IBM Corporation A Case Analysis

Case Analysis: Corporation
A presentation for the course BA291 (Business Policy), Master in Business Management.
Graphics are courtesy of IBM Corporate web site http://www.ibm.com/us/
Preface
Analyses were based on the given facts of the case (c.1994), although when applicable recent data and events were taken into account. An analysis of IBMs Mission Statement of 2004 was made, instead of creating a new one. Internal and External Audit are based on the IBMs guidelines and other readings. Actual Financial Statements for the years 20002005. Instead of a projection for 1994-2000, an analysis is made between 1994 versus 2005.
Data Source: IBM Corporate: http://www.ibm.com/us/
Preface
Analyses were based on the given facts of the case (c.1994), although when applicable recent data and events were taken into account. An analysis of IBMs Mission Statement of 2004 was made, instead of creating a new one. Internal and External Audit are based on the IBMs guidelines and other readings. Actual Financial Statements for the years 20002005. Instead of a projection for 1994-2000, an analysis is made between 1994 versus 2005.
IBM Center for e-business Innovation
IBM Building, NYC

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Corporate Profile, Business Operations and Model, Mission, Goals and Objectives
Corporate Profile
New Orchard Road, Armonk, New York, U.S.A. Industry: Information Technology Sector: Diversified Computer Systems Rankings: Fortune500 Apr 17 2006: 10th overall FT Global 500: 13th overall Dow Jones: Global Titans (Industrial) S&P 500 Listed IDC: No.1 in 2Q 2006 external disk storage. Global Impact: Celebrated 25th anniversary of IBM 5150, the $1,565 16K-memory PC developed by Don Estridge, the "father of the IBM PC, debuted on 12 Aug 1981.
Business Operations
IBM delivers on demand solutions through the following business segments: Hardware products like Servers, Storage, Personal systems, Printing systems and Retail store solutions Software Connect operating systems, business processes, and applications seamlessly. Research Innovative technologies that produce leading-edge solutions.
Business Operations (continued)

Services Comprehensive IT services integrated with business insight to reduce costs, improve productivity, and assert competitive advantage. Financing A leading provider of financing and asset management services to companies selling or acquiring IT related products and services. Technology Develop, market and deliver leading chip technologies and services.
Corporate Segments
Global Services Strategic Outsourcing. Business Consulting Services, Integrated Technology Services, Business Performance Management, Center for Business Optimization, On Demand Innovation Services, Application Management Services, e-Business Hosting Services, Hardware maintenance. Hardware Servers, Storage, Microelectronics, Engineering & Technology Services, Printer Systems, Retail Store Solutions. Software Middleware (WebSphere, IM, Lotus, Tivoli, Rational), Operating Systems.
Corporate Segments
Global Financing Client Financing, Commercial Financing, Remarketing. Enterprise Investment Product Lifecycle Management, Document Processing Technology. IBMs Worldwide Organizations Sales & Distribution, Research, Development and Intellectual Property, Integrated Supply Chain Corporate HQ Corporate Legal, Global Skills Marketplace, Information Technology Real Estate Site Operations
Geographical Operations
Americas U.S. revenues grew 3%, Canada grew 7% and Latin America grew 11%. in 2005. Europe/M.E./Africa Revenues in U.K. 7%; France 2%; and Spain 5%, while Germany and Italy declined 6% and 7%. Asia Pacific Declined 5% in 2005 versus 2004. Japan & China revenue grew 8% and ASEAN revenue grew 20%, led by India (55%). OEM Revenue increased in 2005 versus 2004 primarily due to improved manufacturing yields for game processors.
IBMs Vision
The last thing IBM needs right now is a vision. . . . I want to stay away from abstractions and deal with the marketplace. Our mission is to be the most successful information technology company in the world. O.K., you want a vision statement? Fine, you got it, now lets go back to work.
CEO Louis Gerstner, Jr.
IBMs Proposed IBMs Vision Vision

International Business Machines Corporation The last thing IBM needs right now is a aimsvision. . . . I want to stay away from to be: A globally integrated open source information abstractions and deal with the technology enterprise; mission is to be the marketplace. Our A worldwide leader in information innovative most successful on-demand technology solutions and services; company in the world. O.K., you want a A socially-responsible company serving now vision statement? Fine, you got it, customers, employees, stockholders and the lets go back to work.
worldwide communities. Louis Gerstner, Jr. CEO
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Mission Statement (2004)

