.. cused on forming both a decentralized and interlinked company. Therefore, it was difficult to counter the strong competition IBM divisions are facing from meaner rivals. 2.2. There is a slow pace of product introductions due to slow market researches: one of the most difficult challenges of IT markets is that products must be updated in a regular and very frequent basis.
As you may have already noticed, a brand new computer will lead the market for only 5 to 6 months. That’s why researchers must continually look for new technologies to apply to their products. However, the research process at IBM takes too much time, and this costs huge amounts of money, leading to a higher price than that of competitors, and finally to decrease in sales. 2.3.IBM uses a shotgun approach, meaning that products are launched in the market without any previous information. This can be perceived as a weakness since it would be preferable to make people know about the evolution of IBM technology. Customers need to know what is to be expected from IBM. 3. Marketing: 3.1.One of the main characteristics and weakness of IBM marketing approach is that it is based on updating and recycling older systems architectures. Instead of creating a 100% new product, the company chooses some obsolete products and try to upgrade them. This shows that there is a lack of communication and understanding between IBM and its customers, since there is no or little interest in what are the real needs.
It is just with the arrival of Gerstner that this marketing approach changed, when he ordered 25 executives to meet customers. 4.Management: 4.1.IBM maintains an effective internal control structure that consists of: ? Organizational arrangements with clearly defined lines of responsibility and delegation of authority ? Comprehensive systems and control procedures. ? the objective of this structure is to provide reasonable assurance that transactions are executed in accordance with management authorization, and that they are appropriately recorded, in order to permit preparation of financial statements in conformity with generally accepted accounting principles and to adequately safeguard, verify and maintain accountability of assets. 5.HRM: 5.1. To assure the effective administration of internal control, IBM carefully selects and train its employees, develops and disseminates written policies and procedures, and provides appropriate communication channels. 5.2.To compete and win the global marketplace, IBM needs to attract and retain talented and motivated professionals from practically every country, community and background.
IBM provides a cash compensation opportunity that will attract, retain and motivate high performing employees. Their pay will be strongly influenced by the results obtained by each one of them. 5.3 Among other benefits: medical, dental and vision benefits; income protection; work and personal life balancing; stock purchase; IBM club, etc. 6.Accounting: 6.1.The Audit Committee of the Board of Directors is composed solely of outside directors. It recommends to the Board the independent firm that will conduct the company’s auditing.
The Audit Committee meets periodically and privately with the independent accountants, as well as with IBM managers to review accounting, auditing, internal control structure and financial reporting matters. Usually, IBM is helped by PricewaterhouseCoopers LLP to review the whole internal structure of the company and to test its accounting procedures. 6.2.With this approach, neutrality and objectivity are respected, so IBM managers are sure that the results obtained are not influenced by inside auditors. 7.Porters competition model 1. The computer industry is still young and expanding, so there is a big threat from potential new entrants. 2. The industry is competitive, so IBM has to satisfy both industrial buyers and consumers. 3. IBM faces high threats from substitute products because computer products have a short lifecycle. PC networks are replacing mainframes.
4. There are increasing numbers of competitors in the industry spurring both price competition, and product innovation. III. Strategic Alternatives 1. Outsourcing can be one good solution for IBM to cut its costs so that it can sell at a competitive price. The hardware can be manufactured where there is cheap labor and equipment for instance. 2.
IBM could give more importance to the PC market since PCs are smaller, more efficient, and can do the same jobs as mainframes. 3. The company has to look for a new marketing strategy to enter its products at the right place and time and better meet its customers needs. Use heavy and direct marketing. 4.
One important way of reducing costs and be better prepared for the future is to make strategic alliances, thus, building sustainable competitive advantages. 5. The internal culture should be changed. Give more importance to team work. IV.
Strategic Recommendations 1. Even if it is currently one of the leaders in the computer industry, IBM should prepare itself for the future especially for the high competitiveness that engulfs the industry. For instance, very known competitors, such as Compaq, are increasingly doing well and can easily surpass IBM if it defaults on meeting customers demands and being innovative by having a truly sophisticated R&D. In fact, IBM should try to provide integrated system solutions to customers not only to ease the way of using them but also to ease the life of its customers. 2.
One of IBMs problems is the operational conflict between its units, especially between the Personal Systems Unit, which produces PCs and workstations for one market, and the other units that provide integrated package solutions for a different market. The conflict in this case is due to the Personal Systems units two functions: ? Selling products to the individuals market ? Providing other units with products that are to be used as components in integrated package solutions to be sold to organizations. The Personal Systems market is very competitive with many PC producers getting their product on the market fast. An autonomy strategy would benefit the Personal Systems unit, which would be able to focus on its sales without losing time in coordinating with the other units. On the other hand, the other units would suffer under this strategy because they would lose a supplier of made to specification components.
