Case Study on IBM

Course Code: Mkt302

Course Title: Marketing

Management

Section: 01

Semester : Summer2020

Submitted to: Suman Saha

Submitted by: Mashiat Kabir Muskan

ID : 1830901

Overview of the company:

IBM which is also known as International Business Machine is an American multinational

technology company and IT consulting corporation which is located in New York and has
operations in 170 countries.  IBM originated from the bringing together of several companies
that worked to automate routine business transactions, including the first companies to build
punched card based data tabulating machine and to build time clocks . In 1911, these
companies were amalgamated into the Computing tabulating recording company
(CTR).Thomas J. Watson  joined the company in 1914 as General Manager and became its
President in 1915. In 1924 the company changed its name to "International Business
Machines." IBM expanded into electric typewriters and other office machines.

IBM manufactures and sells computer hardware and software, offers infrastructure services
and provides global consulting services. It provides knowledge of business processes and is
one of the leading brand of It industry. IBM is world’s largest information technology
company with 2005 revenues of $91 billion. Its main activity is to find solutions to its wide
range of clients and deliver its high value added service to customers using the advanced
technology. In order to meet its customer’s response it creates, develops and manufactures
many of the world’s most updated technologies, ranging from computer systems and software
to networking systems, storage devices and microelectronics. IBM also opened new channels
of distributions through companies like Sears and ComputerLand.

For it to succeed, however IBM had to cannibalize its own computer product lines and move
its current system to the new technology. But between 1991 and 1993 IBM posted net losses
of $16 billion, however it then introduced the iconis Thinkpad which helped regain lost share.
To rebuild its brand image the firm consolidated its marketing efforts from 70 adverting
agencies to 1 and created consistent universal message.

Ibm now focuses on solving world’s most challenging high tech and is the largest and most
profitable information technology in the world and second valuable by global brand with
4103 billion in sales and 388000 employees worldwide. It employs scientists, engineers ,
consultants and sales professionals in over 170 countries and holds patents than any other US
based technology company. IBM now focuses on solving the worlds most challenging high
tech problems such as better water management , lower traffic congestion and collaborative
healthcare solution.

Today Virginia M. Rometty, more commonly known as Ginni, is the

Chairman, President and CEO of IBM.

Environmental Risks and Impact:

IBM's environmental focus is:

 Energy conservation
 Climate Protection
 Supply Chain requirements
 Use of material
 Managing of electronic equipment

SWOT analysis can be done to identify the strengths, weaknesses, opportunities and threats
most significant and relevant to the business. IBM’s strengths and weaknesses are internal
strategic factors that determine capabilities and challenges based on the organization’s
characteristics. On the other hand, the opportunities and threats in IBM’s business are
external strategic factors that reflect the situation of the information technology industry and
the markets where the business operates.

The SWOT analysis of IBM is presented below:

Strengths : Weaknesses :

 It is a high valued brand  Low degree of diversification

 Expertise in production process  Static growth in core business unit
and material management  Imitable products
 Strong brand name and global presence in
leading products and solutions.

Opportunities: Threats :

 Sophisticated service market  Trade war and economic policies

 Growth opportunities in government  More competitors
 Rapid innovation of products   Large size of the company can affect output
quality at times

The results of this SWOT analysis of IBM specify the internal and external strategic factors
that support long-term business survival. The company has an extensive intellectual property
portfolio that contributes to competitive advantage against other information technology
firms as we see IBM has a high-value brand that strengthens the business against competitors
and new entrants. Also, this strength can support the company in diversifying its business and
entering other industries. Despite IBM’s strengths and positive position in the industry, there
are considerable challenges based on the weaknesses of the business, and the opportunities
and threats in the external environment. For example, the company faces the threat of
competition and experiences the weakness of the imitability of its products.

Mission Statement:

The main activity of International Business Machine is to find solutions to its wide range of
clients using the advanced technology. Its clients comprises of individual users, specialized
businesses, and institutions such as government, science, defense and educational
organizations. IBM is a multi-tasking company that creates, develops and manufactures many
of the world’s most updated technologies, ranging from computer systems and software to
networking systems, storage devices and microelectronics, in order to meet and respond to its
customer’s needs.

