CHAPTER I

INTRODUCTION

International Business Machines Corporation or IBM, is an American

multinational technology and consulting corporation, with headquarters in Armonk,
New York, United States. IBM manufactures and markets computer hardware and
software, and offers infrastructure, hosting and consulting services in areas ranging
from mainframe computers to nanotechnology.[3]

The company was founded in 1911 as the Computing Tabulating Recording Company
(CTR) through a merger of three companies: the Tabulating Machine Company, the
International Time Recording Company, and the Computing Scale Company. CTR
adopted the name International Business Machines in 1924, using a name previously
designated to CTR's subsidiary in Canada and later South America. Security analysts
nicknamed IBM Big Blue in recognition of IBM's common use of blue in products,
packaging, and logo.

In 2012, Fortune ranked IBM the #2 largest U.S. firm in terms of number of
employees (433,362), the #4 largest in terms of market capitalization, the #9 most
profitable, and the #19 largest firm in terms of revenue. Globally, the company was
ranked the #31 largest in terms of revenue by Forbes for 2011. Other rankings for
2011/2012 include #1 company for leaders (Fortune), #1 green company worldwide
(Newsweek), #2 best global brand (Interbrand), #2 most respected company
(Barron's), #5 most admired company (Fortune), and #18 most innovative company
(Fast Company).

IBM has 12 research laboratories worldwide and, as of 2013, has held the record for
most patents generated by a company for 20 consecutive years. Its employees have
garnered five Nobel Prizes, six Turing Awards, ten National Medals of Technology,
and five National Medals of Science. Notable inventions by IBM include the
automated teller machine (ATM), the floppy disk, the hard disk drive, the magnetic

1
stripe card, the relational database, the Universal Product Code (UPC), the financial
swap, SABRE airline reservation system, DRAM, and Watson artificial intelligence.

IBM is a global IT manufacturing and consulting company, with 335,000 employees

across nearly every industrialized country in the world. Once largely focused on the
sale of mainframes and related software contracts, IBM has evolved into lucrative
technology and business consulting, supported by a wide range of IBM software
platforms and products. Figure 1 shows IBM‘s value system in the marketplace,
demonstrating a reliance on knowledge-based transformation and processes. Products
such as hardware and software are either sold outright, or used (along with
competitor‘s products) as a basis for consulting engagements.

IBM is a global technology and innovation company that stands for progress. With
operations in over 170 countries, IBMers around the world invent and integrate
hardware, software and services to help forward-thinking enterprises, institutions and
people everywhere succeed in building a smarter planet.

IBM has been present in India since 1992. The diversity and breadth of the entire IBM
portfolio of research, consulting, solutions, services, systems and software, uniquely
distinguishes IBM India from other companies in the industry.IBM India's solutions
and services span all major industries including financial services, healthcare,
government, automotive, telecommunications and education, among others. As a
trusted partner with wide-ranging service capabilities, IBM helps clients transform
and succeed in challenging circumstances.

IBM has been expanding its footprint in India - and has a presence in over 200 cities
and towns across the country - either directly or through its strong business partner
network. IBM India has clearly established itself as one of the leaders in the Indian
Information Technology (IT) Industry - and continues to transform itself to align with
global markets and geographies to grow this leadership position. Widely recognised
as an employer of choice, IBM holds numerous awards for its industry-leading
employment practices and policies.

2
 CHAPTER II

MARKETING

Marketing Strategies of IBM

Introduction

This study aims at examining the use of theoretical marketing approaches in the
practical business scenario. In this domain the marketing strategy of IBM has been
considered on empirical grounds. It is by the use of marketing theory and concepts
that the study evaluates the marketing strategies of IBM and its role in fulfilling the
firm' overall goals and objectives. Four specific aspects of marketing strategy
evaluation are assessed in this study. Initially the proceedings are related to the
importance and the use of information in successful marketing strategies by IBM.
This is followed by a discussion on IBM marketing strategies in relation to its
organisational strategy. The paper also makes an analysis of the application of IBM
marketing strategies in global context. Lastly e-business strategies of IBM in the
marketing domain are assessed.

Evaluation of marketing strategy of IBM

International Business Machines Corporation, better known as IBM, is a multinational

IT company involved in the manufacture and retail of computer hardware and
software applications, and IT consulting services. Employing the best talents in the
industry, IBM is today the largest as well as the most profitable information
technology employer in the world. Despite of the adverse economic conditions, the
firm achieve a significant increase in its net revenue and income in 2008 compared to
previous years.

Well - devised and efficient marketing strategies have been the key to IBM' global
success. The company strongly believes that devising effective marketing strategies
requires making appropriate decisions that can well enhance all kinds of competitive
advantages and can create all kinds of new sources of value for the purpose of

3
improving the organisational revenue growth. According to Luq Niazi, Leader of
Strategy and Change at IBM, "when the leaders of an organisation think about their
business as components, it becomes clear which ones they need to own - and which
they do not". This clearly indicates the great emphasis that IBM places on the
performance and decision making capabilities of leaders in devising effective
marketing strategies. In addition, the firm also considers understanding the
requirements and needs of customers as crucial for developing effective marketing
strategies. Understanding the innovative demands of customers lies at the core of
developing effective marketing strategies.

Based on IBM' market share and dominance in the IT industry, the firm can be aptly
described as a 'market leader'. Being a market leader, an important marketing strategy
which IBM uses against its competitors is the defensive marketing warfare strategy.
The defensive marketing strategy involves the firm employing tactics to maintain its
market share. There are several tactics that firms use for defending their market share,
such as fortification, counterattack, mobile defence and strategic retreat (Ries and
Trout, 2005). Being the courageous market leader that IBM is, the firm adopts the
best defensive marketing strategy which is "self attack". IBM' strategy is "cheaper and
better than IBM". Aware of IBM' tactic, customers wait for IBM' new prospects as
they know that the Big Blue will constantly introduce new and better products which
makes the firm' own products obsolete. Another key marketing strategy employed by
IBM for sustaining its market leadership is product differentiation strategies. Product
differentiation can be achieved using a variety of factors such as distinctive products,
reliability, durability, product design etc (Kurtz and Boone, 2006). IBM uses a
product differentiation strategy based on quality of performance. In line with its quest
for further growth and market leadership, the firm adopts a diversification strategy.
The importance of IBM' growth strategy has heightened in the current economic
situation with companies in the computer industry having faced a massive drop in the
industrial production and productivity of computer hardware and the future growth for
this segment also appearing dim. In such a context, IBM has strategically reduced its
exposure to hardware by diversifying into software and services.