At IBM, we strive to lead in the creation, development and manufacture of the industry's most advanced information technologies, including computer systems, software, networking systems, storage devices and microelectronics. We translate these advanced technologies into value for our customers through our professional solutions and services businesses worldwide.
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Case Analysis: Mission

Components Customer Products/Services Markets Technology Survival, Growth, Profitability Philosophy Self-Concept Concern for Public Image Concern for Employees IBM No Remarks Mentioned but unspecified. Clarified in 2005s IBMs Business Value. Yes Creation, development and manufacture Yes Worldwide or global Yes Specified as Information Technology No No Mentioned in IBMs Principal Goals, longterm value to shareholders. Based on IBMs Guiding Principles.
Yes Presumed by word lead. Based on IBMs New Industry Model. No No Mentioned in 2005s IBMs Business Model Mentioned in 2005s IBMs Business Model and Business Conduct Guidelines.
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Proposed Mission Statement

At IBM, we strive to lead in the creation, innovation, development and manufacture of the industry's most advanced information technologies, including computer systems, software, networking systems, storage devices and microelectronics. We translate these advanced technologies into competitive value for our individual and corporate customers through our professional on-demand solutions and dedicated business services, while consistently generating high returns for our shareholders, and a shared commitment to our employees and the world.
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Business Values
Dedication to every client's success Innovation that matters, for our company and for the world Trust and personal responsibility in all relationships.
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Principal Goals, circa 2005

Help our clients succeed in delivering business value by becoming more efficient and competitive through the use of business insight and information technology solutions; Provide long-term value to our shareholders.
small s and big E (Less focus on strategic development, maximum push on EXECUTION)
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The New Model, circa 2001

The New Industry Model:
Innovate or Integrate
The New Business Model:

Services-Led
The New Computing Model:

Infrastructure + Ubiquity
The New Marketplace Model:

An Open Playing Field
(excerpts from 2001 Annual Report)
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Business Model, circa 2005

IBMs business model, developed over time, is through Strategic investments in services and technologies that have the best longterm growth and profitability prospects based on the value they deliver to clients. A commitment to employees and the communities in which it operate.
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On Demand Business, 2005

IBMs on demand business model, based on 2003s e-business on demand model, considers four essential characteristics:
Responsive intuitively responsive to dynamic, unpredictable changes in demand, supply, pricing, labor, and competition. Variable flexible in adapting to variable cost structures and processes associated with productivity, capital, and finance. Focused concentrated on core competency, differentiated tasks and assets, with tightly integrated strategic partners. Resilient capable of managing changes and threats with consistent availability and security.

IBMs on demand business model, based on 2003s e-business on demand model, considers four essential characteristics:
Responsive intuitively responsive to dynamic, unpredictable changes in demand, supply, pricing, labor, and competition. Variable flexible in adapting to variable cost structures and processes associated with productivity, capital, and finance. Focused concentrated on core competency, differentiated tasks and assets, with tightly integrated strategic partners. Resilient capable of managing changes and threats with consistent availability and security.
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The on demand operating environment, has its own four characteristics:
Integrated integration of core processes and systems so that business can flow inside companies and across multiple enterprises. Open As the basis for integration, open technical interfaces and agreed upon standards are essential. Virtualized Grid computing will allow distributed computing resources to be shared and managed as a single large, virtual computer. Autonomic The enormous complexity of tomorrows computing systems must rely on technology that manages itself.

The on demand operating environment, has its own four characteristics:
Integrated integration of core processes and systems so that business can flow inside companies and across multiple enterprises. Open As the basis for integration, open technical interfaces and agreed upon standards are essential. Virtualized Grid computing will allow distributed computing resources to be shared and managed as a single large, virtual computer. Autonomic The enormous complexity of tomorrows computing systems must rely on technology that manages itself.
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IBM Investment Cycle
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Long-Term Objectives
Long-Term Objectives
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Corporate Culture
Respect for the Individual, for his rights and dignity. Service to the Customer. Excellence Must be a Way of Life. Managers Must Lead Effectively. Obligations to Stockholders Fair Deal for the Supplier. Good Corporate Citizenship
Ibm.swf
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Corporate Strategy
Case Analysis: Strategy

Concentric Diversification, e.g., Ascential in 2005, Candle and Maersk Data in 2004, and Rational in 2003; to focus more on enterprise and middleware software.
[Acsential, provider of enterprise data integration software for 1.14Bn, plus 5 service- and 9 software-related companies.]

