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Analysis of Strategic Management Issues
of
Group Members of Survivors
Md. Safiuddin 14119
Farhana Sultana Jhumi 14050
Masud Ali Khan 14010
Md. Shaikot Jahan 14089
Ba...
Overview of
Md. Safiuddin 14119
IBM or International Business Machines is a well known
American computer manufacturer.
Founder Thomas J. Watson
Big Blue I...
"At IBM, we strive to lead in the invention, development and
manufacture of the industry's most advanced information
techn...
“Solutions for a small planet”
• "Dedication to every client's success
• Innovation that matters, for our company and for ...
IBM
History
1930
• IBM began designing and manufacturing calculators
• using the technology of their own punch card proces...
The IBM international corporate headquarters are located in
Armonk, New York
4,00,000 employees of IBM
around the world
Po...
Computer
industry
Hardware Software Services
Processing
service
• Data entry
• Credit card
automation
• Billing
• Pay off
processing
Network service
• Electronic data
...
Computer service industry
Contracts with
customers with
designated time,
monetary value,
specifications
Solid
knowledge
ab...
Continue………
Strong growth of
computer industry
(S & P survey)
USA, the
largest
producer
and user
segment 2012 2013 2014
Global service 56% 55% 56%
Systems and
technology
17 17 16
Software 24 25 25
Global financing 2 2 2...
Macro environment Analysis
economic
Political
social
technological
legal
• In general international operations are highly
influenced by the governmental policies and
their laws, but in this case ...
• National growth rates.
• Fuel Prices
• Positive customers' perception toward new
technology around the world.
• Increase...
• Advanced technology development.
• Internet
• Increase numbers of companies that need ERP systems
• Cyber protection and...
Star
(IBM)
Question
Mark
Cash
cows
Dog
Market Share
IndustryGrowth
High Low
Highlow
IBM Position Considering IT Skill
Farhana Sultana Jhumi - 14050
• IBM-committed to technology , leadership &
rapid delivery of customers solutions.
• Extensive investment in research &
d...
Advantages
• Brand recognition
• Global reach
• Continuous flow of new products & services
In 2000, IBM faced challenges
about whether to continue to be
• “everything for everyone” or
• shift towards providing sol...
• Earlier IGS offered solutions to
–Mainframe
–Client Server
–E-Business
• E-business revenue grew 70% in 2000
• ‘Future Network Economy or E- Utility’
• Four main issues on the proper course of
action that IGS should adopt:
I. Shortage of needed IT skill in the industry
II...
• Lack of IT skill:
• In an article by the BBC dated March 2000,
“ There is a serious shortage of skilled
information tech...
“The main mitigate for them is to employ
people from different backgrounds and then
train them on the job for the needed s...
• Issues to be considered are:
a. Is the cost of such an action justifiable to
the “bottom line” of either of these
corpor...
c. Is the training of these professionals
according to specific company needs and
tactics more useful than hiring them dir...
• June 2000 in BusinessWeek, Cisco’s strategy:
“New Economy Shop”
Cisco getting involved in the teaching of
student while ...
According to the Federal Reserve Chairman
Alan Greenspan , the problem is that
“we have developed a shortage of highly
ski...
Is there really a techie shortage?
According to a 1998 article in BusinessWeek ,
“the demand supply is not in shortage, in...
In terms of 5 porter forces?
bargaining power for the supplier & the IT
skilled professionals.
• Decision should be based on focusing the cost
of the IT skill on one promising market and
reducing costs allowing them t...
Segmentation of the market
Md. Shaikot Jahan 14089
Market segments
• As the largest computer service provider
and Information Technology Company in
the world, IBM with its I...
Large Enterprise
IBM's Professional Computer Services segment offers a wide range of
computer services to large firms (mor...
Small Enterprise
IBM e-business solution is also available for small and growing
up enterprises (fewer than 100 employees)...
Key Success Factors in large and small firms
Major key factors would be:
• Ability to retain small and large enterprise wi...
• Provide consistent services to non-profit organizations at the lowest
cost possible
• Talent to adjust to price sensitiv...
Recommendation
Based on the apparent successful segmentation of the market, it is
the recommendation of this section that ...
Analysis of Current Marketing
Situation
Masud Ali Khan 14010
Current strategy
• Building customer loyalty by using
differentiation strategy
• High reliability, high quality and high
d...
Industry Key Success Factors
Large Corporations
• ability to provide a customizable, all-in-one
solution.
• proven track r...
