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    IBM Presentation IBM Presentation Presentation Transcript

    • Presented by
      Ryan Olsen ~ Ali Aldossary ~ Adair Gregory ~ Ahmad Alrashidi
      Management 3800 – Business Policy & Strategy
    • The Roots
      1911 ~ Computer Tabulating Recording Co. (C-T-R)
      • International Time Recording Company
      • Computing Scale Company of America
      • Produced meat/cheese slicers, commercial scales, industrial time recorders, tabulators & punch cards
      • 1,300 employees. 6 Plants.
      1914 ~ Thomas J. Watson Sr. becomes General Manager
    • Thomas J. Watson Sr.
      Became President within 11 months of joining C-T-R
      Corporate Culture
      “THINK” mantra
      Dark suits, ties, clean cut
      Company sports teams, family outings, and band (company songs)
      3 Principles
      Respect for the individual
      Service to the customer
      Excellence must be a way of life
      Focus on large scale tabulating solutions for customers
      Revenues doubled to over $9 million in first four years
      Expanded operations to Europe, South America, Asia, & Australia
      CTR becomes IBM in 1924
      ♪ Our voices swell in admiration, ♪
      Of T. J. Watson proudly sing,
      He'll ever be our inspiration,
      To him our voices loudly ring,
      The I B M will sing the praises,
      Of him who brought us world acclaim,
      As the volume of our chorus raises,
      ♪ Hail to his honored name. ♪
    • Early Years at IBM
      Grew business through acquisitions and investments in R&D
      Grew during the Great Depression as a result of government contracts
      • 1930s ~ One of the first companies to offer its employees group life insurance, survivor benefits, paid vacations
      The New Deal ~ Social Security Act of 1935
      • IBM maintains employment records for 26 million people
      “…the biggest accounting operation of all time”
      WWII ~ IBM facilities used at governments disposal
      • Produced bombsights, rifles, and engine parts
      • Only took 1% profit from government and established a fund for widows and orphans of IBM war casualties
    • Leading the Way in Business Computing
      • 1944 ~ The Mark I
      • First machine that could execute long computations automatically
      • Took less than a second for an addition problem, 6 for a multiplication problem, and 12 for a division problem
      • $141 million revenue
      • 21,126 employees
      • 1981 ~ IBM Mainframe/5150
      • 70% market share
      • $26.2 billion in revenue
      • 341, 279 employees
    • A History of Progress
    • Key Issues @ IBM
      • IBM hires 1st outside CEO, Lou Gerstner, on April 1, 1993
      • IBM’s strategic vision focuses on infrastructure and integration
      • IBM’s focus on open technologies and high value-added solutions
      • Sold off commodity low-value elements of portfolio and used the capital to purchase high-value extensions to software and services business
      • IBM’s done over 40 acquisitions of software companies under software group since 2000
      • Acquisition of PricewaterhouseCoopers
      • Become the premier globally integrated enterprise
      • Contemporary challenge for IBM is to help build a smarter planet
      • IBM in Middle East
    • Help From an Outsider~ Louis V. Gerstner ~
      • 1991-1993 ~ $16 billion loss (100 days until bankruptcy)
      • Disassociated divisions ~ Software, Hardware, Services
      • Very decentralized and independent culture
      • Proprietary technology
      • Appointed in April, 93’
      • 1st outside higher level executive hire
      • Brought customers perspective ~
      • CEO of American Express & RJR Nabisco
      • New Strategy ~
      • Integration & Infrastructure
      • By 1999 ~
      • Stock at all-time high
      • $169 billion market capitalization
    • A New Strategic Vision~ Louis V. Gerstner ~
      Decision to INTEGRATE divisions
      • 11 Globally Integrated Support Functions
      • Breaks “no layoff” policy
      85,000 employees laid off by 1996
      • Cut $7 billion in costs
      • Integrate internally to provide a top-to-bottom solution for customers
      • End-to-End business solutions
      One end all suppliers, distributors, tax authorities, regulatory agencies and anyone else outside a company’s firewalls; on the other end: the “explosion of devices” connected to the net
      IBM’s Role: To facilitate the workflow
      Big servers, mainframes that could handle the mass amount of eBiz
    • A New Strategic Vision~ Louis V. Gerstner ~
      “Inside IBM, we talk about 10 times more connected people, 100 times more networked speed, 1,000 times more devices and a million times more data. Whatever it is, very soon this networked world is going to be several of orders of magnitude bigger and more complicated than anything we know today.”