Our strategic recommendation is that the units should operate as separate businesses, coordinating only when the performance of the individual units will not suffer. The Personal Systems unit produces standard products for an enormous market, so they should not waste time in adapting to the other units. When the other units require components they should buy them from Personal Systems. If these components are incompatible, they should adapt their package system or outsource (out of IBM) the components. The personal systems industry is very competitive because it is simple compared to integrated solutions, services, and products, with lower and decreasing margins.
IBM will outsource low margin products and keep high margin integrated products in house. 3. IBM should further integrate the separate systems of its different vendors in order to have satisfied customers 4. IBM employees are experts in products, so they should strengthen ties with firms specialized in applications. V.
IBM vision and strategy of growth today: 1. Todays mission statement: We create, develop and manufacture the industry’s most advanced information technologies, including computer systems, software, networking systems, storage devices and microelectronics. It has two fundamental missions: ? Strive to lead in the creation, development and manufacture of the most advanced information technologies. ? Translate advanced technologies into value for its customers as the world’s largest information services company. IBM professionals worldwide provide expertise within specific industries, consulting services, systems integration and solution development and technical support. 2.
Todays objectives: 1) Build marketing for IBM middleware on NT with its channel partners. 2) Be the leader in market share by 1998 on the NT platform. 3. Todays strategy: ? Continue to deliver solutions -Cross industry -IBM and partners ? Continue to deliver best of breed product -IBM and partners ? Maniacal focus on customer satisfaction 3.1) IBMs strategy of acquisitions. In 1995, IBM acquired Lotus Development Corp., and the next year acquired Tivoli Systems Inc.
Services became the fastest growing segment of the company, with growth at more than 20 percent per year. 3.2) IBM Technologies, whose role is supplying advanced technologies, is currently looking for computer producers with whom it can form alliances. IBM and Dell were in discussions since June 1998 and the result is a strategic agreement worth $16.6 billion over 7 years for IBM. Under this deal they will share their competencies and technologies, and cooperate in developing future technologies. Dell will acquire IBM components for its computers, and database, network, and microelectronic technologies, and they will exchange a large array of licenses. Further areas of cooperation will follow.
Dells general director says that a company cant do everything alone. Dells share of the US market for servers jumped 95% in 1998 to 5.6%, making it the 5th. IBM is 1st with 30.5%. 3.3) In May 1997, IBM dramatically demonstrated computing potential with Deep Blue, a 32-node IBM RS/6000 SP computer programmed to play chess on a world class level. Deep Blue defeated Garry Kasparov. World Chess champion.
3.4) In October 1998, IBM has created a division that could take advantage of opportunities for growth in the sale and service of guiding technologies, and would develop its relations with computer producers. 4. Todays vision: Nowadays, IBMs CEO states it clear that the net is the future. The net has changed the way business is done and provides a great network of communication. According to Gerstner the net is a vocational medium-a place where real work gets done, real competitive advantage is gained, and real growth is generated. Indeed, with the Internet a company can increase its sales and profits.
It can enhance communication between employees and thus provide a better internal environment. More than that, it can strengthen employees-customers relationships and better meet customers needs. It also provides a fast and efficient way of doing business between partners in a supply chain. E-business can also provide an environment of customizable communications through which you better serve customer needs and reflect a good product image. Thats why IBM is getting more involved in e-business. For 1996 the top computer companies in the world were ranked: 1.IBM 2.Fujitsu 3.Hewlett-Packard 4.NEC, 5.Compaq.
VI. IBM in Morocco: In 1939, IBM France launched in Morocco the first agency in Africa. Morocco was chosen because it represents an open door to Africa. IBM MAROC employs 85 employees and has almost 500 clients (ministries, banks, insurance companies, Al Akhawayn University, etc.). The main activities of IBM MAROC are to meet all customers’ needs, to provide high quality tools, and to create a structure that will guarantee high quality maintenance services.
IBM has two important strategies, which are: ? direct marketing: it means selling directly to the consumer through the mail, by telephone, or door-to-door. By having direct contact with the customer, the company knows what are the needs, the preferences, and then can effectively choose the kind of products it will sell in the Moroccan market. ? Commercial partnership: IBM has 22 commercial partners that sell its products in many different regions in Morocco. Thus, IBM MAROC is not obliged to create agencies in many cities, rather, its products are sold with other firms’ articles, which increases the competition. Business.