Beruflich Dokumente
Kultur Dokumente
Shazil Ahmed
Saad Akhtar
Ibrar Chaudary
Rao Kamran
Muhammad Umer Jafar
Muhammad Naqeeb Arshad
Table of Contents
INTRODUCTION TO INTERNATIONAL BUSINESS MACHINES....................................2
VISION AND MISSION STATEMENTS........................................................................3
OBJECTIVES & STRATEGIES.................................................................................... 4
PORTERS FIVE FORCES MODEL............................................................................. 5
FINANCIAL ANALYSIS.............................................................................................. 6
CPM MATRIX........................................................................................................... 7
EXTERNAL OPPORTUNITIES AND THREATS.............................................................8
Opportunities...................................................................................................... 8
Threats............................................................................................................... 8
EFE MATRIX............................................................................................................ 9
INTERNAL STRENGTHS AND WEAKNESSES..........................................................11
Strengths.......................................................................................................... 11
Weaknesses...................................................................................................... 11
IFE MATRIX........................................................................................................... 12
SWOT MATRIX...................................................................................................... 14
QSPM................................................................................................................... 17
GRAND STRATEGY MATRIX................................................................................... 20
BCG MATRIX......................................................................................................... 21
IE MATRIX............................................................................................................. 22
SPACE MATRIX...................................................................................................... 23
CONCLUSION....................................................................................................... 24
RECOMMENDATIONS............................................................................................ 25
WORKS CITED...................................................................................................... 26
APPENDIX............................................................................................................. 27
1 | Page
IBM was one of the leader brands of I.T industry which is basically related to computing
various dimension of technology weather it is about gadget or the software. It developed
products from punch-card tabulating machines to room sized calculators and main frame
computers.
In 1980, the company introduced IBM Personal Computer (PC) in which the processor came
from Intel and operating system from Microsoft. In 1992, the company introduced laptops
which were named ThinkPad. IBM introduced cost effective technologies like instead of pure
silicon chip, they introduced a blend of silicon and germanium. IBM has On Demand
Innovation services where different teams offer business transformation and technology
consultation services.
Today, IBM is the largest information technology company and the eight largest company in
the world with workings in over 170 countries. More than 60% revenue of the company is
generated from outside of US.
2 | Page
3 | Page
4 | Page
Component Check
IBMs Mission Statement
Customers
Products
Markets
Technology
Concern for survival, growth &
profitability
Self-concept
Concern for employees
5 | Page
Substitutes
IBM provides number of products which have low or no substitutes.
Competitive Rivalry
It is high as there are large companies like HP, Microsoft and EDS to compete IBM.
6 | Page
FINANCIAL ANALYSIS
7 | Page
CPM MATRIX
Critical Success
Weights
IBM
Rate Score
Microsoft
HP
Rate Score Rate Score
EDS
Rate Score
Factors
Diversification
Financial
0.1
0.15
3
4
0.3
0.6
4
2
0.4
0.3
1
2
0.1
0.3
4
1
0.3
0.15
position
Market share
Advertisement
Customer relation
Management
R&D
TOTAL
0.2
0.2
0.1
0.05
0.2
1
2
1
4
2
4
0.4
0.2
0.4
0.1
0.8
2.8
4
2
2
4
4
0.8
0.4
0.2
0.2
0.8
3.1
2
4
3
3
2
0.4
0.6
0.3
0.15
0.4
2.25
3
1
1
3
2
0.6
0.2
0.1
0.15
0.4
1.9
The CPM shows the critical success factors for companies, which would be same for all in a
given economy. Seven factors were tested among competitors of IBM (i.e. Microsoft, HP,
EDS). Microsoft holds a strong competitive position among its competitors followed by IBM,
HP & EDS.
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Threats
Over reliance on developing economies like India (38% growth)
Unstable electronics market
Change in technology (iPad)
Customers have low switching costs
Rapid product development from competitors
Fierce competition from Microsoft & HP
9 | Page
OPPORTUNITIES
WEIGHT
RATING
0.05
WEIGHTED
SCORE
0.15
economies
Create products appealing to a
0.16
0.16
0.04
0.08
0.1
0.16
2
3
0.2
0.48
THREATS
0.06
0.06
growth)
Unstable electronics market
Change in technology (iPad)
Customers have low switching
0.06
0.1
0.07
2
3
2
0.12
0.3
0.14
costs
Rapid product development from
0.1
0.3
competitors
Fierce competition from
0.1
0.3
Microsoft & HP
TOTAL
1.00
EFE MATRIX
expertise
Over reliance on developing
economies like India (38%
2.29
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The EFE matrix shows various opportunities to be availed by IBM and the threats it faces.