Divestiture, e.g., On December 31, 2002, IBM sold its HDD business to Hitachi for approximately $2Bn. Divested its Personal Computing business to Lenovo on April 30, 2005 for 1.75Bn. Strategy employed to focus more on high-end hardware, such as servers.
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Joint Venture,
Cell microprocessor with Sony and Toshiba in 2005 for a 4GHz supercomputer. Wireless chip with Chartered Semiconductor, Infineon and Samsung created its first siliconfunctional circuits using a 45 nm production process on 300 mm wafers.
Product Development, e.g. open technology. Market Development, e.g. Business Transformation Services, ServiceOriented Architecture.
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Problem Statement
Statement of the Problem

Based on the existing Corporate Profile, Competitive Profile, External Factor Evaluation, and Internal Factor Evaluation Matrices, what specific strategies and longterm objectives should be recommended to sustain growth, increase profitability and maintain its competitive advantage?
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Competitive Profile Matrix
Competitive Profile Matrix

Market Share Financial Position Quality, Research & Development Customer Loyalty / CRM Technology Leader Global Innovation Forerunner Knowledge Management
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CP Matrix: Market Share

Systems and Financing: World leader in server sales. Software: World leader in middleware and the secondlargest software business overall. Services: World leader in IT services and consulting.
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Leader in Middleware

Leader in Middleware
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CP Matrix: Financial Financial Statements Position
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CP Matrix: Financial Position IBM Worldwide Facts

By 2005, IBM is the world's largest information technology company.
Measured by revenue, the biggest provider of
IT services ($46B), hardware ($31B) and financing ($2.6B), and second in software ($15B).
2004 revenues were $96.2B.

10

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CP Matrix: Financial Position

Consistent Earnings per Share
Data Source: IBM Corporate: http://www.ibm.com/us/ Source: CNN Money
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Consistent Earnings per Share
Data Source: IBM Corporate: http://www.ibm.com/us/ Source: CNN Money
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Consistent Credit Ratings
Standard and Poors Senior long-term debt Commercial paper Moodys Investor Service Fitch Ratings
A+ A-1
A1 Prime-1
AAF1
Ratings remained unchanged over the past five years.
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Sources of Funds
For the Year ended Dec 31 Client finance: External Internal Commercial & finance $ 12,249 $ 12,433 $ 13,279 1,167 27,032 1,185 25,566 1,150 24,291
2005 2004 2003
Total $ 40,448 $ 39,184 $ 38,720
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Versus Competitors; Versus Industry
Particulars Market Capitalization Revenue (2005) Gross Margin LT Growth (5 year) IT R&D (2005) EPS p.a.(1995-2005) Return on Investment Return on Assets Return on Equity Employees 114.90B 88.50B 41.29% 10.50% 5.842B 10% 12.1 8.2% 26.6% 341,750 Rank 2nd 2nd 2nd 5th 1st 2nd 56th 77th 22nd 1st (33%) RGAm (109.6%) Thomas (69.4%) Moodys (185.6%) Leader (246.02B) (88.89B) (82.72%) RACK(35.2%) Industry 542.53M 847.47M 28.38% 6.9% 0.250B 5% 16.9% 9.0% 31.0% 787
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CP Matrix: Quality, R&D

World's largest IT research organization,
With more than 3,000 scientists and engineers working at eight labs in six countries. RD&E expense was $5.842B in 2005 (MSFT: 6.2B), $5.874B in 2004 and $5.314B in 2003.
More U.S. patents than any other company for the thirteenth consecutive year in 2005.
With 3,248 patents earned in 2004 2000-2005: received more than 13,000 patents -approximately 5,400 more than any other patent recipient.
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CP Matrix: Quality, R&D

World's largest IT research organization,
With more than 3,000 scientists and engineers working at eight labs in six countries. RD&E expense was $5.842B in 2005 (MSFT: 6.2B), $5.874B in 2004 and $5.314B in 2003.
More U.S. patents than any other company for the thirteenth consecutive year in 2005.
With 3,248 patents earned in 2004 2000-2005: received more than 13,000 patents -approximately 5,400 more than any other patent recipient.
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CP Matrix: Quality, Quality IBM Worldwide Facts Product R&D

Software accounted
for more than 40% of the 3,415 U.S. patents awarded to IBM in 2003. Nearly three times as many patents as Microsoft, Twice the combined total awarded to its four closest software industry competitors.
Intels Preferred Quality Supplier of 2006
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CP Matrix: Customer Loyalty

Leader in Brand Recognition
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CP Matrix: Customer Loyalty

Commercial Campaign History
1925 1994 2003 2004
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Competitors Pitch
Invention that makes a difference.
Invent
Direct the World Over.

