IBM
Wasiq Hamid Sindhu
INTRODUCTION
In 1886 Herman Hollerith, 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
In the 1970s and 80s, IBM product lines expanded from its traditional
mainframes to minicomputer
In 1981, the company introduced the IBM Personal Computer or PC,
allowing the use of computers in schools, homes and businesses.
Components for the computer were sourced from outside the company. The
processor chip came from Intel and the operating system, called DOS (Disk
Operating System), came from Microsoft.
IBM introduced the ThinkPad in 1992, In 1995, IBM acquired Lotus
Development Corporation and Tivoli Systems.
INTRODUCTION
IBM sold most of its hard disk drive operations to Hitachi in December
2002. The sale involved the creation of a joint venture called Hitachi Global
Storage Technologies, which was 70%-owned by Hitachi.
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 worldwith approximately sixty percent of
revenues generated outside the United States.
VISION STATEMENT
“Breakthrough microprocessor architecture that puts broadband
communications right on the chip.”
MISSION STATEMENT
“At IBM, we strive to operate in the invention, development and
manufacture of the industry's most advanced information technologies”.
PORTER FIVE FORCES
The threat of entry is low because manufacturing, and distribution are very
high and IBM is one the oldest company in this industry.
The power of buyers is high because the switching costs for buyers are
low; there are also many product choices for the buyers. The buyers can
easily switch from one company to another if they are not satisfied with the
price.
However, the power of supplier for other low required materials and parts
is lower than the main suppliers. The number of suppliers in the chip
supplying is very few so they have high bargaining power but the suppliers
of other raw materials are large in numbers so they have low bargaining
power.
PORTER FIVE FORCES
The business of other companies and some advanced devices and
computers could cause threat of substitutes. Customers can easily switch to
other available substitutes that increase the threat of substitutes.
The strength of competition in this industry is very high; the main rivals
are HP, Microsoft, Dell, and Fujitsu Siemens Computers, they compete
with international, national, regional, and local market. The competitors
are working overall the world and competing with each others all over the
world.
PESTEL ANALYSIS
POLITICAL
• Companies in this industry are working all over the world so they have
to adopt and implement the policies according to the political condition
of the country so political factors effect the company a lot.
• Heavy taxes in some countries make IBM increase its products price.
ECONOMIC
• National growth rates.
• Fuel Prices
PESTEL ANALYSIS
SOCIAL
• Positive customers' perception toward new technology around the world.
• Increase in population and internet users.
TECHNOLOGICAL
• Advanced technology development.
• Internet
• Increase numbers of companies that need ERP systems
PESTEL ANALYSIS
ENVIRONMENTAL
• IBM made the some of the major technologies like to trace weather
throughout the world.
LEGAL
• Cyber protection and the chemical the use in making hardware; like
carbon, germanium, and silicon
• Currency exchange
•
Legal registration for their business outsourcing facilities.
(CPM) COMPETITIVE PROFILE MATRIX
IBM MSFT HPQ EDS
Weight Rating Weighted Rating Weighted Rating Weighted Rating Weighted
Critical Score Score Score Score
Success
Factors
0.12 3 0.36 3 0.36 4 0.48 3 0.36
Price
0.15 3 0.45 3 0.45 2 0.30 2 0.30
Financial
Position
0.09 2 0.20 3 0.30 4 0.40 2 0.20
Advertising
0.22 4 0.88 3 0.66 3 0.66 2 0.44
Innovation
