAKNESSES Declining in revenues of services and systems segments in 2006 Decline in revenue of public.10 in 2006 TOTAL 1.08 0.16 .20 Total assets are gradually decreasing from 109M to 103M 0.
2. 4. 1. 3)Decline in revenues in Asia Pacific area by 5.Entering the mobile phone market.Hedge threats from US companies by increasing marketing efforts into Asia and Europe.92$. 4. O1).Entering the video game console market by produce video game console. 7. 1.IBM ranked number 1 hosted service provider in Western Europe. S-O STRATEGIES 1.A unique approach to engage their employees in an online intranet using its Jam technology.The IT market in Russia. 3.STRENGTHS WEAKNESSES SWOT ANALYSIS 1. (W3. 3.Increasing marketing efforts into Asia Pacific. 2)Decline in revenue of public. W-O STRATEGIES 1.Strong strategic planning to be an innovation-centric globally integrated corporation. (S5.Offer discounts on products for Small & Medium business. (S5.billion in 2006.Mobile phone markets are expected to growin near future. Brazil.. 4)Total assets are gradually decreasing from 109M to 103M in 2006. 2. THREATS S-T STRATEGIES W-T STRATEGIES 1. (S5. 1)Declining in revenues of services and systems segments in 2006. (S4. 6. small and medium business industries in 2006 by 9. T3). industrial.Small & Medium business demand fails to accelerate.Handheld computers markets are expected to grow in upcoming years. 3. O4). 3. (W2. OPPORTUNITIES 1.Video game console market revenue is projected to increase in future 2.Entering the Handheld computers market. 5. and China are expected to grow twice as fast as in the rest of the world. India.Economic fluctuation could crimp consumers’ spending.6%. 2.IBM concentrated on becoming stronger in high value added businesses.Competitors are strong.IBM revenues increased 7 percent to 69.IBM operates in 170 countries with about 60 percent of its revenues being generated outside the US. T1). O3).7%. . O3).IBM is supercomputing leader as provider of 35 of the world's 100 most powerful supercomputers.
167.DIRECTIONAL VECTOR POINT IS ( 3.163) FS Conservative Aggressive AGGRESIVE • Backward. forward. horizontal integration • Market Penetration • Market Development C A IS Defensive Competitive ES . 1.
167 AVERAGE 2.167 3.0 AVERAGE X-axis .163 COMPETITIVE ADVANTAGE Market share Product Quality Customer Loyalty Control over other parties Technological know-how RATING -2 -2 -2 -2 -2 INDUSTRY STRENGTH Growth potential Financial stability Ease of entry new markets Resources utilization Profit potential Demand variability RATING 6 5 5 4 6 5 5.33 ENVIRONMENTAL STABILITY RATING Rate of inflation Technological changes Price Elasticity of demand Competitive pressure Barriers to entry new markets Risk involved in business AVERAGE Y-axis -3 -5 -4 -6 -3 -4 4.SPACE MATRIX FINANCIAL STRENGTH Return on assets Leverage Net Income EPS ROE Cash Flow AVERAGE RATING 6 5 5 5 5 6 5.167 1.
GRAND STRATEGY MATRIX Rapid Market Growth Quadrant II Quadrant I Weak Competitive Position Strong Competitive Position Quadrant III Quadrant IV Slow Market Growth Market Development Market penetration Product Development Forward Integration Backward Integration .
0 to 1.99 Low 1.0 to 1.99 II III The EFE Total Weighte Medium d Score 2.99 IV V VI IBM Low 1.99 Strong 3.0 to 3.0 to 2.0 to 2.IE MATRIX High 3.99 I The IFE Total Weighted Score Medium 2.99 VII VIII IX .0 to 3.
32 0.12 3 4 2 - 0.10 2 3 2 0.40 0.06 0.10 0.08 0. small and medium business industries in 2006 by 9.92$.42 .10 0.20 - Strong strategic planning to be an innovation-centric globally integrated corporation IBM operates in 170 countries with about 60 percent of its revenues being generated outside the US IBM concentrated on becoming stronger in high value added businesses IBM ranked number 1 hosted service provider in Western Europe IBM is supercomputing leader as provider of 35 of the world's 100 most powerful supercomputers 0.40 0.24 0.7% 0.10 3 0.00 2.6% Decline in revenues in Asia Pacific area by 5.billion in 2006 A unique approach to engage their employees in an online intranet using its Jam technology 0.30 0.40 2 0.08 0.20 2.40 Total assets are gradually decreasing from 109M to 103M in 2006 0.40 - WEAKNESSES Declining in revenues of services and systems segments in 2006 Decline in revenue of public.40 0.30 SUBTOTAL 1.20 - 4 4 4 - 0.QSPM MATRIX KEY INTERNAL FACTORS Weight STRATEGY 1 STRATEGY 2 Enter video game console market Increasing marketing efforts into Asia and Europe AS TAS AS TAS STRENGTHS IBM revenues increased 7 percent to 69.16 0. industrial.10 0.30 3 0.10 0.06 4 0.20 4 4 4 0.32 0.
80 0.20 4 . Brazil.10 4 3 4 0.80 2 0.40 . and China are expected to grow twice as fast as in the rest of the world Mobile phone markets are expected to grow in future Handheld computers markets are expected to grow in future 0. India.30 0.30 0.STRATEGY 1 STRATEGY 2 Enter video game console market (Product Development) Increasing marketing efforts into Asia and Europe (Market Penetration) AS TAS KEY INTERNAL FACTORS OPPORTUNITIES Video game console market revenue is projected to in future Weight AS TAS 0.10 3 0.10 0.10 0.10 4 1 1 0.80 0.40 SUB TOTAL 1.90 2.10 1 0.60 The IT market in Russia.15 - - - - THREATS Competitors are strong Economic fluctuation could crimp consumers’ spending Small & Medium business demand fails to accelerate 0.00 1.20 0.15 0.
(BCG) MATRIX MARKET SHARE POSITION INDUSTRY SALES GROWTH RATE IBM Question Marks Cash Caw Dogs .
. Company’s revenue in Europe/Middle/Africa has remains constant from 2005 to 2006 and company’s revenue in Asia Pacific has been reduced in 2006 from 20. . Company should transform itself into an innovation-driven integrated global company as it should seeks to pursue value-added businesses and services that will generate high value for its customers and high profits for its shareholders. Company’s revenue in industrial sector and in Small & Medium Business has been reduced as compared to 2005 so company should concentrate on these sectors. Company has done the acquisition of $ 4.8 billion in 2006 but company’s total revenue in 2006 as compared to 2005 has not been increased with high rate so company should penetrate the market and increase its sales.RECOMMENDATIONS Company should penetrate the market with the existing products and the markets.4 % to 19.2%.
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