Analysis of IBM Corporation - Essay Example

IBM Corporation IBM is a leader in IT industry with S$96 billion revenue a year. s and technology are the primary driving factors in this arena. Customers want products that satisfy their needs or improve their productivity. IBM looks for ways to deliver these benefits at a lower cost, smaller size, and higher speed. Operating within an industry with this kind of rapid change presents several challenges for personal computer and notebooks, namely production costs, intellectual property owners, and monopolies. In general, IBM is one of the profitable Corporations today and, as predicted, in future (Bellis, 2001). Strengths of IBM Corporation include knowledge, relationships, selling and history. The challenges of the company are based on high quality of products and services. Direct sales force maintains a relationship. Among the weaknesses are high competition and rapidly changing technology market (IBM boosts sales productivity, n.d.). The innovative PC technology is not cheap and that is why not all the potential customers can afford it today. IMB, in contrast to Dell Corporation, tries to maintain high standards of service proposing and selling (the most important) to its customers high quality products. In this case IMB takes into account both internal and external stakeholders (Crawford, Benedetto, 2003). Opportunities of IBM Corporation are local area networks, the Internet and training of the staff. The increasing opportunities of the Internet offer another area of strength in comparison to the box-on-the-shelf major chain stores (McDonald, Christopher, 2003). Customers want more help with the Internet, and IBM Corporation is in a better position to give it to. IBM will strengthen its long-standing commitment to 64-bit computing. For more than three decades, the power of microprocessors has doubled every 18 to 24 months, and most observers expect that to continue for another 10 years. The same progress is being made in other functions in silicon, such as graphics processing. Some portables will have the full power of desktop machines (Clarke, 2001). The challenges of the company are to follow the technological trends of computer industry and develop new products for professional users. For instance, notebook processors will double in power every two years, "to 12 GHz in five years, predict industry observers. Disks will shrink and may be replaced by solid-state memory. Displays will grow clearer, brighter and more energy-efficient and may even unfold to desktop size. The efficiency of batteries will improve, but perhaps not enough to keep up with power-hungry applications such as multimedia and wireless communications" (Anthes, Brewin, 2002). For this reasons, IBM strategies should integrate technology refresh provisions early in the design process of major systems and components to allow upgrades during development, production and system operation. Cost leadership (Porter, 1985), however, is a sustainable source of competitive advantage only if barriers exist that prevent competitors from achieving the same low costs. In an era of increasing technological improvements in manufacturing, manufacturers constantly leapfrog over one another in pursuit of lower costs. At one time, for example, IBM enjoyed the low-cost advantage in the production (Winograd, 1997). Then the Japanese took the same technology and, after reducing production costs and improving product reliability, gained the low-cost advantage. IBM fought back with a highly automated printer plant in North Carolina, where the number of component parts was slashed by more than 50 percent and robots were used to snap many components into place. Despite these changes, IBM ultimately chose to exit the business; the plant was sold (Prahalad, Hamel, 1994). Competitive advantage (Porter, 1985) of IBM Corporation is driven more by sales and performance management than by manufacturing and product innovations. The direct sales model (or other near-direct models) has been successful in the U.S., and the industry is moving more in that direction (IBM Web site, n.d.). However, it is not well established outside of the U.S., U.K. and a few other markets and there are questions about whether it can succeed in major markets such as Japan, Germany, France and Italy, and in high-growth emerging markets such as China, Korea, India and Brazil. 2. The opportunity of IBM is specification, which is to do with the 'design quality' of service, and conformity, which is to do with the 'process' quality which is achieved are of particular importance to customers. Ultimately they are the two factors which determine the quality levels provided by IBM to its customers. These two factors however are themselves determined by other factors. Service concepts are based on understanding the unique environment in which company operates (Portfolio Management, n.d.). Service concepts include improvement of communication, and the environment composed of all the individual services used for implementation of the group communication primitives (IBM takes customer service, n.d.). Maintenance of high standards of service is a key opportunity to maximizing customers satisfaction. The purpose of maintenance of high standards is to attempt to maximize the performance of service by ensuring that it performs