IBM has had a long history with many ups and downs. Some keys to its recent success include embracing consulting and data analytics through acquisitions, heavily investing in R&D spending $50 billion with 30% allocated to long-term research, and having a large, skilled workforce. IBM's plans to solve world challenges through targeting issues like pollution may face risks as the solutions to large problems are difficult with uncertain timelines and technologies that could become outdated. IBM also decentralizes and spends heavily on R&D.

1. A Case Study
-Tushar Vatsa

2. Company Timeline
1910 1950 1993 2002
Focus on large
scale tabulating
solutions for
customers
First slogan
“THINK”
Own computer
product line
70% market share
1980-outsource
components to
Microsoft and
Intel
1991-1993: net
losses $16 billions
Thomas
Watson Sr
Sold off low-value
commodities
Acquire 100 firms
Focus on high
tech problem
Spend $50 billions
in R&D
-30% for long
term research
Samuel
Palmisano
Focus on high
margin business
Introduce
ThinkPad
Rebuild brand
image
Louis
Gerstner
Thomas
Watson Jr
CEO
Strategy

4. Strategy & Values

5. Change in Business Focus &
Impact

7. PESTEL Analysis for Macro Environment factors
IBM
SocialPolitical
Technological
Environmental
Economic
Legislative

8. PESTEL Analysis for Macro Environment factors
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
 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.
 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.

9. PESTEL Analysis for Macro Environment factors
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.
Social
Economic
Legislative
 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.
 IBM stopped to work with
Iran and North Korea,
therefore they lost these
markets as well.

10. Porter’s 5 Forces Analysis for Micro Environment factors
Intensity
of Rivalry
Bargaining
Power of
Suppliers
Bargaining
Power of
Buyers
Threat of
Substitutes
The Threat
of Entry

11. Porter’s 5 Forces Analysis for Micro Environment factors
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.
Low
IBM’s business
employs a wide variety
of components,
supplies, services and
raw material from a
substantial number of
suppliers around the
world.
Bargaining
Power of
Suppliers
Intensity of
Rivalry
The Threat of
Entry

12. Porter’s 5 Forces Analysis for Micro Environment factors
Threat
Substitute
Bargaining
Power of
Buyers
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.

13. Question 1
Few companies have had a such a long
history of ups and downs as IBM. What
were some of the keys to its recent
success? Can its plans to solve some of
the world’s most challenging problems
succeed? Why or why not?

14. Answer 1
Distribution-related Key
Success Factors
Strong direct sales (internet)
Most sales are large contracts
Able to secure image to
consumers, used in banks,
libraries, etc.
Marketing-related Key
Success Factors
Well-known brand name
Respected brand name
Good, large customer service
Skills & Capability-
Related Key Success
Factors
Technology-related Key
Success Factors
Skilled employees
Wide distribution channel
Strong e-commerce capabilities,
user friendly website
Large IT workforce & leading
the industry with e-networks.
Organization quickly adapts to
technological changes.

15. Answer 1
Manufacturing-related Key
Success Factors
Has the capital and man power
to survive through bad economy
IBM’s products is in demand
irrespective of economic
conditions.
Low production design cost
Other Types of Key
Success Factors
Overall low costs
Ability to provide fast,
convenient after sale repairs
and service

16. Solution 1
Due to
Embracing IT Consulting & data
analystics via acquisition of about 100
firms such as PwC.
Having a very skilled & dynamic
workforce of engineers & consultants.
Major focus on R&D & developing R&D
by allocation of 30% of the budget ($50b)
on it.
IBM’s plans to solve some of the
worlds most challenging problems can
succeed

17. Question 2
Who are IBM’s biggest competitors
today, and what risks do they face with
their current strategy?

18. Major Competitors

19. Major Competitors

20. Major Competitors

21. Risk with Current Strategy
Targeting of issues such as pollution &
congestion is very niche.
Reaching a solution of such problems isn’t
that probable.
The timeline in completing such projects
isn’t that easily quantifiable &
solution/technology might become out of
date as project completion is reached.
Decentralization occuring in the pursuit of
becoming the premier Globally Integrated
Enterprise
Liability associated with spending $5b
annually on R&D

23. Created by Tushar Vatsa during a marketing
internship under Prof. Sameer Mathur – IIM Lucknow
(visit www.IIMInternship.com )