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* A Case Study In Strategic

Management

*T

IBM is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. IBM manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas ranging from mainframe computers to nanotechnology .

IBM holds more patents than any other U.S.-based technology company, and has nine research laboratories worldwide
Famous inventions by IBM include the Automated teller machine (ATM), the Floppy disk, the Hard disk drive, the Magnetic stripe card.

History

of IBM

In 1886 Herman Hollerith, a statistician for the US Bureau of Census formed the Tabulating Machine Company and Thomas J. Watson became its leader in 1915 and made the company slogan Think.

It changed its name to International Business Machines (IBM) in 1924. During the period between 1910 and 1960, it developed products from punch-card tabulating machines to room-sized calculators to mainframe computing systems for large enterprises and changed the nature of accounting, calculation and basic back-office business processes In the 1970s and 80s, IBM product lines expanded from its traditional mainframes to minicomputer and personal computers and applications moved from backend operations to departmental operation.

IBM introduced the ThinkPad in 1992, the first in a series of notebook computers to be manufactured by the company. In October 2002, IBM acquired PwC Consulting, the global management consulting and technology services unit of Price Waterhouse Coopers.

During the nineties, with the Internet and open standards, IBM embraced the network computing model and coined e-business to describe how network computing can transform core businesses and transactions.
In 2003, IBM Research launched On Demand Innovation services, which teamed customers with a team of researchers who specialize in business transformation and technology consulting. Today, IBM is by far the largest information technology in the world and the eighth largest company in the world. In 2003, it had revenues of US $89.1 billion, a net income of 4.32, and more than 366,000 employees in 170 countries with approximately sixty percent of revenues generated outside the United States.

External Audit Of IBM


Opportunities
Video game console market revenue is projected to reach $12 billion in 2008 and $66 billion in 2012. The IT market in Russia, India, Brazil, and China are expected to grow twice as fast as in the rest of the world. Mobile phone markets are expected to grow by 9% in 2008*. Handheld computers markets are expected to grow by 32% in 2008.

Threats
Competitors are strong. Economic fluctuation could crimp consumers spending. Small & Medium business demand fails to accelerate.

STRENGTH
The Advanced business action management and innovative culture.
The successful strategic outsourcing, mergers and acquisitions of IBM. The most recent merge of IBM is with the Lenovo; Lenovo is providing the outer element profession and IBM providing all of its latest chip technology can result in greater success of the company. The creative service that International Business Machines provides is its strength. It is handling almost 95% of business tasks of top 1000 companies all over the world. Today, IBM has entered a wide range of fields including Business continuity, snap services, End user services, integrated subject services, IT strategy and architecture services etc.

WEAKNESS
At International Business Machines there are high costs involved in the value chain and also the company is dealing with some acquisition issues. Low market share within PC market. Dependency on corporate customer base. IBM spends quite a lot on its research and development where as the implementation of new processes is a little difficult.

OPPORTUNITY
The rising demand for wireless and internet services provides the company new opportunities to explore. There are many possible acquisitions and merger opportunities that the company can seize and increase its market share greatly. By making its distribution channels stronger and increasing its retail outlets and suppliers can result in more profits for the company. The rising energy prices and cost makes running and operations of the business difficult. IBM has addressed by making its strategy related to environment. With its green strategy it is able to save up to forty percent of energy costs.

THREATS
There are many competitors like HP, Dell, Accenture and Microsoft etc that have captured large segments of the market. The market has perfect competition state and switching cost is low for the customers. At IBM, there is a constant high threat of new substitutes as well as service switching. The technology market is very flexible, entry is easy and even small companies like Compaq can reduce the market share of IBM greatly. The global recession is a large threat for IBM. The company prices are higher as compared to other service providers in the same industry therefore; the IBM needs to take effective cost reduction strategies to deal with the unstable market conditions

Corporate level strategy of ibm


Companies in industries around the world are
in a race that gets more difficult every year, with bigger, stronger, and more innovative competitors. In addition, the rules of the race are constantly changing with the emergence of electronic business, globalization, disruptive technologies, innovation and convergence of industries.