regularly and efficiently (Mills, Grandy, 2000). Service, however complex or simple, however cheap or expensive, is liable to breakdown. The effective operation of IBM is dependent on the maintenance of all parts of the system (Porter, 1980), e.g. buildings, services. Indeed, company welfare or personnel practice is designed partly as a maintenance activity, e.g. training and retraining to maintain the availability of appropriate skills, facilities to maintain human capacity, counselling to maintain interest and motivation. Innovation in services is occurring for organizational computing (PCs on demand, PC outsourcing, web services), which is creating new flexibility for consumers and for business, government and education markets (IBM boosts sales productivity, n.d.). And innovation is also occurring through experimentation with new approaches to market development in emerging markets There appears to be a mismatch between the users' technology incorporation cycle and the technology introduction cycle (Turkle, 1995). Just when the customer feels comfortable with a given technology that they have acquired, a new version comes along making the earlier one obsolete. 3. One of the key strategic methods in sustaining competitive advantage is through the people who are employed. That is why maximizing each employee's potential as an individual and as a team member will be a key to maximizing the profitability. To improve operations, administration should introduce employee bonus programs and support continuing education programs for all of its employees (Rothaermel, 2000). These and other programs will improve and bring advantages in recruiting and retaining employees. IBM is seeing a continuing change in the structure of production networks as more production is outsourced and moved overseas (Hophe, Woolf, 2003). The major PC companies (competitors) have also established distribution channels where customers can conveniently download updated software products that is compatible with PC. It is very difficult to enter this highly competitive segment. Threats include: the larger price-oriented store. When they have huge advertisements of low prices in the newspaper, the customers think they are not giving them good value. One of the major impediments is that the new technologies require skill levels that many consumers do not possess. Consumers may not feel the need to adopt new technologies because they are still trying to master the technology they have recently acquired and integrate it with other existing technologies (Big-Bang, Technologies, 2004). A problem with computer industry is that although there are only a few major companies, these companies have a majority of the control over the market, requiring an extremely unique spin off of this already established product to have a chance at success. There are many innovative products that enter the sector every year. A talented company management could definitely add these product to the list if they are willing to work hard, think outside of the box, and put their heart into their company. References 1. Anthes, G.H., Brewin, B. 2002. The Future of Notebooks. Available at: http://www.computerworld.com/hardwaretopics/hardware/story/0,10801,75889,00.html 2. Bellis, Mary. 2001, Strategy Formulation in a High-tech and Project Management Setting, Cambridge: Cambridge Univ. Press. 3. "Big-Bang, Technologies Converge at Last," 2004. Business Week, June 21. 4. Clarke, Arthur, 2001, A Space Odyssey, London: Hutchinson/Star. 5. Crawford C. M. Di Benedetto C. A. 2003, New Products Management. Irwin-McGraw Hill. 7th ed. 6. Hophe G., Woolf B. 2003, Enterprise Integration Patterns : Designing, Building, and Deploying Messaging Solutions. Addison-Wesley Professional. 7. IBM Web site www.ibm.com/us/ 8. IBM Corp. http://www.washingtontechnology.com/news/13_17/state/270-2.html 9. IBM boosts sales productivity through a performance management solution. n.d. Available at: http://www-306.ibm.com/software/success/cssdb.nsf/CS/KHAL-6FMLFPOpenDocument&Site=default 10. IBM takes customer service to another level n.d. Available at: http://www-306.ibm.com/software/success/cssdb.nsf/CS/AMWR-68HT32OpenDocument&Site=default 11. McDonald M., Christopher M. 2003, Marketing: A complete Guide. Palgrave Macmillan. 12. Mills, Albert J., Grandy, Gina. 2000, "A Radical Reflexive Look at the Discipline and Practice of Strategy", The Wall Street Journal, May 27, pp. 23-25. 13. Porter M.E. 1980, Competitive Strategy: techniques for Analyzing Industries and Competitors. New York, Free Press. 14. Porter M.E. 1985, Competitive Advantage. New York, Free Press. 15. Portfolio Management Capabilities Using IBM Rational Portfolio Manager. n.d. Available at: http://www-306.ibm.com/software/success/cssdb.nsf/CS/WJBN-6C9PYLOpenDocument&Site=default 16. Prahalad, C.K., Hamel, G. 1994. Competing for the future. Boston: Harvard Business school Press, 202-207. 17. Rothaermel, Frank T. 2000, Technology Analysis &Strategic Management. 18. Sterman, J. D., 2000. Business Dynamics: Systems Thinking and Modeling for a Complex World, Irwin McGraw-Hill, New York. 19. Turkle, Sherry, 1995, Life on the Screen: Identity in the Age of the Internet. New York: Simon and Schuster. 20. Winograd Terry. 1997, Beyond Calculation: The Next Fifty Years of Computing, Springer-Verlag. Read More