      • Proprietary technologies to open standards
      • Invests $1 billion in Linux
      • Invests $100 million in computer that is 100 times more powerful than any other computer
    • New Leader, New Strategy
      Samuel J. Palmisano becomes CEO in October, 2002
      Strategy focuses on Integration & Innovation
      Sold off low-value commodities and invested in high-value added solutions
      Hitachi buys hard-drive division in 2002 for $2.05 billion
      Lenovo buys PC division in 2005 for $1.25 billion
      JV gives IBM Chinese market access
      Ricoh buys Printer division for $725 million
    • Expanding Software & Services
      Purchased 40 software firms since 2000
      Investment in Service Oriented Architecture to better manage business processes
      Streamline BPM through SmartSOA
      2nd Largest Software firm (Microsoft)
      Acquired PricewaterhouseCoopers Consulting in October, 2002 for $3.5 billion
      Access to C-Level executives at Fortune 500 companies
    • Service Oriented Architecture
    • IBM: Let’s Build a Smarter Planet
    • IBM: Let’s Build a Smarter Planet
      Areas of Attention
      • Energy
      • Traffic
      • Food
      • Infrastructure
      • Retail
      • Intelligence
      • Government
      • Banking
      • Telecom
      • Oil
      • Healthcare
      • Cities
      • Water
      • Public Safety
      • Buildings
      • Work
      • Rail (Trains/Subways)
      • Products
      • By the year 2010 there will be over 1 Trillion devices connected to the Internet.
      • Each person will carry over one billion transistors
      • Shows we have become globally integrated
      • IBM can leverage existing technology to make the world better
    • IBM in the Middle East
      In Middle-East since 1947
      Originally went to service oil companies
      • Trust IBM to save their information
      Outsourcing work
      People are becoming familiar with growing technology
      Business shifting from regular commerce to E-commerce
      Governments trying to minimize paper usage
      • IBM offers electronic solution
      • Headquartered in Dubai
      • 1,500 local employees
    • Evaluate the Role and Effectiveness of Corporate Executives in the Development and Implementation of the Organizational Strategic Plan
      Lou Gerstner
      Integrate & Infrastructure
      Shift from Hardware to Services based business
      Rightsized company, laid off 85,000
      Near bankruptcy to record earnings in 6 years
      Sam Palmisano
      Integrate & Innovate
      Global Supply Chain Integration
      Software & Services Acquisitions
      Smarter Planet
    • SWOT Analysis
      Strengths ~
      • IBM has the technology and expertise to make every business more efficient
      • IBM has a singly supply chain used worldwide, which helps in their being the premier globally integrated enterprise
      • IBM has an employee base of well over 350,000 employees operating in over 170 countries, this gives IBM the expertise and talent base to find solutions and grow as a globally integrated enterprise.
      • Most patents held by any company (R&D)
      • IBM’s “smarter planet” initiative
      • Smart Service-Oriented Architecture approach to managing business processes at all levels makes companies much more efficient
      • Have significant amount of market share in each of the industry’s they compete in: (Global) Services, Software (2nd behind Microsoft), and Hardware (large mainframe computers, servers, etc.)
    • SWOT Analysis
      Weaknesses ~
      High operating expenses
      Spends nearly $5 billion per year on R&D, depending on the amount of success the department has, this could be spending “money for nothing
      Opportunities ~
      High price products that competitors produce
      Continue global expansion. Become more globally integrated.
      Amount spent on research and development should give them an advantage over their rivals.
      Use PricewaterhouseCoopers to continue expanding the consulting services aspect of the business.
      Continue making acquisitions of software firms that can innovate new solutions
      Continue to help “make the world a smarter planet”
      Threats ~
      Liability associated with spending $5 billion annually on R&D
      Changing marketplace
      Shift to a globally integrated enterprise, more decentralized organizational structure, which did not serve them well prior to Lou Gerstner
      Sam Palmisano will most likely retire in two years at age 60, as most IBM CEO’s are encouraged to do. This shift of power will likely cause turbulence at IBM.
