This document provides background information on IBM and its former CEO Louis Gerstner. It details IBM's struggles in the early 1990s when Gerstner joined as CEO, and describes his turnaround strategy which included cost cutting, streamlining products, investing in new technologies like Java, and restructuring the company's marketing and workforce. It also provides an overview of IBM's current market position and strategy under current CEO Ginni Rometty, focusing on cloud, data, and digital engagement.

2.  Introduction
 Background Note
 His tenure at IBM and Early Initiatives
 The turn around Strategy
 E-Business
 Criticism
 Current market Position

4.  American multinational technology
 Headquarters :- Armonk, N.Y., U.S.
 Operations over 170 countries.
 Current employees status (IBMers) :- 3,80,000 .
 Manufacture :- software, hardware
 Provides consulting services.
 Inventions :- ATM, PC, Floppy disk, Hard disk drive,
Magnetic strip card, SQL, UPC barcode, DRAM.
 Commoditizing of markets.
 5 Nobel prize, 6 Turning awards, 10 National medals
of technology & 5 National medals of science.

5.  In 1993, IBM was in financial trouble.
 Then, in 2001, IBM again become a Global leader.
 Significant changes.
 ERP & e-commerce.
 Special importance.

6.  Conscious role.
 Good sense.
 Beliefs & instincts.
 Satisfy needs of the customer.
 Visualizing the network.

7. BACKGROUND NOTE

8.  Born on March 1, 1942 in Minolta, New York.
 Father was a Traffic Manger
 Stressed importance of education and discipline.
 Graduated in Engineering at Dartmouth in 1963.
 Earned Business Management Degree from Harvard
Business School.
 1965: Joined McKinsey & Company → Partner before
six years.
 1975: Director of the firm.
 Helped Penn Central Railway turn around from the
verge of bankruptcy.
 Focus on the problem at hand and create an
environment that encouraged people to come out with
their ideas, irrespective of their designation in the firm.

9.  1978: Joined American Express as an Executive Vice President →
President of TRS division.
 TRS division ↑ 18% → best performing divisions
 Customers needs and preferences were accorded top priority.
 Set High Targets and motivated his colleagues.
 Adopting new technologies for better services.
 1989: Joined RJR Nabisco → Loss making one to Profitable one.
 Quick Decision making → Invested more in High performing
products.
 Communicating directly with the employee → win their confidence
→ Motivate them.
 Well known for turnaround strategies
 1993: April → Joined IBM as its CEO.

11.  In April 1993, Grestner joined IBM.
 IBM was passing through the worst phase ever
when he joined IBM.
 Loss of $325 million in 1993.
 Stock price dipped by 15%
 The mainframes and storage division were at loss,
the co’s Pcs were not generating any profit &
105000 employees were asked to leave the job.

12.  Learned about prevalent situation
 Met customers,competitors,financial Analysts,
Senior executives etc.
 After such conversation, he felt the need of
improvement in the products.
 Different Business units need to be integrated
 Raised confidence among his employees and
Executives.
 Cost cutting initiatives were taking place.

13.  Lifetime employment policy
 Open discussions with employees
Discussions like -
Central issues
Wanted changes

14.  Changes in compensation structure of employees.
That provided benefits like –
medical pension

15. Stock option plan
Evolved marketing
strategy
Created co-operated
committee

16. THE TURN
AROUND
STRATEGY

17.  Decrement in prices up to 30%
 For better compatibility , he used JAVA as
programming language in its hardware and
software.
 Divided workforce into 14 vertical marketing groups
, each catering to specific industry.
 Replaced older mainframes with smaller, faster ,
cheaper but highly profitable machines(using
CMOS technology).

18.  In 1994, he reduced the unit cost of mainframes by
96% and manpower strength by 80,000.
 To strengthen technological capabilities , IBM
acquired software company LOTUS.
 Adopted network – centered computing so that
computers around the world get connected and
have wider applications.
 Shifted 25% of R&D’s expenses to network centered
projects.

19.  Promoted launch of innovative products at
competitive prices and reduced cycle time.
 Marketing strategies before launching new product.
 Bought Tivoli systems for client server computer
networks.
 As a result , they were able to make profits
amounting to $5.4 billion on revenues of $75.9
billion.

21. CURRENT MARKET POSITION

22.  Virginia Marie "Ginni" Rometty
 Joined IBM in 1981 – Championed
the purchase of the big business consulting firm,
PricewaterhouseCoopers.
 Highlights of Rometty’s career at IBM
 Attempt in 2012 to shore up IBM’s cloud computing
business (IBM V/s Amazon)

23.  IBM’s three pillar strategy :
 Cloud
 Data
 Engagement
 The triangle of cloud, data, and engagement is a way
to think about corporate strategy. It’s also a relevant
prism through which to see emerging market growth.