IBM also realises the importance of maintaining good relationships with its customers
and in line the firm lays great emphasis on trust - based marketing strategies. Trust

4
based marketing strategies stress on the need for organisations to gain ethical hold
over consumer dealings and also be honest and open about its products and the
services. For IBM, adoption of this strategy has been very effective in developing its
brand identity and image. In all of its marketing activities, the firm strives at building
customer trust and loyalty.

Importance and use of information in IBM marketing strategy

The importance and use of information is vital for gaining success. In line, IBM
adopted the strategy to take up Social Networking to the work place. It is an absolute
means of sharing ideas, complains and letters of appreciation in public. By means of
adopting networking opportunities, IBM established its strong hold over competitive
market. It is through the provision of Social Networking (SN), that IBM established
its commitment to technology and developed an enterprise - wide SN mindset. IBM is
the first major IT supplier that has got potential provisions for SN and is in the
process of changing the entire enterprise along with a credible application to address
the market.

By means of investments made in the SN domain, IBM has gained enough market
strengths in the enterprise lineage, global services, deep pockets and above all in
gaining loyal customers. By success of SN, IBM proved to be a fine player in the
domain of information networking. The proceedings have added many advantages to
its organisational global services. SN for enterprises have been implemented with
enough marketing strategies and this is what is providing IBM with technical
expertise in the field of organizational/adoption issues. The launching of more
facilities related to SN are relevant to the competition of the market. The launcher
came up with a new idea and launched it much before the though had developed in
anyone' mind. The second big thing to the adoption of marketing strategy is the IBM's
mindset in the launching of Lotus Connection. It is an information networking process
with collaboration-centric approach to SN and helps in information sharing and
uninterrupted workflow. By few minutes of exploration anybody can well get hold
over its functionalities. IBM kept it easy and user friendly; the basics of marketing
strategies.

5
When it comes to the use of information system in IBM, the adoption of unique kind
of marketing strategies is predominant. The basic approach is in being innovative and
adopting something that is very user friendly and easy for the customer to adopt.
Complicacies in the same field can lead to failure of the same. This is the reason that
IBM lays emphasis over making it simple, easy and sharing more than the consumer
can expect. Once there is a kind of trust and sense of being facilitated gets into the
consumer, he hardly will opt for any other company and this is what IBM believes to
the core. Application of innovative ideas in the field of information sharing units can
be of great risk, but under the marketing strategy of IBM, this risk has been taken
again and again with enough success.

THEORY TO EVALUATE THE MARKETING STRATEGY OF IBM

It is by the use of marketing theory and concepts; we are evaluating the determined
marketing strategy of IBM in attaining its organisational goals and objectives. Initially
the proceedings are related to the importance and the use of information in successful
marketing strategies by IBM. Then there is the discussion about IBM marketing
strategies in terms of their overall organisational strategy. We will make an analysis
over the application of IBM marketing strategies in global context. Lastly we will
assess IBM e-business strategies in marketing domain.

International Business Machines Corporation, or the IBM, is basically a multinational

computer technology and has got hold over IT consulting services. The company has
established itself as one of the selected information technology companies since 19th
century. Adoption of marketing strategies for IBM has been a planned structure since
19th century and by means of these strategies it has earned enough success all over
the world. With its growth in the manufacturing as well as marketing domains of
computer hardware and software, it has gained the nickname of "Big Blue". On
marketing grounds, IBM follows strict infrastructural services, added by hosting
provisions and consulting services in various areas from mainframe computers to the
persuasion of nanotechnology.

The company considers that to make marketing strategies, it is important to have

appropriate decisions that can well enhance all kinds of competitive advantages and
can create all kinds of new sources of value for the purpose of improving the

6
organisational revenue growth. As declared in its official website. IBM considers that
their strategy and change services target in helping their clients in transforming their
economy and related businesses by the scope of identifying strategic options. This
further gets added by provisions for developing strategic and planned change
programs to meet the demands of their consumers. According to Luq Niazi, Leader -
Strategy and Change,

"When the leaders of an organisation think about their business as components, it

becomes clear which ones they need to own - and which they do not"

Importance and use of information in IBM marketing strategy

The importance and use of information is very vital for gaining success and thus IBM
in particular came up with Social Networking provisions. It is an absolute means of
sharing ideas, complains and letters of appreciation in public. By means of adopting
networking opportunities, IBM established its strong hold over competitive market. It
is through the provision of Social Networking (SN), that IBM could establish its
commitment to technology and SN mindset. The company uses its technological
supports and draws new kinds of driving features. IBM is the first major IT supplier
that has got potential provisions for SN in the process of changing the entire
enterprise along with a credible application to address the market.

By means of investments made in the SN domain, IBM has gained enough market
strengths in the enterprise lineage, global services, and deep pockets and above all in
gaining loyal customers. By success of SN, IBM proved to be a fine player in the
domain of information networking. The proceedings have added many advantages to
its organisational global services. SN for enterprises has been implemented with
enough marketing strategies and this is what providing IBM with technical expertise
in the field of organizational/adoption issues. The launching of more facilities related
to SN are relevant to the competition of the market. The launcher came up with a new
idea and launched it much before anybody can ever think of it. The second big thing
to the adoption of marketing strategy is the IBM's mindset in the launching of Lotus
Connection. It is an information networking process with collaboration-centric
approach to SN and helps in information sharing and uninterrupted workflow. By few

7
minutes of exploration anybody can well get hold over its functionalities. IBM kept it
easy and user friendly; the basics of marketing strategies.

