The Big Blue
Case Study 2
Abstract
In this case study, IBM, also known as "Big Blue," is examined for its problems in the 1990s.
When stock prices fell sharply in 1991, IBM, which had previously been renowned for its
superior products and employee development programs, lost more than 30% of its total value
from January to November. To save more than $2 billion annually, IBM was forced to make
significant changes, including 20,000 job cuts and a move toward more independent business
units. The causes of IBM's decline are looked at in this case study, as well as the steps the
company took to make up for its losses.
Introduction
IBM, also known as "Big Blue," has long been a leader in the technology industry. Due to its
reputation for producing high-quality products and offering comprehensive employee training,
IBM was once thought of as a company that provided lifetime employment to its employees.
However, IBM's stock prices fell sharply in the 1990s, with the company losing more than 30%
of its total value between January and November. This decline prompted some significant
changes, such as the 20,000 job cuts and a move toward more independent business units. The
causes of IBM's decline in the 1990s are examined in this case study, as well as the strategies it
employed to make up for its losses. The causes of IBM's decline in the 1990s are examined in
this case study, as well as the strategies it employed to make up for its losses. We can learn
from this case about the dangers of becoming complacent as well as the necessity of remaining
innovative in a field that is constantly changing.
Analysis
The Big Blue case study emphasizes both the benefits of adapting to changing market
conditions and the dangers of complacency. For many years, IBM was regarded as a reputable
company with top-notch products and programs for staff development. However, IBM's stock
prices significantly dropped in the 1990s, which ultimately forced the company to make drastic
changes, such as cutting 20,000 jobs and moving toward more independent business units.
One of the main reasons for the company's demise was IBM's inability to adjust to the evolving
technology market. As technology developed and new competitors emerged, IBM's products
lost some of their innovativeness, and its market share began to fall. Additionally, IBM found it
difficult to remain adaptable and responsive to market changes due to its emphasis on
upholding a traditional corporate structure that prioritized lifetime employment for employees.
IBM had to significantly alter its business practices to recover from its losses, including selling
off non-core operations, restructuring its workforce, and placing a greater emphasis on the
development of novel products. This allowed IBM to recover and reclaim its position as the
market leader in the technology sector.
Recommendation and Action Plan
Based on the analysis of the Big Blue case study, the following recommendations and action
plans may be of interest to IBM or other businesses:
To stay competitive, businesses in the technology sector need to constantly innovate
and develop new products that address shifting consumer needs. IBM should prioritize
innovation by supporting R&D, encouraging collaboration between various business
units, and encouraging a culture of innovation.
Remain adaptable: To respond quickly to market changes, IBM should adopt a more
flexible corporate structure. One way to accomplish this is by establishing smaller, more
independent business units that have the power to act quickly and make decisions.
Another is to switch to a more inclusive decision-making process that takes into account
input from all employee levels.
Emphasize employee development: Despite the possibility that IBM's historical
preference for lifetime employment contributed to its decline, investing in employee
development is still crucial for attracting and retaining the best workers. IBM should
promote professional development and advancement, offer opportunities for education
and skill development, and offer competitive pay and benefits.
Thoroughly examine the marketplace and identify areas for growth and innovation.
Establish multidisciplinary teams to develop new products and services that meet
shifting consumer demands.
Build a more agile corporate structure and more manageable, autonomous, and
compact business units.
Provide employees with opportunities for training and skill development to ensure they
have the knowledge and abilities necessary to support the growth and innovation of the
business.
Make sure all employees are aware of the company's vision, goals, and priorities to
foster agreement and focus.
Regularly review and evaluate the company's performance and make the necessary
adjustments to strategies and tactics to stay on track and achieve desired results.
By putting these suggestions and action plans into practice, IBM and other companies can
position themselves for long-term success and keep up their competitiveness in a market that is
changing quickly.
References
Armstrong, M., & Taylor, S. (2014). Armstrong's Handbook of human resource management
practice.