IBMs approach to corporate level strategy is based on six core principles: 1. Find value across the corporation 2. Have a bias for rapid implementation 3. Bring industry-specific expertise 4. Be customer-driven 5. Be global 6. Create a strategic management competency

Competitive level strategy


Where to compete: Markets (e.g., customer segmentation and targeting; market share targets) Products (especially portfolio life cycle management and margin targets) Channels (e.g., value-added channel, e-commerce)
How to compete: Industry value chain (e.g., supplier strategy; company domain; channel strategy) Financial structure (e.g., cash flow strategy) Internal Capabilities: Culture (i.e., set of beliefs held by the people of the company about the company) Core processes (i.e., central set of linked work activities performed by the company to create value) People, capital, technology (i.e., the companys fundamental resources) Systems and technology (especially customer understanding, decision support, performance measurement and other information-based systems) Organization structure

BUSINESS LEVEL STRATEGY OF IBM


The IBMs Business strategy consulting practice can assist in the following areas of 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 transactionsacquisitions, 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. 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 challenges
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. 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.

IBMs STRATEGY
IBM innovation and growth, business strategy consultants are catalysts for transformation, creating strategies and models that drive innovation from strategy through execution. Acting as focal points for this innovation, IBMs leverage its own unique research and vision across the technology horizon to develop new business models that boost sustainable advantage and increase competitiveness. IBM do this by working collaboratively with customersoffering expert analysis, business planning, scenario envisioning, project planning, and business case developmentto build solutions to the business problems confronting their organization.

Company structure of IBM

Root organization:
The root organization is the top level organization and is its own parent. All organizations in the IBM organization structure are descendents of the root organization. The site administrators are owned by the root organization.

Default organization:
The default organization is owned by the root organization. All guest customers and all customers in a consumer direct scenario belong to the default organization. Customers in a B2B direct and value chain scenario can belong to either the default organization, or other organizations.

With nearly half a million employees worldwide, IBM has an organizational structure that is highly complex as well as frequently adjusting to maintain maximum efficiency.

At the top of the list is chairman, CEO, and president Samuel J. Palmisano, along with a board of directors. Under the CEO are a series of senior vice presidents including CFO Mark Loughridge, Services VP Michael Daniels, and Software & Systems VP Steven Mills, who oversee various other portions of the company run by junior vice presidents including Controller James Kavanaugh, Business Development VP Robert Thomas, and Emerging Technologies VP Rod Smith.
From there, the corporate structure splits out across subcompanies, divisions, and so forth, each with its own organizational structure.

The fall of ibm


{case analysis}

Increasing competition Changes in technology

Workstation

Workstations generally come with a large, high-resolution graphics screen, at least 64 MB (megabytes) of RAM, built-in network support, and a graphical user interface. Most workstations also have a mass storage device such as adisk drive, but a special type of workstation, called a diskless workstation, comes without a disk drive. The most common operating systems for workstations are UNIX and Windows NT. In terms of computing power, workstations lie between personal computers and minicomputers. High-end personal computers are equivalent to low-end workstations. And high-end workstations are equivalent to minicomputers. By the year 1988,work station market was $4.7 billion and its profit margin was 45% compare to mini computer whose profit margin was 58% . IBM was small player in work station segment in 1989 its market share was 3.9% as compare to sun micro system s and Apollos whose share were 29% and 21% respectively to over come this problem the IBM and DEC introduced workstations based RISC (reduced instruction set computing )
processor which makes the machines 2 to 3 times faster . IBM RT PC workstation failed due to underpowered micro processor which was launched in 1986 . In 1989 RS /6000 workstation was introduced and it captured by the end of 1991 the work station market also played a vital for large computer maker .

Software and services

IBM has realized the importance of devoloping software that can link its mai frame and personal computer to facilitate customer with intregrated compu pakage. IBM failed to recognized the market for general operating language and software application. IBM tied to software that supports mainframes was not in a healthy position compete in new sotware and services market.

*
In 1985 Jhon Akers become the CEO of the company and was charged with the task of using IBMs vast resources to make it the market leader in the new lucrative and to reduce IBMs dependence on mainframe.
In January 1988 he reorganised IBM to speed decision making. IBMs contention system.