When it comes to the use of information system in IBM, the adoption of unique kind
of marketing strategies is predominant. The basic approach is in being innovative ad
adopting something that is very user friendly and easy for the customer to adopt.
Complicacies in the same field can lead to failure of the same. This is the reason that
IBM lays emphasis over making it simple, easy and sharing more than the consumer
can expect. Once there is a kind of trust and sense of being facilitated gets into the
consumer, he hardly will opt for any other company and this is what IBM believes to
the core. Application of innovative ideas in the field of information sharing units can
be of great risk, but under the marketing strategy of IBM, this risk has been taken
again and again with enough success.

8
 CHAPTER III

IBM MARKETING STRATEGY IN RELATION TO

ORGANISATIONAL STRATEGY

The measurement of strategic effectiveness in an organizational strategy can be

discovered through SWOT analysis. This is a structure that figure out strengths,
weaknesses, opportunities and threats of a particular company. Added to this there is
the initiation led by Johnson and Scholes model for corporate strategy (Rifkin, 2001).
Under this persuasion we can evaluate a company on the basis of three key success
criteria. These are marked as following;

1. Suitability can be assessed to identify the factors that will support the
strategies.
2. Feasibility is all about the adoption of executing the strategy into practical
field.
3. Acceptability is something that will determine the reactions that the
organisation will receive by the execution of the strategies.

At IBM there is enough encouragement for creative marketing tactics. Anybody

within the organisation can attain these tactics. The application of SWOT and the
Johnson and Scholes model proves that IBM has got enough potentiality to gain well
crafted assessment about itself. Its main strength lies in identifying its weaknesses.
The approaches are all very professional and the marketing persuasions are well
structured as per the organisational structure. As per the declarations made by the
official site of IBM, the basic marketing strategy in relation to organisational strategy
adopted by IBM is more concerned about the proceedings led by HRM. The
perspectives of organisational dealings are strategically adopted to meet the demands
of HRM.

The typical business culture of IBM is customer centric and for that they make their
HR department feel the responsibility. It has been marked that on traditional ground

9
many IBM executives along with aspiring general managers are selected for the
purpose of improving sales force and market oriented projects. It can be well marked
as Samuel J. Palmisano, the current CEO, IBM; initially joined the company in the
position of a salesman.

Global context in IBM marketing planning

In the global context, IBM has proved itself as a strong contender by managing to
sustain in the most difficult situations. It has overcome the twists and turns it initially
faced in adjusting to the 'bricks-and-clicks' business structure. Overcoming all the
hurdles IBM is now achieving milestones through the advantages forwarded by brick-
and-click enterprises. It is through this enterprise structure that IBM has transformed
into a major player in terms of getting hold over global marketing plans. Its
formulisations are inclusive of creating a global brand blueprint. It is a mode that
usually gets expressed locally and after attaining some success approaches on global
grounds. IBM always follows the process of establishing central framework and then
architects the relevant consumer experiences to gain consistency with the brand.

IBM always concentrates in gaining single view from its consumers and that helps in
assessing the risk factors of global marketing strategies (Rometty, 2001). In order to
meet the diversified point of views, IBM follows the structure noted below;

 Process of analysing the context of 'when', 'where' and 'how' the appropriate
and relevant customer data can be collected. This is an approach that is done
under the provision of practical market survey.

 The means to create absolute governance framework with special attentions

led over management policies and overall practices. These are the sources that
are collected through the purpose of encouraging customer centricity added by
the scope to safeguard customer privacy.

 Approaches led by institute consistent processes for target customer is the next
step. In this process the relationship led by the management across all the
domains of sales and provided services of the organisation are scrutinized
professionally.

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  The process of appointing efficient team leaders and strong management
initiators. IBM also appoints a leader who can perform as a single customer
advocate and is very much accountable for all the sorted touch points.

The marketing strategies adopted by IBM to meet global demands and competitions
are well inclusive of a robust infrastructure. It has the provision for optimising
flexibility and a hub-and-spoke architecture for collecting consumer demands on
global arena. There is also well marked acknowledgement for all the innovative ways
adopted by the partners of IBM. Developments attain by the partners of IBM in global
terms is also directly related to the marketing strategies followed by IBM. IBM
understands the fact that partners can add much hold over the local market and can
reach the consumer with more in-depth formulations. This is the reason that they
believe in developing capitalized relationship with these partners for future
opportunities.

IBM and e-business strategies

The motive of any electronic business is to achieve consumer demands through

internet networking. This is a provision that can collect more consumers all over the
world with very minimum investment. It is an exclusive means adopted through the
dealings related to information and communication technologies. For the development
of business proceedings through ICT is considered to be the best means. In case of
IBM the role of e-business is very strong. Through e-business strategies, IBM is
enabling itself to all kinds of external activities and is applying determined
relationships for respective business dealings, with individuals, diversified groups and
all other corporate. According to 'Who Says Elephants Can't Dance?'; a book by a
former CEO of IBM, Louis Gerstner (2003), the approach of IBM for "e-Business
strategies is handled under IBM's marketing provisions and under specialised internet
teams since 1996.

It is through its e-business strategies that IBM is able to link its internal as well as
external data processing systems with more efficiencies and flexibilities. E-business
helped IBM in coming much closer to its consumers and that builds the bridge of
reliability and consumer loyalty to the brand. The proceedings led by IBM for the

11
development and implementation of e-business are more strategic and led
concentration over diversified functions occurring through electronic capabilities.IBM
is also a part of the entire value chain proceeding for more profitable dominance over
the local as well as global market. There are some predominant sectors where the e-
business strategies are applied to gain more trust and money from the consumer.
These activities are noted below;

1. electronic purchasing
2. supply chain management
3. processing orders electronically
4. handling customer service

These proceedings are adding special technical standards in the e-business structure of
IBM. It is also utilising e-business strategies to exchange of data between its partners
and associate companies. As a matter of fact the e-business strategies of IBM are not
much different from the other marketing strategies. The basic difference however
depends over the expansion of management for sending and receiving contracts from
the consumer. It is under this strategic implementation that IBM has adopted many
local dealers to be a part of its services. These dealers are of course selected through
some professional modes. The reputations of these dealers are marked by IBM first
before offering the partnership. In terms of services for each product sold through e-
business, IBM provides appropriate training to all those people who are a part of this
structure. With strategic planning IBM is also into the dealings related to integrated
intra and inter firm business proceedings.

