IBM
SWITCHES
STRATEGIES
(case analysis)
Employee Values:
IBM: Present Day - Dedication to every client’s success.
* Samuel J. Palmisano
- Innovation that matters – for our company and for the
Chairman, President & world.
- Trust and personal responsibility in all relationships.
Chief Exec. Officer, IBM
Current Financial Status:
2010 (1st half) 2009
Revenue $95,758
Net income $13,425
Total assets 109,022
Total debt 26,099
Total equity 22,755
• (Figures in millions dollars.)
International Business Machines Corp. , New
Orchard Road, Armonk, New York
Nos. of employ. in IBM/owned subs. 399,409
IBM: Present Day Major Markets of IBM:
* The company focuses in capturing • Financial Services: Banking, Financial Markets,
wide ranges of market , from gov’t
and private sectors representing Insurance
every major industries. • Public: Education, Government, Healthcare, Life
Sciences
• Industrial: Aerospace, Automotive, Defense,
Chemical and Petroleum, Electronics
• Distribution: Consumer Products, Retail, Travel,
Transportation
• Communications: Telecommunications, Media and
Entertainment, Energy and Utilities
• Small and Medium Business: Mainly companies
with less than 1,000 employees
* Important notes: IBM is currently establishing partnership with
Chungwa Tel and, as we all know, they had merged with Lenovo
for strategic purposes.
IBM: Present Day IBM Research Triangle Park
* “At IBM, our approach is twofold:
we are working to make our existing
Leadership Data Center
products and processes more
efficient for both the environment • Gold certification for its new data center - achieved
and for business, while also Leadership in Energy and Environmental Design (LEED).
developing new innovations that 22 Sept. 2010
can help the world become smarter,
drive economic and operational – awarded the LEED Gold certification by the U.S. Green
improvements, increase Building Council (USGBC)
accountability and lessen – reused 95 percent of the original building's shell and in the
environmental impact.” process IBM recycled 90 percent of the materials from the
original building and ensured 25 percent of newly purchased
material came from recycled products
– rainwater collection system which generates non-potable
water to be used in the facility
– used an innovative modular design method called IBM
Enterprise Modular Data Center (IBM EMDC)
• (Please watch the video at the end of our presentation.)
http://www.youtube.com/watch?v=DTrLWTcDi2k&feature=player_embedded
IBM: Present Day
* Current world leader in
market share in Social Platform
with total revenue of $369.7
million in 2009, representing
growth of more than 55
percent. - International Data
Corporation (IDC), 2009
• IT Services:
– Business continuity and resiliency service
– End user services
– Integrated communications services
– Security services
– IT strategy and architecture services
– Maintenance and technical support services
– Middleware services
– Outsourcing services
– Server services
– Site and facilities services
IBM: Present Day IBM PRODUCTS AND SERVICES
* Product is a "thing produced by • 1. Servers & Systems
labor or effort“ or the "result of an – AMD Processor-based Servers, Bladecenters, Cluster system,
act or a process", and stems from Intel-processor based servers , Linux servers, Mainframe
the verb “produce”. A product is
servers, Power Systems, System (iSeries), UNIX servers, x86
also referred to anything things, or
goods produced. servers for Windows and Linux, Servers and systems A-Z
• 2. Software
– Software Products, Software b
• 3. Storage
– Disk systems, Hard drives/microdrives , Network attached
storage, Storage area networks , Storage software , Tape
systems , Storage A-Z, Media
• 4. Products for medium business
– Hardware for Medium Business, Software for Medium Business
IBM: Present Day IBM SERVICES:
*Services are intangible products • IT Services Management
that are not goods (tangible – Business continuity and resiliency, End user services,
products), such as accounting, Integrated communications services , IT strategy and
banking, cleaning, consultancy,
architecture services , Maintenance and technical support
education, insurance, know how,
medical treatment, transportation. services , Middleware services, Security services, Server
services, Site and facilities services , Storage and data
services
• Additional Services
– Application Services, Asset Recovery, Outsourcing
Services, Software Services
• Business Consulting
– Business Analytic and Optimization, Customer
Relationship Management, Financial Management,
Human Capital Management, Strategy and Change,
Supply Chain Management, Thought Leadership
Case Overview: Historically Significant Details:
* an American multinational • It is the world's 4th largest technological company and
computer, technology and IT the 2nd most valuable global brand
consulting corporation
headquartered in Armonk, • IBM manufactures and sells computer hardware and
New York, United States software; offers infrastructure services, hosting
services, and consulting services in areas ranging
from mainframe computers to nanotechnology