Vision Statement:

IBM strives to lead the invention, development and manufacturing of the industry’s most
updated information technologies, which includes software, computer systems,
microelectronics, and storage systems. It translates these advanced technologies into value for
its customers by providing professional solutions, services and consulting businesses
worldwide.

Q1. Few companies have had such a long history of ups and downs as IBM. What were some
of the keys to its recent success? Can its plan to solve some of the world’s most challenging
problems succeed? Why or why not?

Ans : For a company like IBM which has such a long history, there were definitely a number
of reasons which were key to its recent success. For decades, IBM was doing quite well, at
times, even being the leader. One key reason to this was its well-known brand name. For its
contributions during the Cold War, IBN gained a great brand image. Soon this brand image
was enhanced throughout time and added to IBM’s success.

Additionally, IBM has enjoyed much from its global distribution capabilities. It expanded
throughout its operating era and was able to capture share globally. Internationally, IBM is
known as a huge company now and this success is thanks to the immense global distribution
capabilities that it possesses.

While IBM has gone through changes throughout its existence, it has managed to survive and
do well despite the setbacks. Technology has been the core driver of its operations and all
throughout its existence, IBM has been able to adapt. Technological changes have come and
gone uncountable times but IBM has managed to grasp the changes and has been able to
adjust to these changes which are yet, another reason for its success.

The time when IBM had to lose out on market share going from market leader to market
challenger or even a market follower at other times, the company still managed to survive.
The key reason behind this is that IBM has the sufficient capital and man power. Without
these, the present success would not have been possible. It helped them persevere and bounce
back when the time was right.

Soon, these factors helped IBM make a comeback and the new market that it now operates in,
as of 2019; it stands as the market leader of the AI market with 9.2% share.

It is safe to assume that IBM’s plans to solve some of the world’s most challenging problems
will succeed. There are certain reasons behind this opinion.

For starters, IBM is hiring scientists, engineers, consultants and sales professionals around
the world. They make up the 388,000 employees that IBM employs worldwide and they
contribute to the $103 billion of IBM’s sales.

Coupled with this, IBM has spent over $50 billion on R&D for a while now. Alongside this,
about 30% of IBM’s R&D budget is aimed towards long-term research.

Q2. Who are IBM’s biggest competitors today and what risk do they face with their current
strategy?

Ans: Through the passage of time, IBM has transitioned its business methods leaping from
computation to now involving in data and AI, cloud services, IT infrastructure, server
hardware, software, cognitive offerings and security.
Focusing on competition, the main competitors that IBM has are the likes of HP and
Accenture which are tech and consulting firms that are connected to hardware and software.
Also Google, Amazon, and Microsoft are some of the IBM competitors in cloud computing.
In software, IBM competes in various categories such as e Commerce, security, and others.
They compete against companies like Adobe, Symantec, Alienware, and many others. IBM
still enjoys a bigger market share despite all the competition from these multinationals.

It has already been stated that IBM is a market leader in the AI market. So it is obvious
that IBM should employ the position defense strategy. IBM must hold onto its current
position and guard its share to fight off challengers. In other markets like cloud services, IBM
is more of a market follower with only $3.1 billion share as of 2018 compared to Amazon’s
$25.4 billion. IBM is a market challenger in both the software and server market with
respective shares of 34.6% and 14.1% as of 2015.

IBM’s current strategy comes with particular risks. The giant tech company wants to focus on
solving the world’s most challenging high-tech problems like better water management,
lower traffic congestion and collaborative healthcare solutions.

This surely comes with the risk of an attached success rate that is low. Plus, the strategy has
no guarantee of success due to the changing environment. IBM invests in R&D and the
amount that goes into it is quite high. There is a huge possibility that this investment may go
in vain as R&D might become obsolete by the time the end product is complete and thus IBM
may be unable to capitalize sufficiently on certain innovations. This is because technology is
changing at a fast rate and not everyone can efficiently cope with it. Also their focus
that is centered is more on business rather than consumers, which maybe other company does
not do.

Moreover, there is no certainty that IBM can successfully complete the aim and solve the
problems it focuses on solving. These are not ordinary problems, rather are large, current
world affairs of high magnitude which many firms are also trying to solve. This fact alone is
a big risk for IBM because those other companies too have the ability to solve the problem.
The question is about who can do it first. If the case is such that the other party manages to do
it first, IBM can suffer huge loss.