Industry Key Success Factors (cont’d)
Medium and Small corporations
• ability to provide standardized solutions at a compe...
SWOT Analysis
Strengths
• world renowned for its superior sales force for
many years.
• highly trained and aggressive sale...
SWOT Analysis (cont’d)
Weaknesses
• Complex management system due to its size.
• Slow to bring new services to market.
SWOT Analysis (cont’d)
Opportunities
• prolonged period of strong growth in industry
• trend towards the use of computers ...
SWOT Analysis (cont’d)
Threats
• increased competition
• high acquisition and alliance activity
• threat of new competitor...
Porter’s five forces model
Intensity of rivalry
• Competition is intense for the following
factors
Industry growth rate i...
Intensity of rivalry (cont’d)
Exit barriers are high for all the competitors.
Rivalry weakens a bit because switching co...
Bargaining power of the buyer
• Bargaining power of the buyer is weak
because
switching cost of the customers is very hig...
Bargaining power of the supplier
• Bargaining power of the supplier is weak
because
 IBM is a huge company.
 It represen...
Entry Barriers
• Entry barriers are high:
Presence of a lot of giant corporations
Very high capital requirement
Existin...
Substitution threat
• There is a low substitution threat:
 Switching costs are very high
 Brand loyalty is significant i...
Recommendation
• IGS should offer all service products to all
customers, because
Its abilities to reach all markets and c...
Competitors Analysis
Barun Chandra Dey 14176
Analysis of ACCENTURE model
 Mission: to help its clients
create the client’s future.
 long-term goal: To become a
“netw...
 Broad Industry Coverage:
ACCENTURE targeted 16
industry segments, grouped
into five global markets
Unite: Financial serv...
Analysis of EDS model
 EDS offers the following
services: management
consulting, e-business
solutions, business process
m...
Analysis of HP model
• HP focuses on its original core product and wrapped services.
• It was seeking to provide e-busines...
Analysis of the competition by
computer services market segments:
• In this industry, ACCENTURE is the biggest threat to I...
• Being a Full-Service Provider, we believe IBM should
take advantage of the situation by stealing away the
market share o...
Full services providers:
• EDS is the main threat. They pioneered the concept of
outsourcing. the largest growth rate amon...
• EDS has a limited Internet presence and this weakness should
encourage IBM to prove its Internet presence and launch its...
Evaluation And Final Decision
Md. Ibne Nayeem Hasan 14095
Potential Alternatives
Concentrate
Solely On
E-Business
Service Offerings
Expanding Full
Range of
Professional
Services bu...
Shortage of IT
Skill
Expanding Full
Range of
Professional Services
but Emphasis on E-
Business
2
Market
Segmentation
Concentrate Solely
On
E-Business Service
Offerings
1
Current
Marketing
Situation
Expanding Full
Range of
Professional Services
but Emphasis on E-
Business
2
Competitors
Concentrate Solely
On
E-Business Service
Offerings
1
Shortage of
IT Skill
Market
Segmentation
Current
Marketing
Situation
Competitors
1
1
2
2
Best Alternative
Concentrate
Solely On
E-Business
Service Offerings
Expanding Full
Range of
Professional
Services but
Emph...
Any Queries ?
Thanks All
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Business case of IBM

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Business case of IBM

  1. 1. Analysis of Strategic Management Issues of
  2. 2. Group Members of Survivors Md. Safiuddin 14119 Farhana Sultana Jhumi 14050 Masud Ali Khan 14010 Md. Shaikot Jahan 14089 Barun Chandra Dey 14176 Md. Ibne Nayeem Hasan 14095
  3. 3. Overview of Md. Safiuddin 14119
  4. 4. IBM or International Business Machines is a well known American computer manufacturer. Founder Thomas J. Watson Big Blue IBM is also known as "Big Blue" after the color of its logo. The company has made everything from mainframes to personal computers and has been immensely successful selling business computers. Company profile
  5. 5. "At IBM, we strive to lead in the invention, development and manufacture of the industry's most advanced information technologies, including computer systems, software, storage systems and microelectronics. We translate these advanced technologies into value for our customers through our professional solutions, services and consulting businesses worldwide." Mission statement
  6. 6. “Solutions for a small planet” • "Dedication to every client's success • Innovation that matters, for our company and for the world • Trust and personal responsibility in all relationships" Vision statement values
  7. 7. IBM History 1930 • IBM began designing and manufacturing calculators • using the technology of their own punch card processing equipment 1943 • IBM together with Harvard University financed the invention of the Mark 1 computer, the first machine to compute long calculations automatically 1953 • IBM was ready to completely produce their own computers, which began with the IBM 701 EDPM, their first commercially successful general-purpose computer. 1980 • Microsoft's Bill Gates agreed to create an operating system for IBM's new computer for the home consumer 1981 • The first IBM PC ran on a 4.77 MHz Intel 8088 microprocessor. IBM had now stepped into the home consumer market, sparking the computer revolution.
