Analyze IBM strategies, to remix their businesses in order to move to the emerging higher-value spaces, in Macro and Micro environment level
IBM strategy PESTEL analysis in Macro level Five forces analysis in Micro level Recommendation Conclusion SOWT analysis Complexity analysis
<ul><li>IBM understood Value was shifting in the IT industry, driven by the rising tide of global integration, a new computing paradigm and new client needs. </li></ul><ul><li>Economies of developing nations were growing rapidly, driven by historic investments in fundamental business infrastructure. Enterprises were looking to tap skills and expertise available all over the world and to integrate their operations globally. </li></ul><ul><li>Change in computing architecture was rippling across the data center and the network, along with a proliferation of technology infused into all aspects of work and life. Companies were seeking to integrate advanced technology with their business processes and operations, not only to reduce costs, but to enable innovation and growth. </li></ul><ul><li>IBM remixed their businesses in order to move to the emerging higher- value spaces by focusing on software and IT industry. </li></ul>IBM Strategies
IBM Strategies Hardware And Services Software IBM sold the personal computing department To Lenovo
PESTEL Analysis for Macro environment factors Social Political Technological Environmental Economic Legislative
Iraq War in 2003, affected world economy, and IBM stock fell down. Technology affects directly to computer technology industry because computer technology can be used as a tool to invent many technological products An illness like bird flue, in 2004 effect to all businesses that operate especially in China. IBM has many suppliers in china and Asia countries. Technological Political Environmental PESTEL Analysis
Oil price, increase the price of energy and reduce the worth of Dollar. IBM has a good reputation as big and innovative Information technology company in the world. U.S. Government, sanction against Iran and North Korea. PESTEL Analysis Social Economic Legislative
PESTEL Analysis <ul><li>IBM and U.S. military deployed IBM’s speech to speech translation software to help U.S. serving in Iraq for better communication with local security forces and Iraqi citizens. </li></ul><ul><li>On the other hand IBM focused more on outside U.S. market to reduce the impact of U.S. economies problems. IBM Company revenue more than 50% is from outside U.S. </li></ul><ul><li>IBM collaborated with Scripps research institute to make software framework to allow world health organizations to more easily share and analyze electronic health information, such as the outbreak of disease. </li></ul><ul><li>IBM stopped to work with Iran and North Korea, therefore they lost these markets as well. </li></ul>
Five Forces Analysis for Micro environment factors Intensity of Rivalry Bargaining Power of Suppliers Bargaining Power of Buyers Threat of Substitutes
Five Forces The Threat of Entry Intensity of Rivalry Bargaining Power of Suppliers LOW LOW The high capital investment, high budget for research and development, and high technology of production can be seen as factors that prevent new competitors to enter into computer technology industry. High There are many computer software manufactures in today global market. Each manufacture tries to differentiate its product by creating new programmes that make a computer more powerful. IBM’s business employs a wide variety of components, supplies, services and raw material from a substantial number of suppliers around the world.
Five Forces Bargaining Power of Buyers Threat of Substitutes LOW Software is the main component of the computer which used to enable a computer to perform specific tasks. Nowadays, there is no product to replace or substitute computer software. High As IBM operates business in B2B market, most organizations always buy in large amount per one time. Therefore, customers have power to negotiate with the company.
SWOT Analysis Strengths Weaknesses <ul><li>Leading provider of IT services </li></ul><ul><li>Strong research and </li></ul><ul><li>development </li></ul><ul><li>capabilities </li></ul><ul><li>Strong profitability </li></ul><ul><li>Weak enterprise mobility product </li></ul><ul><li>portfolio </li></ul>Opportunities Threats <ul><li>Expansion in emerging markets </li></ul><ul><li>Growing information on demand </li></ul><ul><li>tools </li></ul><ul><li>market </li></ul><ul><li>Strategic acquisitions </li></ul><ul><li>Intense competition </li></ul><ul><li>Economic Slowdown in US and </li></ul><ul><li>Europe </li></ul>
<ul><li>is to focus on the high-growth, High-value segments of IT industry </li></ul>. IBM decided to become a globally integrated enterprise in order to participate in the world’s growth markets and improve IBM’s productivity . . to support two principal goals: helping clients succeed in delivering business value by becoming more innovative, efficient and competitive through the use of business insight and information technology (IT) solutions; and, providing long-term value to shareholders. System : The relationship between things which interact. Complexity theory: Nonlinear : When noise is added to the graph result the result are no longer a straight line, and are not predictable. Complexity theory <ul><li>Simple System in IBM is focused on software more than hardware and services. </li></ul><ul><li>Noise happen by internal and external factors on organization and market. </li></ul>
<ul><li>This is because IBM is a complex nonlinear system, like most system found in nature. </li></ul><ul><li>The more the model must look like the actual system to predict system result, </li></ul><ul><li>the more complex the system is considered to be. </li></ul>Complexity Analysis in Macro and Micro level Competitors . Oracle . Microsoft, External Factors . Political . Technological . Environmental . Economic . Social . Legislative Weaknesses (spun off) . Printer division . Storage division . PC division Internet's revolution Product complexity, high cost
<ul><li>. The general rule for complex systems is that one cannot create a model that will accurately predict outcomes but one can create models that simulate the processes that the system will go through to create the models. </li></ul>Complexity Analysis in Macro and Micro level . Innovation company . Powerful brand . 84 –years experience IBM has the highest levels of control and the lowest of technology risk or transfer. Strong research and development . IBM use external factors as opportunity.. 50% revenue out of US and also 13000 partner and flexible business. . The high budget for research and development, high capital investment . . Grow in software market IBM have strong enough in terms of financial, management and experience.
<ul><li>These ideas explain why things never go according to plan, as development set up strategy base on research and analysis. </li></ul><ul><li>IBM is flexible company, they can remix their strategy base on happening. Even thought variable factors make noises in linear path, IBM has potential to reduce the direct impacts of them. </li></ul><ul><li>Base on simple factors in above, IBM can be success to achieve their respects about market as well as plan. </li></ul>Complexity Analysis in Macro and Micro level
<ul><li>IBM, should keep his position in the market as world's largest information technology company, with 80 years of leadership in helping businesses innovate. </li></ul><ul><li>IBM should expand into new markets with promising growth through its partner's strategy network program. Already prospering high growth in China, India, Brazil, and Russia, gives them competitive advantage over other Western brands. IBM have the advantage to be top Western brand by rapidly expanding into these markets all the while developing new products, services, and solutions to better help its wide variety of customers from small to large. </li></ul><ul><li>To improve and maintain its corporate image, IBM needs to find new and better ways to be philanthropic company worldwide. For examples improving job satisfaction, communities, and living standards. IBM can also offer scholarships, educational assistance, and internships to improve educational system, which enable them to have quality staff, partners, customer, and suppliers. </li></ul>Recommendations
<ul><li>In conclusion refer to both analysis in macro and micro level of environmental factors on IBM strategy, IBM has strong competitors in hardware industry like Dell or Hp but IBM can work more powerful in software industry with few strong competitors like Microsoft. </li></ul><ul><li>IBM accuracy understand the demand for software and services skills - across Asia and worldwide - is growing. Therefore, the computer technology industry still has high market growth rate. </li></ul><ul><li>Although the external factors such Iraq war, SARS and bird flu have impacted on computer technology industry, IBM still exit on the market. This is because of they have strong enough in terms of financial, management and experience. Moreover, the technology factor has effected directly to computer technology industry. </li></ul>Conclusion