KWAME NKRUMAH UNIVERSITY OF SCIENCE AND

TECHNOLOGY

KNUST SCHOOL OF BUSINESS

Lady Abena Abrafi Adomako- 9008019

Enoch Twum Boafo- 9015419
Angelina Appiah – 9012519
Mary Appiah – 9012619
Denyo Serlom Kofi – 9017919
Abigail Debrah Amanoh- 9017519
Nana Akua Afriyie- 431111
Kyei Jasper -9021019
Introduction

IBM, a multinational technology company, has undergone significant changes in

its global strategy throughout its history. This essay explores the evolution of
IBM's global strategy from the 1970s under the leadership of CEO Sam
Palmisano. It examines how Palmisano transformed IBM into a globally
integrated enterprise, departing from its classic multinational structure. The
essay discusses the key initiatives and strategies implemented by Palmisano and
analyzes their impact on IBM's global operations and competitive position.

The Classic Multinational Structure (1970s-1990s):

During the 1970s and 1980s, IBM was organized as a classic multinational
enterprise. This structure involved a centralized headquarters in the United
States, with subsidiaries and operations in different countries. While effective at
the time, this structure presented challenges in terms of coordination,
responsiveness, and efficiency.

Shift to the Globally Integrated Enterprise (2000s):

Vision and Strategy:

Under Palmisano's leadership as CEO from 2002 to 2011, IBM underwent a
transformational shift toward a globally integrated enterprise (GIE) strategy.
The GIE aimed to leverage IBM's global presence, talent, and resources to
deliver seamless solutions to clients around the world.

Global Integration:
Palmisano emphasized the integration of IBM's operations across geographies,
focusing on collaboration, knowledge sharing, and leveraging the company's
global workforce. He encouraged cross-border collaboration, breaking down
silos, and fostering a unified corporate culture.

Smarter Planet Initiative:

One of Palmisano's notable initiatives was the "Smarter Planet" campaign. This
strategic initiative sought to address global challenges by leveraging IBM's
expertise in technology and data analytics. It involved partnerships with
governments and businesses worldwide to develop innovative solutions for
areas such as energy, transportation, healthcare, and urban planning.
Question 1

A classic multinational enterprise typically refers to a large corporation that has

operations and subsidiaries in multiple countries. These companies have a
centralized headquarters or parent company, often located in their home
country, and they establish subsidiaries or divisions in various locations around
the world.

In the context of IBM, being organized as a classic multinational enterprise

would mean that the company had its main headquarters and management
structure in the United States, while also having subsidiary offices and
operations in different countries. IBM would have conducted business globally,
serving customers and clients in multiple regions.

The multinational structure allows companies like IBM to expand their reach
into different markets, take advantage of local resources, adapt to regional
business practices, and cater to the specific needs of customers in various
countries. It often involves establishing local teams or divisions to handle
operations, sales, and support in different regions.

IBM was organized in a classic multinational company in order to firstly,

Expand Globally: IBM was experiencing significant growth during that period
and sought to expand its operations into international markets. By establishing
subsidiaries and offices in different countries, IBM could tap into new markets,
reach more customers, and increase its global presence.

Secondly to increase Market Demand: IBM's products and services were in

high demand worldwide. By organizing as a multinational enterprise, IBM
could cater to the specific needs of customers in different regions and adapt its
offerings to local markets. This allowed the company to better understand
customer requirements, provide localized support, and tailor its solutions to
different cultural, regulatory, and business environments.

And to also, Access to Talent and Resources: Operating as a multinational

enterprise enabled IBM to access a diverse pool of talent and resources across
different countries. By establishing subsidiaries in various regions, IBM could
hire local employees who possessed specialized knowledge, language skills, and
an understanding of the local business landscape. It also allowed the company
to leverage local resources, such as raw materials, manufacturing facilities, and
distribution networks.
Risk Mitigation: By diversifying its operations across multiple countries, IBM
reduced its dependence on any single market. This strategy helped mitigate risks
associated with economic downturns, political instability, or regulatory changes
in specific countries. If one market faced challenges, IBM could rely on its
operations in other regions to maintain stability and continue serving customers.
Customer Proximity: Being organized as a multinational enterprise allowed
IBM to be closer to its customers in different parts of the world. This proximity
facilitated better communication, understanding of customer needs, and the
ability to provide timely support and services. It also helped IBM build strong
relationships with local businesses and governments, leading to increased
customer satisfaction and loyalty.

Below are some advantages of the strategic orientation

Global Market Presence: By organizing as a multinational enterprise, IBM was
able to establish a presence in multiple countries and access a broader global
market. This provided the company with opportunities for growth, increased
market share, and enhanced revenue streams.
Localized Approach: IBM's multinational structure allowed the company to
adapt its products, services, and operations to suit local market conditions and
customer preferences. By understanding the unique needs of customers in
different regions, IBM could tailor its offerings and marketing strategies,
leading to better customer satisfaction and increased sales.
Access to Resources: Operating in multiple countries provided IBM with access
to diverse resources. This included talent, technology, manufacturing facilities,
raw materials, and distribution networks. Leveraging these resources in
different regions allowed IBM to optimize its operations, reduce costs, and
improve efficiency.

Risk Diversification: Being present in multiple countries reduced IBM's

exposure to risks associated with operating in a single market. Economic
downturns, political instability, or regulatory changes in one region could be
offset by operations in other regions. This risk diversification strategy helped
IBM maintain stability and mitigate potential business disruptions.
Knowledge and Innovation Sharing: Having a global presence facilitated the
sharing of knowledge, best practices, and innovation across different regions.
IBM could leverage the expertise and insights from its subsidiaries and local
teams, enabling cross-pollination of ideas and driving innovation throughout the
organization.
Government and Regulatory Relationships: Operating as a multinational
enterprise allowed IBM to build relationships with governments and regulatory
bodies in various countries. This helped the company navigate local laws,
regulations, and compliance requirements more effectively, enhancing its ability
to operate smoothly and expand its business.