After listing them, weights were assigned according to their importance and the degree to
which they affect the company. The weights are industry specific and assess the importance
of each factor in terms of surviving in the industry. The ratings were given as the following:
1.
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Weaknesses
Lack of synergy resulting from a series of acquisitions and divestitures
Difficult to coordinate over four geographical segments
Too many employees (around 400,000)
Concentration or focus on three major divisions or segments puts the company at a vulnerable
position if revenues from them decline
Declining profit margins from hardware (-7.6%)
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IFE MATRIX
KEY INTERNAL FACTORS
WEIGHT RATING
STRENGTHS
Brand name
0.09
Rising revenue to 91 billion and rising net
0.1
income by 9% to $9.4 billion
Diversification (Software, hardware,
0.05
financing)
Known to have more patents than any other
0.03
American technology company
Acquisition of Watchfire Company in 2007
0.03
InnovationJam capability
0.15
Ranks second in market capitalization, net
0.05
income, and long-term growth behind
Microsoft
Widespread operations in 104 countries
0.05
Rising earnings per share (23% in 2006)
0.1
WEAKNESSES
Lack of synergy resulting from a series of
0.05
acquisitions and divestitures
Difficult to coordinate over four geographical 0.07
segments
Too many employees (around 400,000)
0.03
Concentration or focus on three major
0.08
divisions or segments puts the company at a
vulnerable position if revenues from them
decline
Declining profit margins from hardware (0.12
7.6%)
TOTAL
1.00
WEIGHTED
SCORE
4
4
0.36
0.4
0.15
0.09
3
4
3
0.09
0.6
0.15
0.15
0.4
0.05
0.07
2
1
0.06
0.08
0.24
2.89
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The internal factor evaluation matrix shows that IBMs internal position is above average.
They can come up with more planned and innovative techniques in order to improve their
position as there is room for improvement. IFE value is above 2.50 which means that IBM is
taking advantage of its strengths and minimizing weaknesses. The IFE matrix lists the
weights of each internal factor, both strengths and weaknesses and assigns them ratings and
then finds total weighed scores to assess the internal position of IBM. The weights are
industry specific and assess the importance of each factor in terms of surviving in the
industry. Coming to the ratings, they indicate how effectively the firms current strategies
respond to the factor. The total weighted score is found by multiplying the weights with the
ratings to find the weighted score.
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SWOT MATRIX
Strengths
1. Brand name
2. Rising revenue to 91
billion and rising net
income by 9% to $9.4
billion
3. Diversification
(Software, hardware,
financing)
4. Acquisition of
Watchfire Company in
2007
5. InnovationJam
capability
6. Ranks second in market
capitalization, net
income, and long-term
growth behind
Microsoft
Weaknesses
1. Lack of synergy
resulting from a series
of acquisitions and
divestitures
2. Difficult to coordinate
over four geographical
segments
3. Too many employees
(around 400,000)
4. Concentration or focus
on three major divisions
or segments puts the
company at a
vulnerable position if
revenues from them
decline
5. Declining profit
margins from hardware
(-7.6%)
7. Widespread operations
in 104 countries
8. Rising earnings per
share (23% in 2006)
Opportunities
1.
Globalization in order to
balance the fluctuations in
different economies
2.
3.
4.
5.
S0 Strategies
W0 Strategies
1. Use InnovationJam
technique to get in
touch with younger
customer base in order
to appeal to them well
<<S5,O2>>
2. Capitalize on
worldwide existence to
hire international
expertise to a larger
extent <<S7,O5>>
<<W5,O1>>
3. Use brand name to get
into Gaming PCs and
Laptops for 27% youth
in the world
<<S1,O2>>
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Strengths
1. Brand name
2. Rising revenue to 91
billion and rising net
income by 9% to $9.4
billion
3. Diversification
(Software, hardware,
financing)
4. Acquisition of
Watchfire Company in
2007
5. InnovationJam
capability
6. Ranks second in market
capitalization, net
income, and long-term
growth behind
Microsoft
Weaknesses
1. Lack of synergy
resulting from a series
of acquisitions and
divestitures
2. Difficult to coordinate
over four geographical
segments
3. Too many employees
(around 400,000)
4. Concentration or focus
on three major divisions
or segments puts the
company at a
vulnerable position if
revenues from them
decline
5. Declining profit
margins from hardware
(-7.6%)
7. Widespread operations
in 104 countries
Threats
1.