It can be well concluded that the marketing strategies adopted by IBM are very much
structured on the basis of trust-based marketing strategies. It is through this theoretical
approach that IBM has established itself very strongly, amidst burgeoning and very
unpredictable online as well as global marketplace. IBM concentrates in providing its
consumer every possible facility that he demands and that too with very balanced
services. It is more about having the trust of every single consumer, rather than having
lots of them without the trust. The products and services provided by IBM can
guarantee their utility to the customer's satisfaction. In a nutshell, IBM has got
professional and the courage to take a risk for innovative ideas. It explores the
consumer's domain through proper hold over the local and global proceedings.
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 CHAPTER IV

NEW PRODUCT DEVELOPMENT FOR IBM AND

MARKETING STRATEGY FOR THAT PRODUCT

The management of new product development involving electronic and computer-

oriented consumer and systems products is a special case because of the challenges
created by high technology and complex systems. There is a big project risk involved
as the whole project might fail and make a huge loss for the investors, even if the
product performs as designed in development. These factors are external to the project
team-in the company organization and culture or in the global marketplace. They are
often missed by the technical and engineering personnel in the project because of the
tendency to fix narrowly on the product itself and its design and function,

And not on the company's success in getting it successfully to the market.

IBM WILL DEVELOP A COMPUTER THAT WORKS AS A HUMAN BRAIN

IBM is carrying out a project focused on developing a computer that would work as a
brain, so it can solve problems by considering the real context in which the things are
happening.

This type of technology is called ―Cognitive computing‖, and it will require the
combined work of neurobiologists, computer and materials scientists and
psychologists. In order to develop the project, some researchers from Stanford
University, Cornell University and the University of California-Merced are
collaborating. Besides, the project is supported by the Defense Advanced Research
Projects Agency that has invested $4.9 million.

―The mind has an amazing ability to integrate ambiguous information across the
senses, and it can effortlessly create the categories of time, space, object, and
interrelationship from the sensory data‖, said Dharmendra Modha, a researcher at
IBM who is leading the collaboration.

13
―There are no computers that can even remotely approach the remarkable feats the
mind performs‖, said Modha. ―The key idea of cognitive computing is to engineer
mind-like intelligent machines by reverse engineering the structure, dynamics,
function and behavior of the brain‖.

SEGMENTATION OF THE MARKET

THE COUNTRY CHOSEN IN THIS CASE IS INDIA

NEUROSCIENCE, SUPERCOMPUTING, NANOELECTRONICS

Market segmentation is a strategy that involves dividing a larger market into subsets
of consumers who have common needs and applications for the goods and services
offered in the market. These subgroups of consumers can be identified by a number of
different demographics, depending on the purposes behind identifying the groups.
Marketing campaigns are often designed and implemented based on this type of
customer segmentation.

In this case we can segment the market by the age group of the people who will be
using the end product; this type of computer will be mostly used by the older group of
people who understand what is nanoelectronics and its applications.

SELECTION OF TARGET MARKET

Target Marketing involves breaking a market into segments and then concentrating
your marketing efforts on one or a few key segments.

Psychographic segmentation – based on lifestyle preferences, such as being urban

dwellers

DIFFRENTAITION AND POSITIONING OF THE OFFERING IN THE

CUSTOMERS MIND

In marketing product differentiation is the process of distinguishing a product or

offering from others, to make it more attractive to a particular target market. This

14
involves differentiating it from the competitors products as well as ones own
products.

Differentiation in quality is what IBM will be aiming for in this product as this
product will of superior quality and design which will give IBM a competitive edge
over other companies which plan to launch such a product in the future.

MARKETING OBJECTIVES

Short term targets for milestones with defined measurable achievement.

For example if IBM is planning to get over a million units of sale in this particular
year, then objectives should be defined in such a way

That actual performance can be compared with the objective.

A MARKETING MIX FOR THE NEW PRODUCT OR SERVICE

Product

The product is cognitive computing

Price

The price would be based on development costs plus profits

Place

The place of launch would be INDIA

Promotion

The product would be promoted to the age group of over 25 yrs

People

15
Indian organisations aim to apply for the Investors In People accreditation, which tells
consumers that staff are taken care off by the company and they are trained to certain
standards.

Process

Banks that send out Credit Cards automatically when their customer's old one has
expired again require an efficient process to identify expiry dates and renewal. An
efficient service that replaces old credit cards will foster consumer loyalty and
confidence in the company. Hence efficiency is our aim.

Physical evidence

Physical evidence is an essential ingredient of the service mix, consumers will make
perceptions based on their sight of the service provision which will have an impact on
the organisations perceptual plan of the service.

16
 CHAPTER V

STRATEGIC POSITION ANALYSIS

Strategic Direction

External Analysis

PESTLE Analysis

• Skilled Employees - Despite the ranks of skilled workers in India and other
countries, competition has shrunk the pool of available candidates. Employees
work in a ‗virtual organization‘, where location is no longer defined; employees
are connected to each other through networks and technology.

• Commoditization of Technology - As competitors become adept at duplicating

the same types of services IBM develops, competition increases and profits
drop. Because IBM does not force clients to use any particular product, it is
easy for clients to move to IBM, at the risk of them easily moving elsewhere.

• Pressure to Innovate - Innovation of new products and services (or the

acquisition of the same) is the lifeblood of IBM, missteps in predicting industry
trends can be costly investments with little return.

A dangerous position for IBM is the non-differentiation between a skilled

employee working for IBM and the same employee later working for a competitor.
Clients may not see value in paying IBM‘s premium prices if the same services
can be found cheaper elsewhere. Simply paying employees more merely increases
costs all around and may not be an effective solution – a new way to differentiate
the available pool of talent, raise competitive barriers, and yet keep overhead costs
low must be found.