Value and Customized Technology.
Where do you want to go today?

Your Potential. Our Passion.
Information on Demand
Business on Demand
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CP Matrix: CRM Model

Customer Relationship Management @ IBM
Source: Steve LaBelle and Brian Scheld (2004). CRM done right: executive handbook for realizing the value of CRM, IBM Business Consulting Services, IBM Corporation, pp. 1-34.
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CP Matrix: CRM Model

Deeper Customer Insight
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CP Matrix: Technology Leader

Except for 1995 and 1996, an annual average of five (5) advanced technologies were pursued and completed by IBM, thereby abiding with its own guiding principle of Innovation that matters, for our company and for the world. The adoption of the New Models in 2001 positively turned the company around in terms of revenues and technological advancement.
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CP Matrix: Technology Leader

1990: RISC System/6000 1991: Magnetoresistive heads 1992: ThinkPad 1993: IBM on space (SS/Endeavor, Hubble) 1994: Supercomputing 1995: elementary particle glueball 1996: Network Computers for e-Business 1997: e-Business; Deep Blue 1998: 1 GHz microprocessor (experimental) 1999: system-on-a-chip.
C:\Documents and ettings\del Ayre.DELA
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2000 Advanced Technologies

IBM eServer, a new generation of servers for managing the e-Business needs. Commercial version of ASCI White (RS/6000 SP) -- the most powerful supercomputer in the world. A joint project of IBM and Microsoft using Windows 2000. NetVista brand of new PC devices, Internet access devices and thin clients. ThinkPad X series, the ultra-portable (slimmer and lighter) full-featured notebook computer. Storage Tank, a universal storage system capable of sharing data across any storage hardware, platform or operating system. ViaVoice for Windows, Release 8.0, a family of voice recognition software.
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eServer p690 (Regatta) as the worlds most powerful UNIX server T220, the worlds highest resolution flat panel monitor, with a 22.2-inch screen that shows 12times more detail than current monitors. Ruthenium magnetic coating quadruples the data density of current HDD products. WebSphere Translation Server software enabling businesses to provide real-time Web pages, e-mail and chat in multiple languages
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IBM Director, a SMS solution automatically reduces server downtime by predicting and repairing software failures before they happen. Blue Sky at the U.S. National Center for Atmospheric Research for predicting climate changes. Strained Silicon a breakthrough method to alter silicon to boost chip speeds by up to 35 percent. Project eLiza initiative, a multi-billion dollar program to create a realm of self-managing servers requiring little or no human interaction.
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ThinkVantage Technologies, PC solutions to help customers drive down IT support costs Grid Computing enhances Web services by coordinating global applications and resources at various locations, regardless of the underlying implementations and services. BlueSpace of IBM and Steelcase Inc -- an interactive and personalized office of the future. Worlds smallest working silicon transistor (6nm in length, and at least 10X smaller than the state-of-the-art production transistors).
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Enterprise Privacy Authorization Language (EPAL) provides enterprises automation of the enforcement of privacy policies among IT applications and systems. The worlds first smallest solid-state singlemolecule light emitter, a molecular research breakthrough. ThinkCentre S50 desktop, a redesigned PC with easy access, tool-free chassis design, simple maintenance, upgrades and customer service. DB2 Information Integrator software to instantly access, integrate, manage and analyze all forms of info on any platform across & beyond the enterprise.
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MareNostrum, based in Spain, the most powerful supercomputer in Europe at a sustained performance of 20.53 to 40.00 teraflops. High-speed photodetector to increase the speed at which information travels to and from microchips. SurePOS 500 point-of-sale systems for the demanding food service and hospitality industries. TotalStorage, integrates storage, server and software retention components into a single, securable cabinet. Infoprint multifunction printer, enables customers to print, copy, fax and scan from a single machine.
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Cell microprocessor (jointly with Sony and Toshiba) with supercomputer-like floating point performance with observed clock speeds greater than 4 Ghz. Grid and Grow, a packaged set of software, hardware and services to deliver the benefits of Grid computing to businesses of all sizes. Watson Blue Gene (BGW), the worlds largest privately owned supercomputer, installed at the IBM TJ. Watson Research Center in Yorktown Heights, N.Y. With a processing speed of 91.29 teraflops. Viper, next-generation DB2 database, designed to help customers manage and access data across a service oriented architecture (SOA).
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Service oriented architecture (SOA).
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BladeCenter LS41 server using AMDs Opteronbased chips offering 25% greater memory throughput. (01 Aug) System z9 Business Class special-purpose mainframe, with starting price to $100,000 for search, regulatory compliance and security growth. (28 Aug) On Demand Innovation Services (ODIS) to provide customers any sort of strategic view possible for 20 years into the future (01 Sep)
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CP Matrix: Global Innovation