Over reliance on
developing economies
like India (38% growth)
2.
Unstable electronics
market
3.
Change in technology
(iPad)
4.
5.
Rapid product
development from
competitors
6.
WT Strategies
1. Reposition employment
to more profitable
regions <<W3,T1>>
2. Focus on reasonable
horizontal acquisition to
safeguard against
unstable electronics
market <<W1,T2>>
3. Use InnovationJam
talent to engage in
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product development.
<<S5,T5>>
The SWOT Matrix of IBM lists its strengths, weaknesses, opportunities and threats and then
devises strategies by aligning the strengths with the opportunities, weaknesses with the
opportunities, strengths with the threats and weaknesses with the threats. The aim is to
capitalize on the strengths by taking advantage of the opportunities, overcoming the
weaknesses, and undermining the threats. Coming to the strengths and opportunities cell,
Strength5 and opportunity 2 it can use the innovation jam technique to appeal to the demands
of a younger population. Coming to the weakness opportunities cell, weakness 1 and
opportunity 5 have been aligned by devising the strategy of eradicating lack of synergy
within business units.
Coming to the strengths threat cell and aligning the weakness of change in technology (threat
3) with the strength of rising revenues (strength 2) the strategy arrived at is that IBM should
use revenues to invest in latest technologies. Aligning the weakness of too many employees
(weakness 3) with the threat of over reliance on developing nations (threat 1), the company
should reposition employment in more profitable regions.
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QSPM
KEY FACTORS
OPPORTUNITIES
Globalization in order to
STRATEGY 1
STRATEGY 2
TAS
0.06
0.18
0.20
different economies
Create products appealing to a
0.06
0.24
0.10
0.1
revenue
Focus more on OEM
Hire and use international
0.07
0.1
0.2
0.3
expertise
THREATS
Over reliance on developing
0.05
growth)
Unstable electronics market
Change in technology (iPad)
0.16
0.04
2
-
0.32
-
1
-
0.16
-
0.1
0.1
0.4
costs
Rapid product development
0.16
0.64
0.48
from competitors
STRENGTHS
Fierce competition from
0.05
Brand name
0.09
Microsoft & HP
Rising revenue to 91 billion and 0.1
rising net income by 9% to $9.4
billion
Diversification (Software,
0.05
hardware, financing)
WEAKNESSES
Acquisition
of Watchfire
0.03
Lack
of
synergy
resulting
from
a
0.05
Company in 2007
series of acquisitions
and
InnovationJam
capability
0.03
divestitures
Ranks
second
in marketover four 0.15
Difficult
to coordinate
0.07
capitalization,
net
income,
and
geographical segments
long-term growth behind
Microsoft
Widespread operations in 104
0.05
countries
Rising earnings per share (23%
0.05
in 2006)
0.15
0.05
4
-
0.36
-
2
-
0.18
-
0.2
0.15
--
--
--
--
0.15
19 0.20
| Page
0.03
0.08
0.32
0.24
0.12
0.15
0.20
1.00
3.01
2.66
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The Quantitative Strategic Planning Matrix states critical internal and external success factors
and evaluates each of them for alternative strategies that are made at Stage 1 and Stage 2 of
the Strategy Formulation Framework. We have arrived at two strategies for IBM namely
1) Enter the market for Googles Android tablets.
2) Enter the market for cellphones.
Now the relative attractiveness of each strategy has been evaluated against critical internal
and external success factors that can be improved upon or capitalized. Weights are the same
for these internal and external factors as were previously used in the IFE and EFE matrix
respectively. These are industry specific and show the importance of each factor in terms of
surviving in the industry. For example, fierce competition from Microsoft and HP has been
assigned a high weight of 0.05 as it is extremely important to the whole industry. Both
strategies are inter-related or similar as both relate to product development.