    • Porter’s Five-Forces Model
    • Key Success Factors
      Distribution-related Key Success Factors
      Marketing-related Key Success Factors
      • Strong direct sales (internet)
      • Most sales are large contracts
      • Able to secure image to consumers, used in banks, libraries, ect.
      • Well-known brand name
      • Respected brand name
      • Good, large customer service
      Other Types of Key Success Factors
      Skills & Capability-Related Key Success Factors
      • Talented workforce
      • Global distribution capabilities
      • Strong e-commerce capabilities, user friendly website
      • Overall low costs
      • Ability to provide fast, convenient after sale repairs and service
    • Key Success Factors
      Technology Related Key Success Factor
      Manufacturing Related Key Success Factor
      • IBM has thousands of IT employees and leads the industry with e-networks.
      • Proven ability to change organization when technology changes.
      • Has the capital and man power to survive the bad economy
      • IBM’s product is needed within organizations regardless of the economy
      • Low cost of production design
    • Chairman, President & Chief Executive Officer
      S. J. (Sam) Palmisano
      GlobalBusiness Services
      Software Group
      Sales& Distribution
      Enterprise On Demand Transformation
      Systems & Technology Group
      Global Technology Services
      & Intellectual Property
      Senior Vice President
      R. F. (Frank) Kern III
      Senior Vice President
      M. E. (Mike) Daniels
      Senior Vice President
      V. M. (Ginni) Rometty
      Senior Vice PresidentJ. E. (John) Kelly III
      Senior Vice PresidentL. S. (Linda) Sanford
      Senior Vice President
      R. W. (Bob) Moffat
      Senior Vice PresidentS. A. (Steve) Mills
      • Consulting and Systems Integration
      • Application Management Services
      • Global Markets
      • System z
      • Power Systems
      • System x
      • Storage
      • Retail Store Solutions
      • Global Business Partners
      • Integrated Supply Chain
      • Application & Integration
      • Information Management
      • Tivoli Systems
      • Workplace Portal & Collaboration Software
      • Rational
      • Enterprise On Demand Transformation
      • CIO
      • Quality & Process Transformation
      • Technology Development Programs
      • Strategic Outsourcing
      • Integrated Technology Services
      • e-Business Hosting
      • Small & Medium Business Services
      • IBM Global Financing
      • Managed Business Process Services
      • Research
      • IP & Standards
      • IP Business Development
      • University Relations &
      IBM Academy
      & Manufacturing
      Senior Vice President
      R. (Rod) Adkins
      Services Delivery
      Senior Vice PresidentT. (Tim) Shaughnessy
      Human Resources
      Marketing and Communications
      Strategy and
      Enterprise Initiatives
      Senior Vice President Legal & Regulatory Affairs & General Counsel R.C. (Bob) Weber
      Senior Vice President J.R.(Randy) MacDonald
      Senior Vice President & Chief Financial Officer M. (Mark) Loughridge
      Vice President and General Manager
      E. (Erich) Clementi
      Senior Vice President J.C. (Jon) Iwata
    • Global Technology Services
    • What’s IBM Doing Right Now?
    • Current Figures
      386,000 Employees worldwide
      Suspected to lay off 16,000 in 2009
      Fiscal Year 2008
      IBM posted record revenues of $103.6 billion and profits of $16.7 billion
      Despite 4th quarter revenues dropping 6%
    • Recommendations
      Hire Sam Palmisano’s successor from outside the company to ensure a similar culture doesn’t arise to the one Gerstner found himself in
      Pay close attention to the level of decentralization allowed in the pursuit of becoming the premier Globally Integrated Enterprise
      Use former CEO’s as consultants
      Continue investing in R&D so the company can continue to lead the way in introducing innovative IT solutions to the global business world
      Continue to expand operations into other countries
      Continue purchasing/acquiring software firms that will help integrate global businesses through innovative products
      Pursue initiative to make the world a “smarter planet”, this could be a major source for future revenues