  8. 8. The IBM international corporate headquarters are located in Armonk, New York 4,00,000 employees of IBM around the world Position # 19 out of Fortune 500 companies IBM Corporation International Headquarters :
  9. 9. Computer industry Hardware Software Services
  10. 10. Processing service • Data entry • Credit card automation • Billing • Pay off processing Network service • Electronic data interchange • Electronic mail delivery • File transfer • Electronic funds transfer Professional computer service • consulting • Custom programming • Systems integration • Outsourcing Computer service industry
  11. 11. Computer service industry Contracts with customers with designated time, monetary value, specifications Solid knowledge about revenues
  12. 12. Continue……… Strong growth of computer industry (S & P survey) USA, the largest producer and user
  13. 13. segment 2012 2013 2014 Global service 56% 55% 56% Systems and technology 17 17 16 Software 24 25 25 Global financing 2 2 2 Internal service 1 1 1 total 100 100 100 Segment wise revenue
  14. 14. Macro environment Analysis economic Political social technological legal
  15. 15. • In general international operations are highly influenced by the governmental policies and their laws, but in this case there is little effect because most of countries are looking for developments and new technologies. • Heavy taxes in some countries make IBM increase its products price. Political
  16. 16. • National growth rates. • Fuel Prices • Positive customers' perception toward new technology around the world. • Increase in population and internet users economic Social
  17. 17. • Advanced technology development. • Internet • Increase numbers of companies that need ERP systems • Cyber protection and the chemical use in making hardware; like carbon, germanium, and silicon • Currency exchange • Legal registration for their business outsourcing facilities Legal Technological
  18. 18. Star (IBM) Question Mark Cash cows Dog Market Share IndustryGrowth High Low Highlow
  19. 19. IBM Position Considering IT Skill Farhana Sultana Jhumi - 14050
  20. 20. • IBM-committed to technology , leadership & rapid delivery of customers solutions. • Extensive investment in research & development
  21. 21. Advantages • Brand recognition • Global reach • Continuous flow of new products & services
  22. 22. In 2000, IBM faced challenges about whether to continue to be • “everything for everyone” or • shift towards providing solutions for costumers facing E-Business challenges in sourcing and implementation
  23. 23. • Earlier IGS offered solutions to –Mainframe –Client Server –E-Business
  24. 24. • E-business revenue grew 70% in 2000 • ‘Future Network Economy or E- Utility’
  25. 25. • Four main issues on the proper course of action that IGS should adopt: I. Shortage of needed IT skill in the industry II. Segmentation of the market III. Analysis of the current marketing situation IV. Assessment of the competition and the Key Success Factors in each segment
  26. 26. • Lack of IT skill: • In an article by the BBC dated March 2000, “ There is a serious shortage of skilled information technology workers in Europe, which major companies fear could slow economic growth”.
  27. 27. “The main mitigate for them is to employ people from different backgrounds and then train them on the job for the needed skills.”
  28. 28. • Issues to be considered are: a. Is the cost of such an action justifiable to the “bottom line” of either of these corporations? b. Will these actions have any affect on other industries, and could this cause a shortage in other employment segments that are closely correlated to IT skill?
  29. 29. c. Is the training of these professionals according to specific company needs and tactics more useful than hiring them directly from the industry?
  30. 30. • June 2000 in BusinessWeek, Cisco’s strategy: “New Economy Shop” Cisco getting involved in the teaching of student while still in High School, and gearing them towards the IT industry.
  31. 31. According to the Federal Reserve Chairman Alan Greenspan , the problem is that “we have developed a shortage of highly skilled workers and a surplus of lesser-skilled workers”
  32. 32. Is there really a techie shortage? According to a 1998 article in BusinessWeek , “the demand supply is not in shortage, instead the demand is not for all people with IT skills, instead it is for : 20 year old people who can put in 80-hour week”.
  33. 33. In terms of 5 porter forces? bargaining power for the supplier & the IT skilled professionals.
  34. 34. • Decision should be based on focusing the cost of the IT skill on one promising market and reducing costs allowing them to grow faster and more efficiently.
