Opportunities

Increased globalization is an important opportunity

that can be exploited by IBM in order to balance the
fluctuations in different economies.
Their brand image is synonymous with big and old
they need to create products appealing to a younger
generation and reposition their company.
IBM needs to maintain a competitive edge in the
marketplace and innovation is key and working with ITrelated companies to create new products in the ever
changing market; use patents to generate revenue.
IBMs love of open source operating systems,
specifically Linux, benefits IBM in both the short and
long term. IBM can sell its i-series platforms with
Linux to respond to the growing demands of the
operating systems (OS). Also, IBM can also use Linux
on its Z-series mainframe line and even its p-series
machines which mostly uses IBMs own AIX which
usually competes against the UNIX operating system.
Open architecture is key to creating and maintaining
market share.
IBMs small-medium business (SMB) has improved
over the years but there is definitely a need to
increase its market share to have an overall
competitive edge.

Threats

The fact that they are completely dependent on

Microsoft (in their computer services division) could be
a huge problem if anything ever happened to them.
Hackers and sensitive information can be exposed and
exploited by individuals and IBM needs to be
innovative with regards to firewalls and protective
software.
The supply chain has very few suppliers, leaving IBM
very little to negotiate with or switch to.
HP, Sun Microsystems are all competitors and are all
threats to IBMs bottom line. Their competitors are
able to create cheaper products and make more a
considerable profit. Smaller companies that can move

faster and provide less expensive products and

services than IBM can become very costly to IBMs
more lucrative bundles focusing more on larger
companies with big budgets.

History of IBM

When you look at our history, you see that we have

had a real and lasting impact on the world because of
our unique character our core values, our behaviour
and our performance as IBMers. Take a look back at
the innovations, people and values that have defined
IBM for nearly a century. More . . .

Strengths

IBM leads the world in technological success with

patents in the United States for 17 straight years. In
2008 IBM earned 4186 patents and in 2009 they
increased that amount to 4,914. It published almost
4,000 technical inventions and products without
patent protection in 2009; this is a valuable
intellectual property.
They are the company handling 95% of all business in
the 1000 most profitable companies in the US.
In 2009 they were recognized as the 4th most
recognized brand name in the world and they have
been consistently in the top 10 for 20 years.
IBM is one of the largest and most profitable
companies in the world, with a value of $66 billion.
They have over 400,000 employees worldwide.
It is an old, established company, founded in 1896 as
the Tabulating Machine Company by Herman Hollerith,
in Broome County, New York.
In 1945 they were the first company to establish
dedicated research labs for the creation of
technological innovation, which lead to the creation of
computers, voice recognition software and products
that assist those working in medicine and radiology.

Weaknesses

IBMs size is also its weakness. IBMs goliath size can

make it slower to react to customers needs and wants

as well as to the industrys fluctuations. And its more

than 400,000 employees can make it difficult to find
the support and services needed.
Enormous operating costs and competitors eating into
their market share forced them in 2010 to buy back $8
billion in stock.
Transferring jobs oversees has been an option IBM is
using more and more. At the end of 2009, IBM USA
had a workforce of 105,000 down 30,000 in just a few
years. In 2009, there were rumors that IBM wants to
get the US workforce down to 70,000. This is not a
weakness for other countries that are absorbing many
of these US jobs.
Communication across these different countries can
be very challenging. For example, having the
helpdesks in India creates language barriers in the
US. Also, India has exported many engineers to the
US because they are cheaper to pay but also Indian
Engineers do not have both the educational and
experiential accolades of their US counterparts. Many
of them come over to the states and the few US
employees left in the department have to re-train
them, wasting countless hours that could be used in
supporting their customers.
The current recession has hurt everyone and IBM is
not exempt. Financial services, which accounts for
30% of IBM revenue, has declined. Its riddled with
subprime mortgages forcing to mark down their
portfolios to ridiculously low market prices on
packaged securities that are trading at a fraction of
their theoretical value. This, in turn, is affecting the
equity of banks, and therefore their ability to lend.
Servers and Storage which account for about 20% of
IBMs revenue has declined to 16% and a 6% decline
in margins.