• On May 2010, IBM bought Sterling Commerce Unit
from AT&T for about $1.4 billion
• In 1886, Herman Hollerith, a statistician for the US
Bureau of Census formed the Tabulating Machine
Company
• For decades, IBM got much profits from the hardware
of the computer industry: large mainframe computers
and then personal computers
• In Mid-1990s, the internet began to take-off, IBM
focused on server and related equipment
Case Overview: Production Line:
• Produce hardware for large mainframe computers and
personal computers
• Allocate vast resources to R&D and product development
to ensure a steady stream of cutting edge product
Marketing Frontline:
• Price – premium price for large organizations with strong
financial capacity
• Distribution – through independent retailers
• Promotion/ Advertising – maintained substantial
advertising and promotion budgets to keep potential
customers informed about it constantly evolving product
line and increased the awareness of IBM brand
• Selling – recruiting, training one of the world’s largest and
most technically competent sales forces
• Service - follows the “open architecture” policy that
encourages IBM’s licensees to develop more innovated
applications software for customers
– create customer value of IBM’s hardware
Case Overview: Changes in Technology:
• rapid increase in power of desktop’s PC
* A problematic IBM upholds • emergence of the Internet
in the mid-1990s due to the • development of internal, organization wide
inconceivable technological computer networks (intranet)
trend
As a result:
• demand for large mainframe computers
and centralized data processing system
declined
– Customer purchase criteria changed
Competitors’ Actions:
• more benefits from other brands; lower
prices by offering custom-designed
systems, direct purchasing over web and
user-friendly supports & programs
• IBM’s quality differentiation strategy and
premium price position became less
effective
The “THEN” of IBM: Target Customer:
* Focuses on the Marketing Organization
Strategy the company Individual consumers
implemented from the day of its
establishment towards the mid
-1990s.
Marketing Strategy:
Product-based quality
differentiation Strategy
The “THEN” of IBM:
Products:
Superior product backed up by excellent
4Ps (Integrated
Marketing Concept):
technical service
– Hardware(Mainframe)
– PC-DOS operation system
Price:
Premium Price
Place:
Channels
Independent retailer
Value-added resellers
Promotion:
Sales forces promotion
The “SOLUTION” : Target Customer:
Organization
* The company considered to
reformat their business Brick-and-mortar firm
marketing strategies to cope-
up with the fast changing world
of technology. They learned to
recognize their strength &
capitalize on it. Marketing Strategy:
Service-based quality
differentiation Strategy
Focus on executive-level problem
solving instead of traditional
technology consulting
Products:
The “SOLUTION” : • E-business
4Ps (Integrated • Consulting
Marketing Concept): • Software
• Outsourcing Service;
• Training
• IT service,
• Service pacs
• Server, system and storage
Price:
• Variety of price up to version of
product
Place:
• Channels
» Direct sale
» Online; their website
Promotion:
• Sales forces promotion
• Ads were placed in a variety of
media directed at managers and
entrepreneurs
The Current
Market:
* Informative inputs we may
want to know about the
competitive situation of IBM.
Source: http://www.interbrand.com/en/knowledge/best-global-brands/best-global-brands-2008/best-global-brands-2010.aspx
SWOT
Analysis: Strengths:
* IBM has completely – Advanced business performance
transformed its services from
management
a predominately IT
outsourcing model to a high- – Good organization culture.
value approach focusing on – Strategic outsourcing, mergers and
labor-based processes, acquisitions.
building business analytics
and optimization capabilities – High efficient fulfilment centre.
& turning services into – Flexible marketing management
reusable assets through a – Creative services
combination of software,
services and research and
development. Weaknesses:
– High costs in the value chain.
– Possible acquisition issues
SWOT
Opportunities:
Analysis: – Matured internet market
– Strong and stable economic market
context – High level of entry barrier to
– Sophisticated service market the server market
– High individual consumption power – Wireless Applications
Threats:
– Customers have high experience on – IBM has high switching costs
the service on the core hardware
– Customers have low switching – Intense competition
costs – High threat of substitutes
RECOMMENDATIONS:
The Future for IBM:
• add more distribution channels, reaching their
customers/target market
• always watch-out for threats in competition; keep-up high
investment in research and development
* Interesting Note:
With more than 30 years of point-of-sale (POS) market leadership, IBM and its
network of IBM Business Partners provide retailers of all sizes store solutions
that can help increase sales and reduce costs.
New IBM Data Center.wmv
Thank You
for
Paying Attention