0. 22 3 0.66 4 0.88 2 0.44 2 0.44
Market Share
0.10 4 0.40 4 0.40 3 0.30 3 0.30
Management
0.10 3 0.30 3 0.30 3 0.30 3 0.30
Global
Expansion
TOTAL 1.00 3.25 3.35 2.88 2.34
(EFE) MATRIX
KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED
SCORE
OPPORTUNITIES
Video game console market revenue is projected to 0.20 3 0.60
increase in future
The IT market in Russia, India, Brazil, and China are 0.10 4 0.40
expected to grow twice as fast as in the rest of the world
Mobile phone markets are expected to grow in future 0.15 3 0.45
Handheld computers markets are expected to grow in 0.15 3 0.45
future
THREATS
Competitors are strong 0.20 2 0.40
Economic fluctuation could crimp consumers’ spending 0.10 2 0.20
Small & Medium business demand fails to accelerate 0.10 3 0.30
TOTAL 1.00 2.80
(IFE) MATRIX
KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED
SCORE
STRENGHTS
IBM revenues increased 7 percent to 69.92$.billion 0.10 4 0.40
A unique approach to engage their employees in an 0.06 3 0.18
online intranet using its Jam technology
Strong strategic planning to be an innovation-centric 0.06 3 0.18
globally integrated corporation
IBM operates in 170 countries with about 60 percent of 0.10 4 0.40
its revenues being generated outside the US
IBM concentrated on becoming stronger in high value 0.10 4 0.40
added businesses
IBM ranked number 1 hosted service provider in Western 0.10 4 0.40
Europe
IBM is supercomputing leader as provider of 35 of the 0.12 4 0.48
world's 100 most powerful supercomputers
(IFE) MATRIX
KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED
SCORE
WEAKNESSES
Declining in revenues of services and systems segments 0.08 2 0.16
in 2006
Decline in revenue of public, industrial, small and 0.08 2 0.16
medium business industries in 2006 by 9.6%
Decline in revenues in Asia Pacific area by 5.7% 0.10 2 0.20
Total assets are gradually decreasing from 109M to 0.10 2 0.20
103M in 2006
TOTAL 1.00 3.16
STRENGTHS WEAKNESSES
[Link] revenues increased 7 percent to 69.92$.billion 1)Declining in revenues of services and systems
SWOT in 2006.
2.A unique approach to engage their employees in an
online intranet using its Jam technology.
segments in 2006.
2)Decline in revenue of public, industrial, small and
medium business industries in 2006 by 9.6%.
3)Decline in revenues in Asia Pacific area by 5.7%.
ANALYSIS
[Link] strategic planning to be an innovation-centric
4)Total assets are gradually decreasing from 109M to
globally integrated corporation. 103M in 2006.
[Link] operates in 170 countries with about 60 percent
of its revenues being generated outside the US.
[Link] concentrated on becoming stronger in high
value added businesses.
[Link] ranked number 1 hosted service provider in
Western Europe.
[Link] is supercomputing leader as provider of 35 of
the world's 100 most powerful supercomputers.
OPPORTUNITIES S-O STRATEGIES W-O STRATEGIES
[Link] the video game console market by produce video
[Link] game console market revenue is projected game console, (S5, O1). [Link] marketing efforts into Asia Pacific,
to increase in future [Link] the mobile phone market, (S5, O3). (W3, O3).
[Link] IT market in Russia, India, Brazil, and China [Link] the Handheld computers market, (S5, O4).
are expected to grow twice as fast as in the rest of
the world.
[Link] phone markets are expected to growin
near future.
[Link] computers markets are expected to
grow in upcoming years..
THREATS S-T STRATEGIES W-T STRATEGIES
[Link] are strong. [Link] threats from US companies by increasing [Link] discounts on products for Small &
[Link] fluctuation could crimp marketing efforts into Asia and Europe , (S4, T1). Medium business, (W2, T3).
consumers’ spending.
[Link] & Medium business demand fails to
accelerate.