Global Innovation Outlook
Global, Multidisciplinary, Collaborative and open. 2004: GIO 1.0: focused on 3 broad societal themes: Healthcare, Government and its Citizens, and the Business of Work and Life 2005: GIO 2.0: focused on the Future of the Enterprise, Transportation and the Environment.
Ecosystem participants included representatives from academia, governments, nongovernmental organizations (NGOs), major multinational corporations, venture capital firms, think tanks and other leading organizations.
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CP Matrix: Global Innovation

Innovation Enablers
Smart objects The connectedness of every thing Supercomputing for everyone Information put to work Collaboration and co-creation The marketplace for expertise The virtual corporation
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CP Matrix: Knowledge Mgt

Early adopter in 1994, IBMs four KM Portals: Asset management (BCSs KnowledgeView, Global Services Worldwide Asset Reuse, Software Divisions Xtreme Leverage) Expertise Location (BluePages: a corporate-wide directory; Knowledge Point for consultants with research and expertise location). Collaboration (Collaboration Central for collaboration guidance, tools and best practices, Jams to collaborate and share knowledge on a particular topic; ThinkPlace is focused on innovation). On-demand Learning (On Demand Workplace portals focus on critical job roles within IBM; Learning@IBM an application that streams profile-driven learning right to learners' desktops).
IBM earned KMWorld's KM Reality Award for 2005.
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External Factor Evaluation Matrix
The Global Environment

Globalization is accelerating !
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13

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The Changing IT Infrastructure

.
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The Changing IT Infrastructure

.
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Key Issues & Significant Trends

Sector Business Services Key Issues Legislation Declining Professionals Sector Weakened Dollar Significant Trends Consolidation Online Development Overseas Expansion Consolidation Multimedia Growth Production Outsourcing Operational Relocation Portfolio Expansion Commoditization
Computer Internet Penetration Hardware Commoditization Technological Development Computer Transformational Services Services Growing Security Threat Data Protection
Sources: Yahoo Financials, Reuters Industry Profiles, Fortune,

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EFE Matrix: Opportunities

1. Shift from commodity to annuity and transactionals, from products to solutionbased segments. 2. Seizing future high-growth opportunities 3. Forerunner in ITs shift to Open Computing 4. Emphasis on Corporate Data Security. 5. Resolution of Antitrust Lawsuit
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1. Shift of Business and Revenue Mix
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1. Shift of Business and Revenue Mix
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2a. Seizing future high-growth opportunities
17

2a. Seizing future high-growth opportunities
66

2b. Seizing future high-growth opportunities
18

2b. Seizing future high-growth opportunities
67

2c. Seizing future high-growth opportunities
20

19

68

2d. Seizing future high-growth opportunities
21

2d. Seizing future high-growth opportunities
69

3. Forerunner in Open Computing
Open Standards Open Source Software Open Architecture
70

4. Emphasis on Corporate Data Security.
EduCause 2006 Survey: Security and Identity Management edges out Funding IT as the top challenge. Gartner: Compliance, security and mobility for Midsize Enterprise will affect 2006 IT decisions. Sarbanes-Oxley compliance requirements
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5. Resolution of Antitrust Lawsuit
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EFE Matrix: Threats

1. Increased marketing efforts of competitors 2. Weakened Dollar and Market Risks 3. Aftermath of 9/11 to foreign markets access 4. Influx of Offshore Outsourcing 5. Revival of IT Venture Capitalists and Startup Companies.
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EFE Matrix: Threats

