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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). ...
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