IBM Strategic Management - Essay Example

? IBM STRATEGIC MANAGEMENT CASE STUDY November 26, Qn Competences that IBM Invested in while moving from a ‘Product-Centric’ to ‘Service-Centric’ Organization First, IBM invested in the service business by divesting from low margin industries that included producing hard drives and personal printers. Effectively, the company started investing in acquiring business that gave the company high-profit margins instead of low-profit margins. In this case, the company had realized that the products that gave the company low-profit margins were not centered on fulfilling the needs of the customer. On the other hand, IBM realized that customer-centric and service-centric products have a high-profit margin and investments in products such as software would ensure that company’s profit margin remained high. Hence, divesting from the low-profit margin products was the first step towards investing in service-centric products. Secondly, the company invested in making the company investing in developing services and software with an emphasis on meeting the specific needs of some industries. In this case, the company’s investment in this line ensured that it de-emphasized on creating and producing hardware and focused its attention towards producing services and software tailored to meet the needs of specific industries. Finally, IBM invested in the application of the technology that it manufactured to market its products and reach out to its customers. In this case, the company had realized that it was making technology that it never exploited, whose implications when selling products to customers were evident since customer failed to identify IBM's application of technology. Qn. 2 Description of Louis Gerstner’s Strategy Implementation Style First, it is important to point out that Gerstner was in charge for the turn-around witnessed at IBM. In effect, he was responsible for implementing the competitive strategy that enhanced profitability at the company. In line with this, the case study implies that he single-handedly brought momentous changes to the organization by designing the competitive strategy and overseeing its full implementation. Importantly, the case study does not provide evidence that Gerstner used a team to arrive at the competitive strategy and neither does the case study provide evidence regarding the use of a team to implement the strategy. Hence, the implementation style that Gerstner used to implement the competitive style can be summed up as the commander approach style. In this regard, Gerstner focused on formulating an approach to enhance the company’s competitive advantage. In addition, he applied a rigorous analysis to develop a logical strategy whose implementation changed the course of IBM. Gerstner’s implementation style was important since he was new in the company, which ensured his insulation from any prior personal biases or political influences. In effect, this might be one of the reasons that contributed to the success of the strategy. Qn. 3 Implications of the Globally Integrated Enterprise Model for Marketing Managers in the Australia and New Zealand Subsidiary of IBM At the beginning, it is important to point out that the model for operation in IBM used to be a country-based model prior to the global integrated approach. In effect, the company designed the global integrated enterprise model for all its marketing managers in all the countries of the company’s operations. In effect, IBM marketing managers in a country like South Africa use a similar model to the one used by marketing managers in IBM’s Australia and New Zealand subsidiary. The integration of this model in the IBM subsidiary may have different implications. First, it reduces the duplication of roles in the approach that guided the company’s delivery of specific internal services, which reduces a subsidiary’s costs of operations. In this case, the subsidiary may have global procurement done in a different part of the world while paying of accounts and expenses on human resource are from a different part of the globe. Effectively, this reduces the cost of operations and promotes efficiency in the subsidiary’s operations. On the other hand, the global integrated model ensures of the elimination of restrictions on marketing managers regarding the boundaries within which they can market their products. In effect, the subsidiary can deliver the company’s products on a global basis since the model eliminated restrictions that ensured that the subsidiary only dealt with the market in New Zealand and Australia. Qn. 4 Elements of the Marketing Strategy that Makes IBM Successful in Today’s Global Marketplace First, IBM understands its competitors and identifies the approaches to use in order to remain successful in the global marketplace. In this regard, the company has realized that the competition focused on a single aspect of technology that provides a single solution to one component of the technology. In effect, IBM’s approach in the marketplace offers integrated solutions to various different perspectives in the service sector and meets the specific needs of a customer. Secondly, the company identifies the important role of the element of customer knowledge in implementing the marketing strategy that has ensured its success in the global marketplace. In this case, the company provides customers with technological solutions that meet their specific needs. In fact, this is the reason that the company moved from a ‘product-centric’ model to a ‘service-centric’ model organization. In effect, the company has identified its target market and works to meet their needs based on the different solutions that the company offered its clients. Finally, the company employs the element of product knowledge in its marketing strategy in order to remain successful in the global marketplace. In this regard, it is evident that the company divested in some products whose marginal profits were low to focus on high-profit margin products and develop them into products that were superior and met the needs of their clients. While this approach was a strategic approach that aimed at maximizing profits, it is evident that the company is aware of all its products and can easily market any of their products to their customers. Qn. 5 Challenges that IBM may face in the future and the Response to these Challenges The greatest challenge that IBM faces in the future is from new competitors that are venturing into the technology market. These competitors, unlike traditional competitors such as HP and Dell, have some advantages that risked the market edge held by IBM in countries of the new competitor's operations. For example, Indian firms such as Tata Consulting Services, Wipro, and Mahindra Satyam, have ventured into the technology market, and they have some advantages over IBM. First, these companies had the advantage of cheap and available labor provided by the world’s second most populated nation. In effect, these companies may offer their products at a lower price than IBM’s products in order to attract consumers to their products, which challenges the continued growth and profitability of IBM especially in the crucial Indian market. In order to respond to this challenge, IBM should design approaches to compete with these new competitors by integrating approaches that aimed at making their products affordable to all its customers. In addition, this approach should go hand-in-hand with IBM’s emphasis on its products as more technologically advanced than the products of their competitors due to IBM’s universal appeal. Finally, the company should ensure that it used its brand name to project itself as the global leader in marketing whose products were superior and also aim at improving their products in line with the technological advancements experienced in the world. Read More