Note that the strategies are mutually exclusive and cannot be assigned the same AS for a
given factor. The total attractiveness scores (TAS) have been arrived at by multiplying the
weights for each internal/external factor by the AS. The sum of the total attractiveness scores
for each factor is then calculated .Strategy 1 has a higher Sum Total Attractiveness
Score(STAS=3.01) as compared to Strategy 2 (STAS=2.66) which suggests that IBM should
adopt Strategy 1, that is, go for investing in Android tablets.
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The grand strategy matrix defines and analysis the current position of the company.
According to our analysis, we place IBM in the fourth quadrant. It is a slow growth firm,
which has a strong competitive position in the industry. IBM can move into promising growth
areas through the following strategies
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BCG MATRIX
Division
Financial services
Public
Industrial
Distribution
Communications
Small & medium businesses
OEM
Other
Total
Revenue ($ Million)
25,181
13,401
11,535
9,034
8,679
16,981
3,856
2,756
91,423
Revenues (%)
27.54
14.65
12.61
9.88
9.49
18.57
4.21
3.01
100
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IE MATRIX
The IE Matrix shows the IFE total weighted scores on the x-axis and the EFE total weighted
scores on the y axis. On the x-axis, the total weighted score of 2.29 shows an average internal
position of IBM in terms of capitalizing on its strengths and overcoming its weaknesses. On
the other hand, on the y-axis, the total weighted score of 2.89 is considered medium when we
look at how the company is taking advantage of its opportunities and undermining the threats
it is exposed to.
This results in the company falling in cell number 5 of the IE Matrix which suggests that it
should use the hold and maintain strategy that includes applying intensive strategies like
market penetration and product development. The IE matrix has been applied for the whole
organization rather than its individual divisions so it is an overall analysis of the internal and
external position of IBM and what strategies it should employ considering its internalexternal position.
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SPACE MATRIX
Financial Strength
Industry Strength
Rising ROE
+6
Growth
+4
Profit margin
+4
+1
Average
+5
Ease of
entry
Average
+2.5
Competitive
Advantage
Product quality -5
Customer
loyalty
Average
-2
-3.5
Environmental
Strength
Competitive
-5
pressure
Barriers to
-6
entry
Average
-5.5
The average of FS, IS, CA and ES were calculated after giving them points between -6 to +6.
Then the co-ordinates were calculated by adding FS & IS and CA & ES. After calculating the
co-ordinates for the vector on the space matrix, the vector has been drawn which points
towards the defensive strategies. Under defensive strategies come retrenchment, divestiture
and liquidation. According to the case, IBM should go for divestiture.
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CONCLUSION
The study of IBM and its current position shows that with its current situation and strategies
it will be forced into the lane of defensive strategies. IBM in order to maintain its competitive
advantage strives on research & development and diversifies its operations.
The study shows that IBM has ample room for improvement in its Internal as well as external
environment. The fact that the company needs to further strengthen its brand image can be
done through exploiting potential markets in the long run. In addition, IBM has some loss
making departments which are a burden on the company. The company has not yet come up
with any strategy to divestiture such departments. There is room for improvement IBM needs
to reinstate its line of brands through effective advertisements around the global market.
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RECOMMENDATIONS
The company needs invest more in research and development in order to gain market
leadership through differentiation.
IBM needs to get rid of their loss making departments, this should be done through
the following
1
Divestiture
For the companys profit making departments they should use competitive strategies
and opt for
1
2
Product development
Market penetration
IBM should launch android based Tablets to cater the markets new demand for touch
screen Tablets
Another Category which should be introduced by IBM is the cell phone market as
they have the IT required for most of the work
IBM should cater the youth by providing high end gaming PCs and Laptops.
They should improvise on their marketing department as well. There can be more of
celebrity or branded programming entertainment.
They should move forward with the plan of acquiring intensive strategies.
IBM should lay off its employees as they are a burden on the company.
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WORKS CITED
International Business Machines 2007, Vijaya Narapareddy, University of Denver
International Business Machines 2009, F
athi Salem Muhammad Abdullah, University of Jordan
Strategic Plan: IBM 2010, Yiri Hujizen, College of Applied Sciences
www.prb.org/pdf06/YouthInAGlobalWorld.pdf
http://www.ibm.com/annualreport/2009/2009_ibm_higher_value.pdf (2009 Annual report)
http://www.ibm.com/annualreport/2008/note_t.shtml
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APPENDIX
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