17
 CHAPTER VI
BUSINESS STRATERGY CONSULTING
Leverage core competencies to formulate innovative strategies, create
new business models and ensure successful transformations for
sustainable growth and profitability
Overview

Business leaders understand that profit, success and continued growth are all achieved
through an intelligent, articulate and well-crafted business strategy.

Markets, competition, industry changes, adapting business models, and mergers,

acquisitions and divestitures are just a few factors that your organization must not
only keep pace with, but strive to master in order to drive ongoing business success.

IBM's business strategy expertise can help define and understand market drivers,
innovative value propositions, risks, technology strategies, globalization, M&A
activity and the development of new business models. The business strategy offerings
help your enterprise understand and leverage core competencies to drive real value by
formulating leading-edge, implementable strategies that result in sustainable growth
and profitability.

The business strategy consulting practice can assist in the following areas of your
organization:

 Growth & business model innovation strategies: Continuously innovate to

transform your business model, including where and how you compete, in order to
spur growth, provide differentiation and increase competitiveness.
 M&A services: Take your company from vision to value in pursuit and integration of
deal transactions—acquisitions, mergers, divestitures or spin-offs.
 Sustainability strategy: Clarify economic logic of sustainable actions, and set a
strategy for sustainability (energy, carbon, water, and corporate social responsibility)
within the context of your company's business and operating models.

18
 Smarter business: Understand what is needed internally and externally to be
interconnected, instrumented and intelligent in order to become more nimble and
adept.
 Cloud enabled business models: Innovative approaches that leverages the dynamic
nature of cloud as an enabler of new business models

BUSINESS CHALANGES

Business leaders today are addressing many challenges and opportunities in today's
growingly digital world, including:

 Leveraging business insights and technological capabilities to drive innovation in

business models, and across customers, markets and channels in order to create
growth and sustainable advantage
 Realizing higher value from critical merger, acquisition and divestiture activities
 Developing an implementable roadmap for more efficient and environmentally
conscious policies and operations
 Harnessing and leveraging new technology to become more agile and dexterous while
optimizing past and existing investments in technology and infrastructure

IBM's approach to Mergers & Acquisitions (M&A) is based on the need to align
strategy, selection and implementation. This means focusing on doing the right deal
for the right reason. When these basic principles are followed, organizations are able
to use M&A to:

 Increase market share

 Obtain critical mass
 Establish new growth platforms
 Extend geographic coverage
 Add capabilities
 Diversify portfolio
 Divest to focus on core businesses / competencies

19
 IBM's M&A services practice has a significant track record of helping over 1,000
leading organizations achieve these benefits through mergers, acquisitions and
divestitures.

MARKET LEADER IN M&A SOLUTIONS

In addition to the consulting services offered, IBM also offers clients the leading on-
demand SaaS solution for transaction automation, known as IBM M&A Accelerator.
This solution is an online application enabling deal participants to track, manage and
share all related M&A activities throughout the deal lifecycle. M&A Accelerator
automates all aspects of the M&A process including target tracking, due diligence,
pre-close planning, integration execution, and post-deal synergy monitoring..
Achievement of synergies or lack thereof is immediately visible to executives and
M&A leaders, allowing them to quickly capture more value from all their transactions
or quickly course correct their efforts.

IBM‘s M&A Accelerator is a powerful, highly configurable, yet easy to deploy and
use, tracking and management solution. This solution will streamline your M&A
efforts, while improving results, and providing unprecedented top-down visibility.

Overview of IBM M&A Accelerator

M&A Accelerator is like having a GPS for executing a mergers, acquisitions or

divestment. If you are acquiring another organization, you need ways to achieve
consistent success and better results in your M&A transactions. You need an M&A
automation solution that provides a complete system of record to help you capture,
execute, and monitor your M&A processes and achievements. In essence, it is your
M&A system of record, a single place to create and track all assumptions, synergies,
documents, activities, risks, issues, and measurements and achievement related to a
transaction.

M&A Accelerator quantifiable benefits as noted by our extensive commercial

client base:

 Track & Manage realization of value drivers

20
o Focus entire deal team on activities tied to value – M&A Accelerator connects the
dots between activity and value with our built in SmartLinks
o Create visible value driver measurement to enable early identification of problems
and develop appropriate course corrections
 Increase productivity of the entire deal team
o Eliminate the administrative burdens on the deal team
o Automated deal tracking, reporting, and measurement
o We take over the mechanics, tracking all the moving parts, which allows the
execution team to focus on high value activities (like decision making) and minimize
the distraction to the core business, improve results
 Reduce Risk
o Drive identification and resolution of cross functional issues before they cost you hard
dollars
o Avoid dropping issues between the due diligence/integration handoffs
o Avoid the cost of a 1 day slip. On a deal with $50 million in synergies, the cost of a 1
day slip is more than $100,000!

Assess, analyze and build strategies for your customers to address

markets, marketing, sales, service and online interactions
Overview

In a massively interconnected world, businesses are prioritizing customer intimacy as

never before. Globalization, combined with dramatic increases in the availability of
information, has exponentially expanded customers‘ options. Organizations are
realizing more and more that ongoing engagement and co-creation with customers
produce sustainable differentiation and profitable growth. Moreover, the information
explosion has resulted in an unprecedented opportunity to develop deeper customer
insights.

The right market and customer strategy can help an organization turn customers into
advocates, infuse customer interactions across each channel with positive impressions
of the company, and help engender a feeling of loyalty across the customer base. The
IBM customer experience and market strategy consulting services can help your

21
 organization achieve its goals. Assess, analyze, and build strategies to address
markets, marketing, sales, service and online interactions.

The IBM consulting offerings include the following integral components:

 Customer centric strategy: Strategies to help you focus on customer experience and
care
 Channel transformation: Strategies and approaches to help implement experience
and care activities across any and all applicable channels
 Social media strategy: Strategies and approaches to create meaningful customer
experiences and drive deeper customer relationships in the social web space
 Digital brand & presence strategy: Strategies and approaches to better leverage and
manage your brand in a digital, web-based world
 Smarter sales & marketing: Consulting services to help you understand how to
improve revenue and manage the sales and marketing organization through more
intelligent, instrumented and interconnected marketing and communications activities.

