INTERNATIONAL BUSINESS MACHINE

` ` ` IBM corporation future was decided to divided into 13 different companies 1991-9 3,80000 employees were laid off sought to lowest cost structure Restructuring ca uses closing of factories losses up to $15 billions stiff competition from Dell, Gateway, Sun due to cost advantage

` I Avoi r T i inst j r i t i r i l l tr t t for ll to to r t t oft r i l t tion of tr t of r nting r to li ` ` Selling oost t e short r n t loss of speci l rel tionship ith clients Sale of ne t ork computers ere rocked ut mainframes plunged thinking of switching cost.

Louis Gerstner to take over as CEO "In order to serve markets, we have to understand them, reflect their diversit a nd build a workplace in which ever individual knows their opportunit to contribu te is gated onl by the quality of their ideas and job performance, and the integ rity of their work."

` ` ` ` ` ` Gerstner performed a study on different divisions to implement the steps. New in dependent managers for each division of business. Attractive incentives to the m anagers to perform well. eplaced senior executives with managers in low down ran ks. Changed the decision making process and way of meetings. Centralized hierarc hical structure to quick decision making

` ` ` ` I to remain as a single unit Complete and comprehensive collection of hardware, software and services To provide computer packages suited to new computer enviro nment and to survive the competition Speeding innovations and decision making

` ` ` ` ` Provide a complete state-of-art computing solutions Take advantage of Internet f or marketing. To make I as customer-driven company Low profit margins & to provi de unique so that customers pay on premium price Challenge How to customize the p roducts according to the needs of the customer?

` ` ` ` ` ` ` To design the hardware to meet the satisfaction of clients To customize the main frame computers to suits to all business units small or big Smaller mainframes en terprise servers to meet the clients of growing companies Problem solving ThinkPad devices Development of new advanced microprocessor chips Cost advantage over ain frame Computer. Customize the chip to suit to all computers needs for OE s.

` ` ` ` ` Rapid change in software proved to challenge to I istake is that allowing icroso ft to provide SDOS operating system to I pcs & mainframes Then they tied up with ERP to increase the value by mainframe to server, server to PCs. Started to acqu ire the software companies like lotus Lotus notes for corporate Intranet. Develop ed iddleware software

` ` ` ` Gerstner move is to satisfy all the clients and their needs. Computer services c ontributed to 2 % of the revenues. U.S govt to employ the I to run the major com puting systems. Establishment of Integrated Systems Solution Corporation (ISSC)t o develop the services. Electronic Data System and Accenture Followed Jack Welsh of GE. Renamed as Global Services Consultant -Design, Plan, Implement, aintain and Upgrade to reduce client cost structure. -It increase client loyal on long t erm

` ` ` ` ` Investing large amount to services To compete Accenture and EDS to provide consu lting and services Expertise in middleware Client to Client assessing. All above will give Clear idea on customer needs.....

` Growth of internet and e-commerce would major force in the direction of computin g future Established e-business is to serve internet related value chain transac tion before its competitors Acquisition of lotus enabled competitive advantage L otus collaborative software provided a model for making middleware software inte rnet compatible I I initiative its e business in 6 ` ` ` ` ` Competitive advantage over competitors growing no of clients

` I showed importance on SMBs and growing industries to their needs To manage their databases & functional value chain 1999 two million SMB clients by 2 1 ` ` ` Advantage is early move to internet which helped in cost cutting efforts Saved b illion of dollars by selling their products directly to clients `

` ` ` ` ` ` By 2 IBM replaced EDS as global leader in computer services Gerstner continued t o work to strengthen his new services driven model across all IBM New pay-for-pe rformance at the all levels of employees Change of IBM structure to became entre preneurial, collaborative and customer oriented Gerstners successor Sam Palmisano took charge of global services, he was known as street fighter in college Change in the operating structure as to new service driven organisation.

Sam palmisano corporate headquarter Global services hardware software Global marketing R&D Global sales & distribution

` Global services Hardware Software Global financing R&D Global sales and distribu tion ` ` ` ` `

` LYNCHPIN most powerful group of operating group ` Services surpass hardware revenues Work to deliver software and hardware to clie nts They have two superior software such as PeopleSoft's HRM , SAPs ERP $ billion dollar to develop Linux based OS which works on all platform Major clients in A sia such as India and China which results in lower cost OS ` ` ` `

STRATEGIC OUTSOURCING SERVICES provide customer with cost advantage INTEGRATED T ECHNOLOGY SERVICES designs, implementation and maintenance BUSINESS CONSULTING S ERVICES Business process innovation, application enabled

` Acquisition of PriceWaterhouseCoopers for $2. billion Increase in consultants in services To serve the needs of different industry clients To offer the same com plete IBM solution all over the globe 40% revenues from global services Improvem ent in online collaboration and global teleconferencing to promote collaboration ` ` ` ` `

In 2003, IBM reorganized the hardware group - system & technology group - person al system group

` IBM microelectronics division: Offered: x Leading semiconductor technology. x Customized solution x Sold Engineering tec hnology Services to Original Equipment manufacturers(OEM) x And offered service to other computer companies.

Offered 3 services: Manufactured & tested Semi-conductor products for customers. IBM provides integr ated supply chain services to deliver the product to Customer and clients. x Eg: Sony P3 and Home media centre

In addition, Technology group launched its new Engineering and Technology servic es division that provides system and component design service.

` Include the companies lines of PCs, printers and Point of Sale terminals used in retail stores and fast food restaurants. And include IBM Thinkpad devices Inten se price Competition x Dell, Hitachi and Samsung ` `

` Could not match efficient Competitor. x So in 2000, sold hardware to Hitachi x And in 2002, 3 years Outsourcing to SCI ` Despite outsourcing they plunged in profit (2005). Sold Computing business to LE NOVO. LENOVO can sell under the brand name of IBM. `

` Analysed the Core competencies and gained through the leadership of new CEO x x x x Hardware Software and services Servers Storage Devices Leads to more profit and Operating margins are high.

` Failed in commodity product because of DELL competition Gerstner insight was to offer complete range of computer products and solutions. `

` Offered: Open Source middle ware solutions ` IBM once again to strengthen its competencies in application software went for s tratergic acquisition. Lotus Tivoli System Rational System

` To provide its clients with the financing to facilitate them to purchase their c omputer products and services. This decision is the major source of profitabilit y. IBM is the largest IT financier in the world. ` `

` IBM has an operating division devoted to advanced research Focused on emerging t echnologies like nanotechnology and autonomic computing. `

Palmisano introduced the e-business on demand initiative He searched for new IT bu siness Solution His teams objectives x To further innovation x To significantly reduce cost x To integrate activities It has developed 17 expert system

` By 2005, increased IT budgets IBM was working hard to promotes its x Customized on demand hardware x Software offerings.

` HP- Compaq merger. Microsoft-SAP merger. IBM eyes on lucrative SMB segments ` `