[COMPANY NAME]

[Company address]

IBM CASE STUDY

[Document subtitle]

IBM STRATEGIES

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.

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.

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.

IBM remixed their businesses in order to move to the emerging

higher- value spaces by focusing on software and IT industry.

HARDWARE AND
SEVICES

SOFTWARE
IBM sold the personal
computing department to
Lenovo
To Lenovo

PESTEL Analysis
Political factors
IBM is one of the leading multination company in the world and its
revenue are increasing so it faces lots of challenges with taxation
with in USA and also from outside USA. Higher rate of taxes makes
its product more costly and weaker. Since IBM therefore must be
aware of the different tax rates to operate within normal parameters
of international trade.

Economic factors

 Inflation rates and Gross Domestic Product play a major role in the
buying power of clients. When a country experiences recession, it
affects the purchasing power of potential customers. If a country
has a strong GDP then it can provide healthy market for IBM.

Socio-economic factors

IBM benefits from a large number of internet users. This is especially

so in a world where everyone is beginning to lean towards a
technological lifestyle. The company however, has to be able to
change its approach to suit a particular groups lifestyle.

Technological factors

Technology affects directly to computer technology industry because

computer technology can be used as a tool to invent many
technological products .Technology is the main focus of IBM. The
company can develop new innovative products that give it an edge
over competitors.

Some imports factors of PESTEL

IBM and U.S. military deployed IBMs speech to

speech translation software to help U.S. for better
communication with local security forces .

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.

IBM collaborated with Scripps research institute to

make software framework to allow world health
organizations to more easily share and analyse
electronic health information, such as the outbreak
of disease.

SWOT Analysis
Strengths
1. First mover in cloud computing solutions for enterprises. IBM
has moved to cloud computing in 2007 with its Blue Cloud
program, which was designed to offer hardware and software
solutions for enterprises that were willing to have their own private
cloud. Since then the company has become the first reference point
for enterprise cloud solutions in the cloud market. Unlike many other
companies in the cloud market, the company has been offering the
broadest range of software and services in one place.
2. Brand reputation. IBM has a significant market reach all over the
world in all of the markets it operates. Company has also been
awarded as #1 company for leaders; #1 green company worldwide;
#2 most respected company; #5 most admired company; and has
received many more awards This has resulted in a very positive and
strong brand reputation. According to Interbrand, IBM brand was
value at $75.5 billion in 2012 and was the 3rd most valuable brand
in the world. Brand reputation significantly influences consumers
decision to buy the product and IBM clearly benefits from that.
3. Diversified business. IBM segments its business into 4 divisions:
Hardware, Software, Services and Financing. In 2000, the company
was earning 35% of its income from hardware sales, where profit
margins are low and future market growth is slow or negative. IBM
has diversified from hardware to software business, which is
expected to generate 50% of companys income by 2015. This shift
will result in lower impact of the negative trends in hardware market
and higher profitability from sales of software and services. The
company has also diversified geographically and now earns more

than 60% of its income from outside US. IBM heavily invests into
China and the rest of Asia to increase the geographic diversity of its
income.
4. Strong competency in acquisitions. Over the last 13 years, from
2000 to 2012, IBM has acquired more than 140 companies in
strategic areas including analytics, cloud, security and commerce.
This has led to substantial growth in software and consulting
offerings from IBM and established the company as a leading
software and consulting provider for enterprises. IBM also expects to
invest $20 billion over the next two years on acquisitions to
strengthen its product portfolio even further. Companys
competence in successful acquisitions is the key advantage other
companies, like HP, currently lack.
5. Integration of products and services. IBM offers hardware
(servers, storages), software (enterprise content, service and
information management) and services (cloud, software, data
centres) all related to each other, which enable the company to
provide one stop solution for enterprises and integrated product for
the customers.

Weaknesses
1. Expensive service and software solutions. IBM offers expensive
integrated custom solutions for enterprises that want to build
reliable IT infrastructure in their companies. This often involves
buying hardware, software and services from IBM at the same time,
which is very costly expenditure for any size of enterprise. Such an
infrastructure investment is often postponed in times of uncertainty
or slowing economy growth. This weakness was evident over the
last few years, when IBM struggled to cross sell its products and saw
decreasing revenues in the same period.
2. Focus mainly on customized products. IBM focuses on providing
customized solutions for large and medium enterprises. This is a
very profitable business model but captures only a small share of
the market. The rest of the market is often satisfied with off-the-

shelf software products and services. The lack of these products

makes IBM less approachable by the rest of the market, where
competitors like Oracle and Salesforce thrive.

Opportunities
1. Expand services and software divisions. IBM provides various
services (cloud, security and infrastructure) and enterprise solutions
(servers, networking and storage), which are the most profitable
IBMs businesses at the moment. The company should focus on
growing these divisions as they promise better growth opportunities
and higher profit margins.
2. Increasing demand of cloud based services. The cloud
computing market is expected to grow by an average of 22% each
year from 2011 to 2020. By 2020, the market is expected to reach
$240 billion value. Currently, IBM is offering many services related
with cloud computing and is well positioned to benefit from the
growing market.

Threats
1. Intense competition. Cloud computing and Big Data Analysis
market is Newmarket that has a lot of growth potential. The possible
profits attract many newcomers and start-ups and threaten to take
the market share from the incumbent IBM. Major Competitors are
Amazon and Microsoft.
2. Economic Slowdown in US and Europe As mentioned earlier,
IBM sales heavily depend on the enterprises willingness to make
huge investments into IT infrastructure, which is far from the first
option during the times of slow economy growth. While this scenario
is not forecasted for the whole world during 2013 and 2014, some
regions, like Europe, will still struggle to grow.

Five Forces

The Threat of Entry -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
Intensity of Rivalry - 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
Bargaining Power of Suppliers-BMs business
employs a wide variety of components, supplies, services and
raw material from a substantial number of suppliers around the
world.
Bargaining Power of Buyers -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.
Threat of Substitutes -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.

Complexity Analysis in Macro and

Micro level

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
These ideas explain why things never go according to plan, as
development set up strategy based on research and analysis.
IBM is flexible company, they can remix their strategy based
on happening. Even though variable factors make noises in
linear path, IBM has potential to reduce the direct impacts of
them.
Base on simple factors in above, IBM can be success to achieve
their respects about market as well as plan.

Recommendations

IBM, should keep his position in the market as world's largest

information technology company, with 80 years of leadership in
helping businesses innovate.

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.

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.

Conclusion

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.

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.

Although the external factors 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