HOME ASSIGNMENT 1(STRATEGIC PROFILE BUILDING)-TASK 1

COMPANY NAME-IBM
-S VERGIN IRUTHAYA PREETHI
1.HISTORY:
International Business Machines (IBM), nicknamed "Big Blue", is a multinational computer
technology and IT consulting corporation headquartered in Armonk, New York, United States.
IBM originated from the bringing together of several companies that worked to automate
routine business transactions, including the first companies to build punched card based data
tabulating machines and to build time clocks. In 1911, these companies were amalgamated into
the Computing-Tabulating-Recording Company (CTR).
Thomas J. Watson (1874-1956) joined the company in 1914 as General Manager and became
its President in 1915. In 1924 the company changed its name to "International Business
Machines." IBM expanded into electric typewriters and other office machines. Watson was a
salesman and concentrated on building a highly motivated, very well paid sales force that could
craft solutions for clients unfamiliar with the latest technology. His motto was "THINK".
Customers were advised to not "fold, spindle, or mutilate" the cardboard cards. IBM's first
experiments with computers in the 1940s and 1950s were modest advances on the card-based
system. Its great breakthrough came in the 1960s with its System/360 family of mainframe
computers. IBM offered a full range of hardware, software, and service agreements, so that
users, as their needs grew, would stay with "Big Blue." Since most software was custom-
written by in-house programmers and would run on only one brand of computers, it was too
expensive to switch brands. Brushing off clone makers, and facing down a federal anti-trust
suit, the giant sold reputation and security as well as hardware and was the most admired
American corporation of the 1970s and 1980s.
The late 1980s and early 1990s were difficult for IBM—losses in 1993 exceeded $8 billion—
as the mainframe giant failed to adjust quickly enough to the personal computer revolution.
Desktop machines had the power needed and were vastly easier for both users and managers
than multi-million-dollar mainframes. IBM did introduce a popular line of microcomputers—
but it was too popular. Clone makers undersold IBM, while the profits went to chip makers
like Intel or software houses like Microsoft.
After a series of reorganizations, IBM remains one of the world's largest computer companies
and systems integrators. With over 400,000 employees worldwide as of 2014, IBM holds more
patents than any other U.S. based Technology Company and has twelve research laboratories
worldwide. The company has scientists, engineers, consultants, and sales professionals in over
175 countries.IBM employees have earned five Nobel Prizes, four Turing Awards,
five National Medals of Technology, and five National Medals of Science.
STRATEGIC EVOLUTION OF COMPANY
In 1996, Louis Gerstner, then president and CEO of IBM, set his sights on radically revamping
the company’s existing strategic planning and execution practices and policies. At that time,
IBM’s corporate strategy processes resembled those of most corporations, with several annual
 planning activities. In overhauling the program over the next several years, IBM’s executives
and marketing leaders concentrated on five critical objectives:
 Designing a strategic issues review process that focuses outwardly on economic and
technology issues rather than on internal organizational concerns
 Ensuring that strategic planners focus directly on the critical implications, risks, and trade-offs
inherent in strategic alternatives
 Structuring an ongoing process to keep top executives focused regularly on fundamental
strategic challenges and opportunities and not just on operational issues
 Connecting strategic planning directly to resource allocation decisions, thereby keeping
implementation at the centre of the planning process
 Promoting widespread support and involvement in the entire procToday, strategic planning at
IBM looks quite different than it did in the late 1990s. A continuous strategic planning process
involves ongoing review of major issues and executive decision making on a twice-monthly
basis. “Deep dive” research initiatives enable the firm to fully explore a new challenge or
opportunity, develop a strategy, and allocate resources within 30-90 days. With economic (and
political) upheaval, technical innovation, and competitive initiatives happening rather more
frequently than annual strategic reviews, IBM’s continuous strategy evolution enables the firm
to act and react more quickly than most to critical market challenges and opportunities.
INTENDED STRATEGIES FOLLOWED:
An intended strategy is the strategy that an organization hopes to execute. Intended strategies
are usually described in detail within an organization’s strategic plan.
 IBM, having its roots in one of the fastest growing precinct of the current era,
computers and IT services and consultation, has transcended some of other big
players of the arena. In 2011, IBM excelled Microsoft with a closing value of $214
billion leaving behind the technology giant at $213.2 billion. A year later, IBM
acquired Texas Memory Systems so to expand its technology department further
while enhancing the quality and the quantity of it s production.
 IBM has a unique way of employee management. It was the first company to start
group life insurance in the year 1934 along with survivor benefits in 1935 and paid
vacations in 1937. Although controversial, IBM made sure its same-sex employees
are dealt with equality on the grounds of health benefits and anti-discrimination
laws. In 2003, Human Rights Campaign voted IBM for its same-sex friendliness
and anti-discriminative practices.
 IBM places emphasis on the strong partnership
 IBM partnered with Twitter which helps in integrating complex systems and data
to make better decisions.
 IBM mobile first for ioS connects users to big data and analytics on their ioS
devices.
EMERGENT STRATEGIES FOLLOWED:
An emergent strategy is an unplanned strategy that arises in response to unexpected
opportunities and challenges. Emergent strategies can also lead to tremendous success.
 Many new strategies were adopted by IBM in the year 2020 due to the alarming
challenge (Covid -19)
 Transforming industries and profession with data.IBM Watson is a new class of
advanced analytics which is an AI system with same learning process as humans and is
applied in 17 different industries and cognitive computing for apps.
 More than 4 billion have invested in SAAS .IBM made partnership with SAP to deliver
enterprise application as service in cloud.
 Reimagining work through mobile and social technologies.IBM interactive experience
is the biggest digital agency .Strategic partnership with apple for devolving business
apps.
 Creating a new infrastructure for a new era, Internet of things transformation solutions
combines clouds and Watson’s which mainly focuses on Open innovation. Reimagined
the mainframe for their tremendous growth of mobile workloads.
 Rethinking the challenge of security.10 global security operation centers manages &
monitors 15 billion events daily.IBM follows a mixed strategy