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 CHAPTER VII

IBM IN INDIA

Big Blue is not only a leading employer in India, it also has the highest IT services
revenues.

IT giant IBM is not just one of the largest private sector employers in India, but is also
the biggest player in the domestic IT services space. Its portfolio of clients includes
Bharti Airtel, Idea, Vodafone and Max New York Life, to mention a few. Data
collated from various reports, analysts and industry shows that the US company
derives annual revenues of over $2 billion from the domestic IT services market, with
a marketshare of over 13 per cent.

At this level, Big Blue — as IBM is known — is ahead of domestic rivals HCL (both
HCL Technology and HCL Infosystems), TCS, Wipro and even global rivals like the
HP-EDS combine (including MphasiS) and Accenture. HCL's IT services revenues in
India are estimated to be around $1.2 billion. Wipro, which draws around 22 per cent
of its IT services revenues from India, is believed to be the number-three player, with
estimated revenues of $1 billion, closely followed by HP/EDS. TCS, which recently
renewed its focus on India, generates revenues of $500 million.

An email sent to IBM India's spokesperson for this article remained unanswered.

Being among the first IT firms to establish its presence in India, for its hardware
business back in the 1930s, IBM has been able to harness its offshore operations for
global delivery. With an offshore workforce estimated at 100,000, IBM has paid India
and Indian firms no less than what it has made from India. For example, most Indian
IT services providers provide manpower to IBM on contract to cater to its domestic as
well as global customers.

―IBM is an exception in the domestic market. Its association with India is longer than
most Indian or global companies. Other than as a market, it has used India as a

23
strategic location for its global delivery model,‖ says Amneet Singh, vice-president of
Global Sourcing at research firm Everest Group.

While IBM no longer furnishes the geographic break-up of its headcount, the
company's last publicly announced figure for India was 53,000 employees as on
January 1, 2007. The latest figure, according to estimates of HR consultants and
analysts, is expected to be double that, of which 70,000 work at its strategic global
services division, which includes BPO IBM Daksh. This means that of every three
employees working with its global services division, at least one is from India. IBM's
global services division is estimated to have a worldwide headcount of 190,000.

Besides, of the 70,000 working for its global services division in India, 20,000 work
for the BPO business. The domestic business is also believed to have around 10,000
people. The R&D and consulting divisions are estimated to have 3,500 and 2,000
people, respectively. While the employee strength of IBM's hardware division in India
is unknown, this is manpower intensive and requires strong sales and service
capabilities.

But more than IBM's success in utilising India as a strategic global delivery centre, its
success may be viewed more for its success in leveraging India as a key growth
market. In the last five to six years, IBM has clinched most of the IT outsourcing
contracts announced in the domestic telecom space, thereby maintaining its leadership
position.

Starting with an outsourcing contract worth $1 billion from India's largest telecom
service provider, Bharti Airtel, in 2004, it signed another multi-year mega outsourcing
contract with Idea Cellular in 2007, worth about $800 million. In the same year, it
bagged an outsourcing contract from Vodafone, which is estimated to be worth more
than $600 million. Besides, state-run BSNL has also awarded IBM an outsourcing
contract, although the size is comparatively smaller.

―The only other company which has been able to compete with IBM in the domestic
telecom space to a certain extent is Wipro, especially since it pocketed a $600-million
outsourcing deal from Aircel and similar-sized deals from Unitech Wireless in the last
two years,‖ said an industry analyst, requesting anonymity.

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Other than telecom, IBM has also established a solid presence in the domestic
insurance sector, snapping up large outsourcing contracts from leading insurance
players like Max New York Life, Reliance Life, Birla Sun Life and ICICI Prudential.
The largest deal it signed in this space was with Max New York Life in 2008,
estimated to be worth around $500 million.

In banking, though, it has not been able to make much of a dent. It has only managed
deals with Canara Bank and Kotak Mahindra Bank. Its customers in manufacturing
include Bhilai Steel Plant and SAIL, mostly for SAP implementation.

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 CHAPTER VIII

CORPORATE LEVEL STRATERGY

IBM operates primarily in a single industry using several segments that create a value
byoffering a variety of solutions that include, either singularly or in some
combination,technologies, systems, products, services, software and financing. This
may lead you to believethat IBM has adopted a corporate level strategy of
concentrating on a single business unit, butthis is only half the picture. For IBM there
is not one general type of corporate strategy that bestsuits their needs, but a
combination of both a concentration on a single business strategy aswell as a vertical
integration strategy.A single business unit strategy means that IBM is concentrating
on competing successfullywithin the confines of a single business unit. An advantage
of choosing such a strategy is thatthe IBM can focus its total and collective resources
to dominating and becoming successful inthis business area. If IBM were to attempt
to pursue some other strategy such asdiversification, they might spread their resources
out too thin, thus inhibiting them from takingadvantage of some other opportunities
that may come about due to a lack of availableresources. Another advantage to
pursuing a single business unit strategy is that IBM isremaining within an area with
which it has a great deal of competence and experience. Thisdecreases the likelihood
of IBM partaking in a venture that may be unsuccessful and it keepsIBM in an area
where their existing capabilities and resources can contribute and add value.But
concentrating on just one business area may not be enough and so as previously
stated,IBM has also adopted a corporate level strategy that involves vertical
integration. Verticalintegration can be seen in the corporate level strategy of IBM in
their acquisition of variousinputs such as the LSG Group Inc., which offers services
ranging from application developmentto information technology consulting. This is
known as backward or upstream integration.Choosing a strategy such as vertical
integration generally gives a company a competitiveadvantage by improving
scheduling, by creating efficiency-enhanced assets, by protectingproduct quality and
by enabling the company to build barriers to new competition.IBM operates in more
than 150 countries worldwide and derives more than half of its revenuesfrom sales
outside the United States. IBM has adopted an international strategy with respect
tohow it plans to compete and operate globally. By adopting an international strategy

26
IBM looksto create value on a global basis by transferring valuable skill and products
to foreign marketswhere local competitors lack those skills and products. Although
much of IBM's revenues comefrom overseas sales, they tend centralize the majority of
the decision-making and other company functions right her in the United States. This
means that they first develop marketingand product decisions in the United States and
then transfer what they have done in the UnitedStates to other countries.This does not
mean that no adaptation was done at all but it does mean that any adaptation thatmay
have been done was kept to a minimal. In many cases the modifications IBM may
carry outwith respect to its business decisions in a particular market may be due to the
laws and policiesin a particular country. IBM could also be forced to modify its
business decisions in a certaincountry due to the economic and political changes in
those countries and by macroeconomicchanges, including recessions and inflation. An
example of this would be when a weakness inthe economy of Asia had an adverse
effect on the companies business in 1998 and forced it tochange its strategy with
respect to that market while the countries economy got itself back together.