  35. 35. Segmentation of the market Md. Shaikot Jahan 14089
  36. 36. Market segments • As the largest computer service provider and Information Technology Company in the world, IBM with its IGS provides e- business solutions to two main market segments, large and small enterprises.
  37. 37. Large Enterprise IBM's Professional Computer Services segment offers a wide range of computer services to large firms (more than 1000 employees) that seek IT solutions for its competitive advantage. IBM is able to provide large enterprises with: • Customized e-business solutions • Innovative e-business solutions • Integrated e-business solutions • All-in-one solutions (package of hardware and software products) • Business consulting services • System Recovery solutions
  38. 38. Small Enterprise IBM e-business solution is also available for small and growing up enterprises (fewer than 100 employees). As stated in its website, IBM's products and services help small firms: • Streamline business operations • Improve employee productivity • Promote their products and services • Add e-commerce to their site • Conduct business over the Web more efficiently • Conduct business in a wireless environment • Providing outsourcing solutions
  39. 39. Key Success Factors in large and small firms Major key factors would be: • Ability to retain small and large enterprise with integrated computer services • Provide standardized solutions at competitive prices for small business • Ability to power the system of government in government operations • Ability to adjust for enterprise costs and complexity • Providing co-location facilities to small firms
  40. 40. • Provide consistent services to non-profit organizations at the lowest cost possible • Talent to adjust to price sensitive businesses and markets • Employ trained professionals to sell their services in separate and specific industry sectors. • Provide world-class skills and quality service on a global scale
  41. 41. Recommendation Based on the apparent successful segmentation of the market, it is the recommendation of this section that IBM should focus solely on the E-business unit and try to become the market leader in providing the service to both the large and small firms. Reasons are • by focusing only the e-business model, IBM will be able to successfully beat out the competition from the smaller firms and hence become the leader in this segment. • IBM can also rely heavily on its trusted brand name in building trust in its services and beating out the competition.
  42. 42. Analysis of Current Marketing Situation Masud Ali Khan 14010
  43. 43. Current strategy • Building customer loyalty by using differentiation strategy • High reliability, high quality and high differentiation will build customer loyalty and increase sales.
  44. 44. Industry Key Success Factors Large Corporations • ability to provide a customizable, all-in-one solution. • proven track record in fulfilling the specific needs of the company’s industry.
  45. 45. Industry Key Success Factors (cont’d) Medium and Small corporations • ability to provide standardized solutions at a competitive price. • a strong direct marketing capability . Government Institutions • have knowledge of and ability to leverage the bureaucracy found in such organizations.
  46. 46. SWOT Analysis Strengths • world renowned for its superior sales force for many years. • highly trained and aggressive sales force. • global reach.
  47. 47. SWOT Analysis (cont’d) Weaknesses • Complex management system due to its size. • Slow to bring new services to market.
  48. 48. SWOT Analysis (cont’d) Opportunities • prolonged period of strong growth in industry • trend towards the use of computers and the Internet
  49. 49. SWOT Analysis (cont’d) Threats • increased competition • high acquisition and alliance activity • threat of new competitors • highly unstable and very difficult to predict
  50. 50. Porter’s five forces model Intensity of rivalry • Competition is intense for the following factors Industry growth rate is fast which attracts new competitors  Existence of powerful competitors like Electronic Data Systems, Hewlett-Packard, Digital Equipment, Computer Science, Accenture etc.
  51. 51. Intensity of rivalry (cont’d) Exit barriers are high for all the competitors. Rivalry weakens a bit because switching costs are high.
  52. 52. Bargaining power of the buyer • Bargaining power of the buyer is weak because switching cost of the customers is very high  the buyers’ volume is small in comparison to overall sales of IBM
  53. 53. Bargaining power of the supplier • Bargaining power of the supplier is weak because  IBM is a huge company.  It represents a very high percentage of the turnover of the suppliers.  Revenues of the suppliers are highly affected by IBM’s purchases.
  54. 54. Entry Barriers • Entry barriers are high: Presence of a lot of giant corporations Very high capital requirement Existing companies already have a loyal customer base Existing companies enjoy the advantages of economies of scale Existing companies have professional and complete sales force and distribution channels
  55. 55. Substitution threat • There is a low substitution threat:  Switching costs are very high  Brand loyalty is significant in the computer services industry  Customers are not very price sensitive  Customers are willing to pay a high price for better products and services.