1. Increased market share of competitors
23
EFE Matrix: Threats

24
EFE Matrix: Threats

74
75
EFE Matrix: Threats

2. Weakened Dollar and Market Risks
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EFE Matrix: Threats

3. The aftermath of 9/11
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EFE Matrix: Threats

4. Influx of Offshore Outsourcing
By 2010, IDC predicts, the offshore outsourcing market will reach $29.4 billion annually, annually, driven primarily by U.S. demand. India alone racked up $3 billion in outsourcing revenue in 2005, accounting for 70% of the world's offshore outsourcing deals.
25
EFE Matrix: Threats

27
EFE Matrix: Threats

EFE Matrix: Threats

5. Revival of IT Venture Capitalists and Startup Companies.
Areas: Enterprise Technology Security/Compliance Virtualization Open Source New Technology: Pervasive Computing Knowledge Management Real Time Deep Computing Ease-of-use
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Internal Factor Evaluation Matrix
IFE Matrix: Strengths

1. 2. 3. 4. 5. Professional technical & managerial staff. Global Integration A Flatter Organization Greater Operational Efficiency Internal Competitive Advantage
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1. Professional technical and managerial staff. IBM has approximately 329,000 employees in 75 countries, and serving clients in 174 countries. IBM has one of the most highly educated workforces in the world. More than 200,000 college graduates, nearly 54,000 with post-graduate degrees.
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Samuel J. Palmisano ($16.6M p.a.)
Chairman of the Board, President & Chief Executive Officer
Michael E. Daniels
Senior VP, Global Technology Services, IBM Global Services
Nicholas M. Donofrio
Executive Vice President Innovation and Technology
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Legacies of CEOs
Thomas J. Watson, 1914-1956 Consolidated corporate assets and created IBM. Pioneering must never cease. Thomas J. Watson, Jr. 1956-1971 codifies 3 IBM basic beliefs: respect for the individual; customer service; and excellence. Hourly workers on salary; Stock Purchase Plan IBMs future is in the hands of its people. T. Vincent Learson, 1971-1973 Speech recognition Take some risks.
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Legacies of CEOs
Frank T. Cary, 1973-1981 IBM diskette; Server Network Architecture; Energy Conservation Our business has to undergo changes constantly. John R. Opel, 1981-1985 Goals: growth; product leadership; efficiency; profitability. Focus: Mainframe Lease-to-Own. Engineered minority interest in Intel. Technological leadership is the very lifeblood of this business.
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Legacies of CEOs
John F. Akers, 1985-1993 Reorganization of US operations. Token Ring LAN; Respect for the individual; commitment to excellence in all we do; providing the best service in the world these are IBMs compass. Louis V. Gerstner, Jr., 1993-2002 Reinventing Education Restructuring, The New Model Win, Execute, Team . . . They are personal commitments.
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Current CEOs Focus: Samuel J. Palmisano, 2003- present Finalized IBMs Mission Statement. Created IBMs Global Services. Pioneered the Global Innovation Outlook Started e-Business on Demand campaign; transformed to On Demand Business in 2004. Emphasized on Open Computing and Innovation
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2. Global Integration a single global system
Global Delivery Centers Globally Integrated Manufacturing Globally Integrated Corporate Functions Global Skills Marketplace
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2. Global Integration a single global system
Global Delivery Centers Globally Integrated Manufacturing Globally Integrated Corporate Functions Global Skills Marketplace
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2.1. Global Delivery Centers

IBM garnered clients from countries with the biggest population: considered as all potential customers : China, India, Brazil, and Russia.
GDP
R.P. 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
2.0 0.0 (2.0) 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Year
Selected GDPs 1999-2008

ASEAN USA OECD World
GDP 10.0 8.0 6.0 4.0
IBM's Four Country Target

China India Brazil Russia
Year
Source: World Bank, CRU Forecast Data Source: IBM Corporate: http://www.ibm.com/us/
Source: World Bank, CRU Forecast
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2.1. Global Delivery Centers

Worldwide, 45,000 business partners and 33,000 suppliers connected to IBM through the Web. IBM clients include
the five largest companies in India and five of the top 15 companies in China. 2004 revenue growth
in Russia was 75 percent, in Brazil 15 percent, 45 percent in India, and 25 percent in China.
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2.2. Integrated Manufacturing