CORPORATE GRAND STRATEGIES:

As the previous discussion implies, corporate-level strategists have a tremendous

amount of both latitude and responsibility. The myriad decisions required of these
managers can be overwhelming considering the potential consequences of incorrect
decisions. One way to deal with this complexity is through categorization; one
categorization scheme is to classify corporate-level strategy decisions into three
different types, or grand strategies. These grand strategies involve efforts to expand
business operations (growth strategies), decrease the scope of business operations
(retrenchment strategies), or maintain the status quo (stability strategies).

GROWTH STRATEGIES

Growth strategies are designed to expand an organization's performance, usually as

measured by sales, profits, product mix, market coverage, market share, or other
accounting and market-based variables. Typical growth strategies involve one or more
of the following:

27
 1. With a concentration strategy the firm attempts to achieve greater market
penetration by becoming highly efficient at servicing its market with a limited
product line (e.g., McDonalds in fast foods).

2. By using a vertical integration strategy, the firm attempts to expand the scope
of its current operations by undertaking business activities formerly performed
by one of its suppliers (backward integration) or by undertaking business
activities performed by a business in its channel of distribution (forward
integration).

3. A diversification strategy entails moving into different markets or adding

different products to its mix. If the products or markets are related to existing
product or service offerings, the strategy is called concentric diversification. If
expansion is into products or services unrelated to the firm's existing business,
the diversification is called conglomerate diversification.

STABILITY STRATEGIES:

When firms are satisfied with their current rate of growth and profits, they may decide
to use a stability strategy. This strategy is essentially a continuation of existing
strategies. Such strategies are typically found in industries having relatively stable
environments. The firm is often making a comfortable income operating a business
that they know, and see no need to make the psychological and financial investment
that would be required to undertake a growth strategy.

RETRENCHMENT STRATEGIES:

Retrenchment strategies involve a reduction in the scope of a corporation's activities,

which also generally necessitates a reduction in number of employees, sale of assets
associated with discontinued product or service lines, possible restructuring of debt
through bankruptcy proceedings, and in the most extreme cases, liquidation of the
firm.

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  Firms pursue a turnaround strategy by undertaking a temporary reduction in
operations in an effort to make the business stronger and more viable in the
future. These moves are popularly called downsizing or rightsizing. The hope
is that going through a temporary belt-tightening will allow the firm to pursue
a growth strategy at some future point.

 A divestment decision occurs when a firm elects to sell one or more of the
businesses in its corporate portfolio. Typically, a poorly performing unit is
sold to another company and the money is reinvested in another business
within the portfolio that has greater potential.

 Bankruptcy involves legal protection against creditors or others allowing the

firm to restructure its debt obligations or other payments, typically in a way
that temporarily increases cash flow. Such restructuring allows the firm time
to attempt a turnaround strategy. For example, since the airline hijackings and
the subsequent tragic events of September 11, 2001, many of the airlines based
in the U.S. have filed for bankruptcy to avoid liquidation as a result of stymied
demand for air travel and rising fuel prices. At least one airline has asked the
courts to allow it to permanently suspend payments to its employee pension
plan to free up positive cash flow.

BUSINESS-LEVEL STRATEGIES:

Business-level strategies are similar to corporate-strategies in that they focus on

overall performance. In contrast to corporate-level strategy, however, they focus on
only one rather than a portfolio of businesses. Business units represent individual
entities oriented toward a particular industry, product, or market. In large multi-
product or multi-industry organizations, individual business units may be combined to
form strategic business units (SBUs). An SBU represents a group of related business
divisions, each responsible to corporate head-quarters for its own profits and losses.
Each strategic business unit will likely have its' own competitors and its own unique
strategy. A common focus of business-level strategies are sometimes on a particular
product or service line and business-level strategies commonly involve decisions
regarding individual products within this product or service line. There are also

29
strategies regarding relationships between products. One product may contribute to
corporate-level strategy by generating a large positive cash flow for new product
development, while another product uses the cash to increase sales and expand market
share of existing businesses. Given this potential for business-level strategies to
impact other business-level strategies, business-level managers must provide ongoing,
intensive information to corporate-level managers. Without such crucial information,
corporate-level managers are prevented from best managing overall organizational
direction. Business-level strategies are thus primarily concerned with:

1. Coordinating and integrating unit activities so they conform to organizational

strategies (achieving synergy).

2. Developing distinctive competencies and competitive advantage in each unit.

3. Identifying product or service-market niches and developing strategies for

competing in each.

4. Monitoring product or service markets so that strategies conform to the needs

of the markets at the current stage of evolution.

In a single-product company, corporate-level and business-level strategies are the

same. For example, a furniture manufacturer producing only one line of furniture has
its corporate strategy chosen by its market definition, wholesale furniture, but its
business is still the same, wholesale furniture. Thus, in single-business organizations,
corporate and business-level strategies overlap to the point that they should be treated
as one united strategy. The product made by a unit of a diversified company would
face many of the same challenges and opportunities faced by a one-product company.
However, for most organizations, business-unit strategies are designed to support
corporate strategies. Business-level strategies look at the product's life cycle,
competitive environment, and competitive advantage much like corporate-level
strategies, except the focus for business-level strategies is on the product or service,
not on the corporate portfolio.

