The Evolution of IBM - Case Study Example

? The Evolution of IBM Introduction IBM was at the forefront of the computer movement in the 1980s, enjoying sales, in 1990, which were five times its nearest rival. Yet, the company was also accused of being complacent and arrogant (Carlson). At this time, the company had grown to 400,000 employees and the company was that of low margins, transactions and commodities. The company was too diversified, with a bloated cost structure, and the technologies that it pioneered were on the wane. The company realized that they were trying to do too much, and that the hot companies which were up and coming were concentrating on developing segmented lines – such as Microsoft, which was concentrating on developing desktop software, and Hewlett Packard, which was concentrating on developing printers. What competencies has IBM had to invest in arising from its transformation from a product-centric to a service centric organization? Because of the excess diversification, the organization had to shift away from developing products to providing services. IBM was in the business of developing products, such as personal computers, hardware and storage. It shifted away from this and towards service and software. The competencies thus shifted away from technical quality and towards knowledge, experience and personnel expertise (Carlson). The emphases was on focus, speed, customers, teamwork and execution. The company was centralized, global core processes were standardized, metrics were redesigned, and the focus was on the marketplace and the customer (Carlson). How would you describe Louis Gerstner’s implementation style of IBM’s competitive strategy in the early 1990s? The implementation style of IBM’s corporate strategy was focused upon streamlining the operation and cutting costs. IBM cut its workforce to a low of 220,000 employees in 1994, and used other cost reductions for the company. This was half of the competitive strategy. The other half was that Gerstner recognized that the company should continue to provide integrated solutions. The previous idea was that IBM would divide into separate companies that emphasized separate competencies. The idea was that IBM could bundle and customize solutions for customers, packaging hardware, software and services together in a customized bundle (Carlson). Because IBM was centered around an idea, as opposed to a certain technology, it was able to adapt to changing business climates that occur when new technologies arise, and the magazine The Economist states that companies who are rooted in a philosophy, not a product, are the companies who will be around in 100 years (“The Test of Time,” 2011). The company also dropped low margin industries, such as personal printers and hard drives. Its focus was on high profit margin businesses, with a focus on becoming a technology integrator. It also acquired the management consulting and technology services arm of Pricewaterhouse Cooper, which was a boon for its services division (Carlson). What are the implications of the globally integrated enterprise model for marketing managers in the Australia and New Zealand subsidiary of IBM? The implications are that, even though the New Zealand and Australian marketing managers are working for a subsidiary of IBM, they will have to adhere to the corporate ethos of IBM. Moreover, they will be controlled by the centralized unit of IBM, and the products and services that they will be producing will be products and services which are approved by centralized management at IBM. The values, processes and shared services will be those of IBM. It appears that IBM has abandoned the strategy of having parents and children in the corporate sense, and more that each of the offices around the world are a part of IBM, and not independent. Discuss the elements of the marketing strategy that makes IBM successful in today’s global marketplace. One of the important elements of the marketing strategy is that IBM integrates production and value delivery worldwide, while depending upon state borders less often than it has in the past. Another part of the strategy is to create subsidiaries in different countries, which enables the company to grow in different markets while understanding local customer concerns and enabling the country to take advantage of local talent. IBM then streamlined the subsidiaries into one globally integrated corporation, which meant that the different corporate offices in different countries operated with the same set of values, processes and shared services, and the decision-making was centralized and broadly distributed. Another part of the IBM strategy was that it invested in developing countries, such as Russia, Brazil, India and China (Carlson). Highlight some of the challenges that IBM will face in the future and suggest how it should respond to these challenges. IBM has grown substantially since Sam Palmisano took the reins as CEO in the early 2000s. The company has divested itself of making personal computers, and invested in booming sectors of the technology economy, such as consulting and cloud computing. It has made dozens of acquisitions. Because IBM has grown so much in a relatively short period of time, Wall Street analysts, in 2011, when the new CEO, Ginni Rometty, was announced, questioned whether the company could maintain its “break neck growth” (“IBM’s New Boss,” 2011). This concern is exacerbated by such controversies as the current controversy regarding Oracle, who has been telling IBM customers that they are being wildly overcharged (Bort, 2012).Therefore, it shows that rivals will always try to undermine IBM’s business practices, so this is something else that they must overcome. The Economist also notes that IBM, as with all tech firms, face challenges in the 21st Century because technology is ever changing, as are platforms that are set up to run the next generation of technology. For instance, in the 1960s, mainframe computers were the platform that ran the technology of the day. By the 1980s, personal computers were the platform, and this was the dominant platform from the 1980s to the present day. The newest platform consists of mobile devices and computing clouds. The issue, then, is that firms must adapt to each new platform as the platforms are conceived. When a new platform comes into existence, tech firms must reconfigure not just their strategy, but their philosophy – they must adapt their technical skills, their brand and how they make their money. Therefore, the challenge for IBM going forward is how will they adapt to coming platform shifts? (“1100100 and Counting,” 2011). Conclusion and Recommendations Since shifting platforms, along with the fact that IBM continues to grow at a rapid pace, which might not be sustained, are the largest challenges facing IBM in the coming century. IBM’s marketing strategy needs to focus on these key issues. The issues of today is adapting to mobile devices and cloud technology. The issues of tomorrow will be some kind of coming technology that nobody really is able to conceive of just yet. Since IBM must change with the times and shifting platforms, the company’s strategy going forward should be that it focuses on research and development so that it will always be on the cutting edge of every new technological advancement that might occur in the future. And it needs to be nimble, so that it can adapt to every shifting platform, so the strategy that they are incorporating, which is a streamlined strategy that integrates all aspects of technology, is the strategy that they should continue to pursue. By not focusing on one particular area of technology, but integrating all aspects of technology, it relies on a philosophy, not a product, and this is what will take the company through the 21st Century and beyond. References Bort, J. (2012) “Oracle to IBM: Your Customers Are Being Wildly Overcharged,” Business Insider. 28 March, 2013. Available at: http://www.businessinsider.com/oracle-fires-back-at-ibm-your-customers-are-being-wildly-over-charged-2013-3 Carlson, J. “IBM’s Rise, Fall and Transformation.” “IBM’s New Boss.” (2011) The Economist. 26th Oct. [Online]. “The Test of Time.” (2011) The Economist. 9th June. [Online] “1100100 and Counting.” (2011) The Economist. 9th June. [Online] Read More