North America
Rochester, MN, USA Poughkeepsie, NY, USA San Jose, CA, USA Guadalajara, Mexico
31
Europe
Dublin, Ireland Vac, Hungary Montpellier, France
32

Asia Pacific
Shenzhen, China Singapore
33

North America
Rochester, MN, USA Poughkeepsie, NY, USA San Jose, CA, USA Guadalajara, Mexico
Asia Pacific
Shenzhen, China Singapore
Europe
Dublin, Ireland Vac, Hungary Montpellier, France
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2.3. Corporate Functions

Legal Corporate Legal Human Resources handled by Global Skills Marketplace Finance handled by Global Financing Information Technology handled by inhouse Services Business. Real Estate Site Operations
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2.4. Global Skills Marketplace

IBMs Global Services is the world's largest information technology services and consulting provider. Approximately 190,000 professionals in some 160 countries, revenues totaled $46.2B in 2004.
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2.4. Global Skills Marketplace

IBMs Global Services is the world's largest information technology services and consulting provider. Approximately 190,000 professionals in some 160 countries, revenues totaled $46.2B in 2004.
93

3. Flatter Organization
Sales Support Center; Deal Hubs Restructured operations in Europe New lead-management process
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4. Greater Operational Efficiency
Reduced Costs Decreased inventory Speedier procurement
Navi Radjou, (2005) IBM Transforms Its Supply Chain To Drive Growth, March 24 2005.
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IFE Matrix: Weaknesses

1. Older and Aging Technical Personnel. 2. Non-acceptance of international agreements and standards proposed by international bodies. 3. IP and Copyright Infringement 4. Merger and Acquisitions Issues. 5. Diversity and Workforce Issues
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1. Older and Aging Technical Personnel.
Shortage of developers with mainframe skills. Tight labor market for experienced audit professionals.
35

1. Older and Aging Technical Personnel.
Shortage of developers with mainframe skills. Tight labor market for experienced audit professionals.
97

2. Non-acceptance of international agreements (CSR, Global Compact of UN), standards proposed by international bodies (ISO, GR Initiative, IncoTerms).
98

2. Non-acceptance of international agreements (CSR, Global Compact of UN), standards proposed by international bodies (ISO, GR Initiative, IncoTerms).
98

3. IP and Copyright Infringement.
IBMs Strategy: made 500 of its software patents freely available to anyone working on opensource projects. In 2004,IBM collected $1B or more from licensing its invention.
Source: New York Times, 11 Jan 2005
39

3. IP and Copyright Infringement.
IBMs Strategy: made 500 of its software patents freely available to anyone working on opensource projects. In 2004,IBM collected $1B or more from licensing its invention.
Source: New York Times, 11 Jan 2005
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4. Merger and Acquisition Issues.
Cultural Biases Different Managerial Styles Diverse Industrial Policies
40

4. Merger and Acquisition Issues.
Cultural Biases Different Managerial Styles Diverse Industrial Policies
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5. Diversity and Workforce Issues
July 31, 2003, Cooper et al. v. IBM Personal Pension Plan and IBM Corp. Agreement to pay $314.293B to class members finalized May 2005. May 2005, the Louisiana Supreme Court denied a motion to review and reverse a Louisiana state courts certification of a nationwide class suit filed in 1995. No date has been set for trial. January 24, 2006, Rosenburg, et. al., v. IBM, alleges the company failed to pay overtime wages pursuant to Fair Labor Standards Act.
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Matching Key Factors Alternatives and Recommendations
Matching Stage
TOWS Matrix
S-O Strategies W-O Strategies S-T Strategies W-T Strategies
SPACE Matrix BCG Matrix IE Matrix GS Matrix

103
TOWS/SWOT Matrix
.
104
SWOT Matrix: S-O Strategies

.
105
SWOT Matrix: W-O Strategies

.
106
SWOT Matrix: S-T Strategies

.
107
SWOT Matrix: W-T Strategies

.
108
IBMs SPACE Matrix

Based on various readings:
41
IBMs SPACE Matrix

Based on various readings:
109
IBMs BCG Matrix

Industry Data based on Reuters, CNN Money, Yahoo Financials, MarketWatch websites
% Industry Sales Growth Rate, three-year average IBM Data based on 2005 Annual Report
42
IBMs BCG Matrix