Business-level strategies thus support corporate-level strategies. Corporate-level

strategies attempt to maximize the wealth of shareholders through profitability of the
overall corporate portfolio, but business-level strategies are concerned with

30
 (1) matching their activities with the overall goals of corporate-level
strategy while simultaneously

(2) navigating the markets in which they compete in such a way that they
have a financial or market edge-a competitive advantage-relative to the
other businesses in their industry.

ANALYSIS OF BUSINESS-LEVEL STRATEGIES:

PORTER'S GENERIC STRATEGIES:

Harvard Business School's Michael Porter developed a framework of generic

strategies that can be applied to strategies for various products and services, or the
individual business-level strategies within a corporate portfolio. The strategies are

1. Overall cost leadership,

2. Differentiation, and

3. Focus on a particular market niche.

The generic strategies provide direction for business units in designing incentive
systems, control procedures, operations, and interactions with suppliers and buyers,
and with making other product decisions.

Cost-leadership strategies require firms to develop policies aimed at becoming and

remaining the lowest cost producer and/or distributor in the industry. Note here that
the focus is on cost leadership, not price leadership. This may at first appear to be
only a semantic difference, but consider how this fine-grained definition places
emphases on controlling costs while giving firms alternatives when it comes to
pricing (thus ultimately influencing total revenues). A firm with a cost advantage may
price at or near competitors prices, but with a lower cost of production and sales,
more of the price contributes to the firm's gross profit margin. A second alternative is
to price lower than competitors and accept slimmer gross profit margins, with the goal
of gaining market share and thus increasing sales volume to offset the decrease in

31
gross margin. Such strategies concentrate on construction of efficient-scale facilities,
tight cost and overhead control, avoidance of marginal customer accounts that cost
more to maintain than they offer in profits, minimization of operating expenses,
reduction of input costs, tight control of labor costs, and lower distribution costs. The
low-cost leader gains competitive advantage by getting its costs of production or
distribution lower than the costs of the other firms in its relevant market. This strategy
is especially important for firms selling unbranded products viewed as commodities,
such as beef or steel.

FUNCTIONAL-LEVEL STRATEGIES:

Functional-level strategies are concerned with coordinating the functional areas of the
organization (marketing, finance, human resources, production, research and
development, etc.) so that each functional area upholds and contributes to individual
business-level strategies and the overall corporate-level strategy. This involves
coordinating the various functions and operations needed to design, manufacturer,
deliver, and support the product or service of each business within the corporate
portfolio. Functional strategies are primarily concerned with:

 Efficiently utilizing specialists within the functional area.

 Integrating activities within the functional area (e.g., coordinating advertising,
promotion, and marketing research in marketing; or purchasing, inventory
control, and shipping in production/operations).
 Assuring that functional strategies mesh with business-level strategies and the
overall corporate-level strategy.
Functional strategies are frequently concerned with appropriate timing. For example,
advertising for a new product could be expected to begin sixty days prior to shipment
of the first product. Production could then start thirty days before shipping begins.
Raw materials, for instance, may require that orders are placed at least two weeks
before production is to start. Thus, functional strategies have a shorter time orientation
than either business-level or corporate-level strategies. Accountability is also easiest
to establish with functional strategies because results of actions occur sooner and are
more easily attributed to the function than is possible at other levels of strategy.
Lower-level managers are most directly involved with the implementation of
functional strategies.
32
Strategies for an organization may be categorized by the level of the organization
addressed by the strategy. Corporate-level strategies involve top management and
address issues of concern to the entire organization. Business-level strategies deal
with major business units or divisions of the corporate portfolio. Business-level
strategies are generally developed by upper and middle-level managers and are
intended to help the organization achieve its corporate strategies. Functional strategies
address problems commonly faced by lower-level managers and deal with strategies
for the major organizational functions (e.g., marketing, finance, production)
considered relevant for achieving the business strategies and supporting the corporate-
level strategy.

Sub Business Unit:

In IBM, a strategic business unit (SBU) is a profit centre which focuses on product
offering and market segment. SBUs typically have a discrete marketing plan, analysis
of competition, and marketing campaign, even though they may be part of a larger
business entity.

An SBU may be a business unit within a larger corporation, or it may be a business

unto itself. Corporations may be composed of multiple SBUs, each of which is
responsible for its own profitability. General Electric is an example of a company
with this sort of business organization. SBUs are able to affect most factors which
influence their performance. Managed as separate businesses, they are responsible to
a parent corporation.

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 CHAPTER IX

CONCLUSION

As the conclusion, we believe that the best way to research IBM strategy in India is to
try and contact IBM and perhaps, brief interview should conduct with the global
brand, we think wider marketing strategy is universal across the globe.

At the heart of the IBM philosophy and their aim is to bring Good Quality product
which is easy to utilizes and delight mothers. HR department work efficiently and
now their customers that is their employees need Psychological satisfaction.

It is a relatively new Multinational on the Indian front as compared to its competitor

which has a lot bigger area of operation and also manufactures same type of items.
But it has established a strong footing for itself in the computer industry.

Management has designed rules and regulations which are supposed to be followed by
everyone. Policies have been formulated for major and minor issues both.
Relationship with the employees is maintained at a cordial level. Employees work
with commitment and dedication to achieve the best for the organization. Job
satisfaction soars at a high level.

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 CHAPTER X

BIBLOGRAPHY

BOOKS

Gerst, Louis V. (2003) Who Says Elephants Can't Dance. Leading a Great Enterprise

through Dramatic Change. Harper Paperback

Bruce Barkley (2008) Project management in new product development. McGraw-hill

books

Rifkin, J. (2000) The Age of Access, Putnam Books, New York

WEBSITES

IBM Global Business Services, http://www.935.ibm.com/services/uk/index.wss/home

http://www.935.ibm.com/services/au/index.wss/ibvstudy/igs/a1006209?cntxt=a10058

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http://news.cnet.com/IBM-meets-lowered-estimates/2100-1014_3-885259.html

http://www.modha.org/

http://www.ibm.com/

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