Question 2
By the 1990s, the classic multinational strategic orientation was no longer
working for IBM due to several factors:

Changing Market Dynamics: The global business landscape was evolving

rapidly in the 1990s. Advances in technology, increased globalization, and
liberalization of markets led to intensified competition and disrupted traditional
business models. The classic multinational structure limited IBM's ability to
respond quickly to these changes and adapt its operations to emerging market
demands.

Lack of Coordination and Integration: The classic multinational structure often

resulted in fragmented operations, with each subsidiary operating independently
and making decisions based on local market conditions. This lack of
coordination and integration hindered efficiency, synergies, and the ability to
leverage IBM's global scale effectively. It led to duplication of efforts,
redundant systems, and limited sharing of best practices across regions.
Inefficiencies and Cost Structure: The classic multinational structure could be
costly to maintain. Each subsidiary had its own management structure,
infrastructure, and support functions, leading to duplication and increased
overhead costs. The decentralized nature of operations made it difficult to
achieve economies of scale, optimize resources, and realize cost efficiencies
that could enhance IBM's competitiveness.

Complex Customer Relationships: IBM's multinational structure made it

challenging to establish consistent and cohesive relationships with global
customers. With different subsidiaries operating independently, customers often
had to deal with multiple IBM divisions for their various needs, resulting in
fragmented interactions and potentially inconsistent service experiences.
Slow Response to Market Changes: The classic multinational structure was
characterized by a relatively slow response to market changes. Decision-making
processes were often centralized and bureaucratic, which limited the company's
ability to quickly adapt to evolving customer needs and market dynamics

Limited Customer Focus: The classic multinational structure lacked a strong

customer-centric approach. Each subsidiary primarily focused on its local
market, without fully leveraging the collective customer insights and
preferences across different regions. This limited IBM's ability to provide
tailored solutions and services to a global customer base.
Competitive Disadvantage: The classic multinational structure put IBM at a
competitive disadvantage compared to more agile and integrated competitors.
Companies that had adopted more responsive and globally integrated strategies
were able to adapt faster, enter new markets swiftly, and deliver integrated
solutions that better met customer demands.

Question 3

The globally integrated enterprise (GIE) strategy adopted by IBM under the
leadership of CEO Sam Palmisano brought several strategic advantages to the
company:

Enhanced Efficiency: The GIE strategy enabled IBM to streamline operations,

eliminate duplication, and drive efficiency through centralized functions and
shared services. This allowed the company to optimize resource allocation,
reduce costs, and improve overall operational effectiveness.
Market Responsiveness: By integrating its global operations, IBM became more
responsive to market demands. The GIE strategy facilitated quicker decision-
making, agility in adapting to changing customer needs, and the ability to seize
emerging opportunities. This enhanced market responsiveness provided IBM
with a competitive edge.

Talent Development and Utilization: The GIE approach facilitated the

identification and utilization of talent across IBM's global network. The strategy
emphasized collaboration, knowledge sharing, and cross-border teamwork,
enabling employees to contribute their expertise and foster innovation. This
approach enhanced talent development, retention, and utilization within the
organization.
Integrated Solutions and Services: The GIE strategy enabled IBM to deliver
integrated solutions and services to clients worldwide. By leveraging its global
resources, expertise, and knowledge, IBM could provide comprehensive
solutions that addressed complex client needs across multiple geographies. This
integrated approach helped IBM differentiate itself in the market and enhance
customer satisfaction.

Market Expansion: The GIE strategy facilitated IBM's entry into emerging
markets and expansion of its global footprint. By leveraging its global presence,
IBM could establish strong relationships with local partners, penetrate new
markets, and capitalize on growing opportunities in regions such as China,
India, and other emerging economies.
To make the GIE strategy a reality, IBM had to make significant organizational
changes. Some of the key changes implemented include:
Cultural Integration: IBM worked towards creating a unified corporate culture
that transcended geographical boundaries. Efforts were made to foster a sense of
common purpose, collaboration, and shared values across the organization. This
cultural integration helped facilitate knowledge sharing, teamwork, and cross-
functional collaboration.

Organizational Structure: IBM had to restructure its organization to break down

silos and promote global integration. This involved shifting from a more
centralized structure to a more decentralized model that empowered regional
and local teams to make decisions and respond to market needs. The company
also established global business units to drive collaboration and consistency
across different geographies.
Technology Enablement: IBM invested in technology platforms and
infrastructure that enabled seamless communication, collaboration, and
knowledge sharing across its global operations. This included the
implementation of internal communication systems, collaborative workspaces,
and data analytics capabilities to harness the power of data and insights across
the organization.

Talent Management and Development: IBM focused on talent management

practices that encouraged global mobility, cross-cultural understanding, and
knowledge exchange. The company implemented programs to develop
leadership capabilities, foster innovation, and promote a global mindset among
its workforce. Talent development initiatives aimed to leverage the diverse
expertise and experiences of employees across geographies.

By implementing these organisational changes, IBM transformed itself into a

globally integrated enterprise, aligning its operations, culture, and capabilities to
effectively deliver value to clients worldwide.

Question 4

Global Integration
Location based on economies and expertise( New York, China, Brazil, India,)
Global supply chain,
One business asset.