Industry Data based on Reuters, CNN Money, Yahoo Financials, MarketWatch websites
% Industry Sales Growth Rate, three-year average IBM Data based on 2005 Annual Report
110
IBMs IE Matrix
IE Matrix per IBMs Segments
Note: IFE and EFE weighted scores per segment are based on respective, i.e., different factors than IBM as a firm
43
IBMs IE Matrix
44
IBMs IE Matrix
111
IBMs Summary of Strategies

Based on Porters Value Chain
45
IBMs Summary of Strategies

Based on Porters Value Chain
112
Short-Term Recommendations
Capitalize on technological, business and social trends and the need of enterprises to innovate in addressing those trends; Maintain market-share leadership in systems, middleware software and services, as a platform to drive growth; Focus investment and resources on emerging growth areas, including Business Performance Transformation Services and emerging countries;
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Short-Term Recommendations
Continue IBMs global integration for productivity gains and higher value in service delivery; Further IBMs leadership in innovation initiatives, advanced semiconductor design and development, collaborative intellectual capital, business process expertise and integration, and advanced supercomputing systems; Acquire businesses that contribute strategically to its portfolio, and exit those that no longer support its strategy for innovation and higher value.
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Long-Term Recommendations
Monitor economic environment and corporate spending budgets. Leverage internal business transformation and global integration initiatives. Spearhead innovation initiatives. Push for open standards. Continue investing in growth opportunities.
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IBM Corporation A Case Analysis

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IBM Corporation A Case Analysis

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Case Analysis: Corporation

IBM Building, NYC

Case Analysis: Corporation

Business Operations (continued)

Data Source: IBM Corporate: http://www.ibm.com/us/

IBMs Proposed IBMs Vision Vision

Data Source: IBM Corporate: http://www.ibm.com/us/

Mission Statement (2004)

Case Analysis: Mission

Data Source: IBM Corporate: http://www.ibm.com/us/

Proposed Mission Statement

Data Source: IBM Corporate: http://www.ibm.com/us/

Principal Goals, circa 2005

The New Model, circa 2001

The New Business Model:

The New Computing Model:

The New Marketplace Model:

Business Model, circa 2005

On Demand Business, 2005

On Demand Business, 2005

On Demand Business, 2005

On Demand Business, 2005

IBM Investment Cycle

Data Source: IBM Corporate: http://www.ibm.com/us/

Data Source: IBM Corporate: http://www.ibm.com/us/

Data Source: IBM Corporate: http://www.ibm.com/us/

Data Source: IBM Corporate: http://www.ibm.com/us/

Case Analysis: Corporation

Graphics are courtesy of IBM Corporate web site http://www.ibm.com/us/

Case Analysis: Strategy

Data Source: IBM Corporate: http://www.ibm.com/us/

Case Analysis: Strategy

Case Analysis: Strategy

Data Source: IBM Corporate: http://www.ibm.com/us/

Case Analysis: Strategy

Data Source: IBM Corporate: http://www.ibm.com/us/

Case Analysis: Strategy

Case Analysis: Corporation

Graphics are courtesy of IBM Corporate web site http://www.ibm.com/us/

Statement of the Problem

Data Source: IBM Corporate: http://www.ibm.com/us/

Case Analysis: Corporation

Graphics are courtesy of IBM Corporate web site http://www.ibm.com/us/

Competitive Profile Matrix

Data Source: IBM Corporate: http://www.ibm.com/us/

CP Matrix: Market Share

CP Matrix: Market Share

Data Source: IBM Corporate: http://www.ibm.com/us/

CP Matrix: Market Share

Data Source: IBM Corporate: http://www.ibm.com/us/

CP Matrix: Financial Financial Statements Position

Data Source: IBM Corporate: http://www.ibm.com/us/

CP Matrix: Financial Position IBM Worldwide Facts

2004 revenues were $96.2B.

Data Source: IBM Corporate: http://www.ibm.com/us/

CP Matrix: Financial Position IBM Worldwide Facts

2004 revenues were $96.2B.

Data Source: IBM Corporate: http://www.ibm.com/us/

CP Matrix: Financial Position IBM Worldwide Facts

2004 revenues were $96.2B.

Data Source: IBM Corporate: http://www.ibm.com/us/

CP Matrix: Financial Position