DIRECTIONAL VECTOR POINT IS ( 3.167, 1.163)
FS
AGGRESIVE
Conservative Aggressive
• Backward, forward,
horizontal integration
• Market Penetration
• Market Development
C IS
A
Defensive Competitive
ES
SPACE MATRIX
FINANCIAL STRENGTH RATING ENVIRONMENTAL RATING
STABILITY
Return on assets 6 Rate of inflation -3
Leverage 5 Technological changes -5
Net Income 5 Price Elasticity of demand -4
EPS 5 Competitive pressure -6
ROE 5 Barriers to entry new markets -3
Cash Flow 6 Risk involved in business -4
AVERAGE 5.33 AVERAGE 4.167
Y-axis 1.163
COMPETITIVE ADVANTAGE RATING INDUSTRY STRENGTH RATING
Market share -2 Growth potential 6
Product Quality -2 Financial stability 5
Customer Loyalty -2 Ease of entry new markets 5
Control over other parties -2 Resources utilization 4
Technological know-how -2 Profit potential 6
Demand variability 5
AVERAGE 2.0 AVERAGE 5.167
X-axis 3.167
GRAND STRATEGY MATRIX
Rapid Market Growth
Quadrant II Quadrant I
Weak Strong Competitive
Competitive Position
Position
Quadrant III Quadrant IV
Slow Market Growth
Market Development
Market penetration
Product Development
Forward Integration
Backward Integration
IE MATRIX Strong 3.0 to 3.99
The IFE Total Weighted Score
Medium 2.0 to 2.99 Low 1.0 to 1.99
High I II III
3.0 to 3.99
The EFE
Total
Weighte Medium
d Score 2.0 to 2.99 IV V VI
IBM
Low VII VIII IX
1.0 to 1.99
STRATEGY 1 STRATEGY 2
QSPM MATRIX Enter video game
console market
Increasing
marketing efforts
into Asia and
Europe
KEY INTERNAL FACTORS Weight AS TAS AS TAS
STRENGTHS
IBM revenues increased 7 percent to 69.92$.billion in 2006 0.10 4 0.40 2 0.20
A unique approach to engage their employees in an online intranet using its 0.06 - - - -
Jam technology
Strong strategic planning to be an innovation-centric globally integrated 0.06 - - - -
corporation
IBM operates in 170 countries with about 60 percent of its revenues being 0.10 3 0.30 4 0.40
generated outside the US
IBM concentrated on becoming stronger in high value added businesses 0.10 4 0.40 4 0.40
IBM ranked number 1 hosted service provider in Western Europe 0.10 2 0.20 4 0.40
IBM is supercomputing leader as provider of 35 of the world's 100 most 0.12 - - - -
powerful supercomputers
WEAKNESSES
Declining in revenues of services and systems segments in 2006 0.08 2 0.16 4 0.32
Decline in revenue of public, industrial, small and medium business 0.08 3 0.24 4 0.32
industries in 2006 by 9.6%
Decline in revenues in Asia Pacific area by 5.7% 0.10 2 0.20 4 0.40
Total assets are gradually decreasing from 109M to 103M in 2006 0.10 3 0.30 3 0.30
SUBTOTAL
1.00 2.20 2.42
STRATEGY 1 STRATEGY 2
Enter video game Increasing
console market marketing efforts
(Product into Asia and
Development) Europe (Market
Penetration)
KEY INTERNAL FACTORS Weight AS TAS AS TAS
OPPORTUNITIES
Video game console market revenue is projected to in future 0.20 4 .80 2 0.60
The IT market in Russia, India, Brazil, and China are expected to grow 0.10 1 0.10 3 0.30
twice as fast as in the rest of the world
Mobile phone markets are expected to grow in future 0.15 - - - -
Handheld computers markets are expected to grow in future 0.15 - - - -
THREATS
Competitors are strong 0.20 4 0.80 4 0.80
Economic fluctuation could crimp consumers’ spending 0.10 1 0.10 3 0.30
Small & Medium business demand fails to accelerate 0.10 1 0.10 4 0.40
SUB TOTAL
1.00 1.90 2.40
(BCG) MATRIX
MARKET SHARE POSITION
INDUSTRY
SALES IBM
Question Marks
GROWTH
RATE
Cash Caw Dogs
RECOMMENDATIONS
Company should penetrate the market with the existing products and
the markets.
Company should transform itself into an innovation-driven integrated
global company as it should seeks to pursue value-added businesses
and services that will generate high value for its customers and high
profits for its shareholders.
Company has done the acquisition of $ 4.8 billion in 2006 but
company’s total revenue in 2006 as compared to 2005 has not been
increased with high rate so company should penetrate the market and
increase its sales.
Company’s revenue in industrial sector and in Small & Medium
Business has been reduced as compared to 2005 so company should
concentrate on these sectors.
Company’s revenue in Europe/Middle/Africa has remains constant
from 2005 to 2006 and company’s revenue in Asia Pacific has been
reduced in 2006 from 20.4 % to 19.2%. .
THANK YOU!