  56. 56. Recommendation • IGS should offer all service products to all customers, because Its abilities to reach all markets and customers with greater ease than a smaller less developed competitor. Economies of scale Recognizable brand name Scope of diversification
  57. 57. Competitors Analysis Barun Chandra Dey 14176
  58. 58. Analysis of ACCENTURE model  Mission: to help its clients create the client’s future.  long-term goal: To become a “network of businesses that will be a market maker of the new e-business economy”.  Specialization: consulting and system integration  Others: ACCENTURE also provides outsourcing of business operations and custom programming services  Strengths: Global Presence  operating in 48 countries with 65,000 employees.  leading management and technology consulting firm.  Scope: very wide, serve large, small and medium companies by providing all-in-one solutions.
  59. 59.  Broad Industry Coverage: ACCENTURE targeted 16 industry segments, grouped into five global markets Unite: Financial services, products, communications and High Tech. resources and Government.  Strong research and development effort  Weaknesses:  Competitive market: competitors are expanding their operations into related technology consulting and outsourcing operations.  Limited service offerings: solely focusing on consulting and systems integration, leaving outsourcing
  60. 60. Analysis of EDS model  EDS offers the following services: management consulting, e-business solutions, business process management, and information solutions  Strengths:  It is a global corporation. • It has more than 121,000 employees worldwide and solves challenges in a wide variety of industries like communications, energy, government, and healthcare • outstanding operational efficiency.  Weakness: Its aggressive buying of market share for competing against outsourcing leader IBM Global Services.
  61. 61. Analysis of HP model • HP focuses on its original core product and wrapped services. • It was seeking to provide e-business support and services, but did not have the full range of services as some of the other categories of competitors. • Finally HP is weak in the areas of consulting, custom programming, system integration, and outsourcing.
  62. 62. Analysis of the competition by computer services market segments: • In this industry, ACCENTURE is the biggest threat to IBM. Consulting and system integration is the specialty of this company • In the consulting arena, ACCENTURE has a strong position because previously, the company was a business-consulting firm (accounting). • Offer their clients a wide range of consulting services including both business and information technology services. • Financially strong, having a strong global presence and broad industry coverage, • ACCENTURE is a very tough competitor. And in order to overcome it, IBM should differentiate its consulting services and offer better quality solutions that will be better perceived by the target customers.
  63. 63. • Being a Full-Service Provider, we believe IBM should take advantage of the situation by stealing away the market share of the other services industry such as outsourcing and e-business solutions in which ACCENTURE was weak or didn’t focus on. • Since IBM’s revenues from the custom programming remained constant year to year, while those from the consultant services were steadily increasing, we think that IBM should focus more on the consulting services and aggressively compete with ACCENTURE in this line of business.
  64. 64. Full services providers: • EDS is the main threat. They pioneered the concept of outsourcing. the largest growth rate among all other industries • That is why IBM focuses a lot on outsourcing & compete aggressively against EDS who are financially strong and globally present. IBM provides the outsourcing services through “IGS Strategic Outsourcing (SO) line of business.” • The best way to compete against EDS is to identify the • customer’s business strategy and differentiate core from non- core operations.
  65. 65. • EDS has a limited Internet presence and this weakness should encourage IBM to prove its Internet presence and launch its e- business program and provide top quality e-business solutions to its 36 customers • IBM being a large company, the process to implement the e- business strategy was slow and not flexible • IBM should supports its services by using the Internet in order to communicate, advertise, sell online, and offers their online services using e-business (e-business consulting, e-business systems integration, e-business hosting services).
  66. 66. Evaluation And Final Decision Md. Ibne Nayeem Hasan 14095
  67. 67. Potential Alternatives Concentrate Solely On E-Business Service Offerings Expanding Full Range of Professional Services but Emphasis on E- Business Consider Third Alternative 1 2 3
  68. 68. Shortage of IT Skill Expanding Full Range of Professional Services but Emphasis on E- Business 2
  69. 69. Market Segmentation Concentrate Solely On E-Business Service Offerings 1
  70. 70. Current Marketing Situation Expanding Full Range of Professional Services but Emphasis on E- Business 2
  71. 71. Competitors Concentrate Solely On E-Business Service Offerings 1
  72. 72. Shortage of IT Skill Market Segmentation Current Marketing Situation Competitors 1 1 2 2
  73. 73. Best Alternative Concentrate Solely On E-Business Service Offerings Expanding Full Range of Professional Services but Emphasis on E- Business Consider Third Alternatives 1 2 3
  74. 74. Any Queries ? Thanks All

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