IBM’s global strategy is based on three pillars: cloud, data and engagement. Closely watched
by the global investment community, the IT sector, and IBM’s 431,000 employees, IBM’s
strategy has its fans and detractors – but each of the three pillars says something about global
growth and competition in the 21st century.

2. VISION, MISSION AND CORE VALUES:

MISSION STATEMENT:
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. And our worldwide network of IBM solutions and services
professionals translates these advanced technologies into business value for our customers. We
translate these advanced technologies into value for our customers through our professional
solutions, services and consulting businesses worldwide.

VISION STATEMENT:
To be the world’s most successful and important information technology company. Successful
in helping out customers apply technology to solve their problems. Successful in introducing
this extraordinary technology to new customers. Important, because we will continue to be the
basic resource of much of what is invested in this industry?
 CORE VALUE:
 Dedication to every client’s success
 Innovation that matters, for our company and for the world
 Trust and personal responsibility in all relationships

3. PREMILINARY ANALYSIS OF RESOURCES AND CAPABILITIES:

KEY RESOURCES:

IBM operates numerous research laboratories worldwide that are all bundled under IBM
Research.

Major campus installations, science centres and a Linux Technology Centre make the spine of
the company’s development core with a collective working force of 435,000 employees
worldwide, making it the second largest US firm in terms of workforce.

CAPABILITIES:

IBM was transformed from a company that primarily manufactured mainframes to a company
that offered complete IT solutions. The company was able to change its focus from being
product centric to being customer centric. IBM realized the need to continuously reinvent the
business model of a company amidst rising competition and changes in the business
environment. Unnecessary costs were cut down in the process and many new relevant
technological innovations led the way for a successful turnaround for IBM. Other companies
can greatly benefit by reviewing IBM’s strategic and operational planning and in their use of
technology. Such lessons would help any company in IBM's position thwart competitive forces
in today's IT market, facilitating better management techniques, inventory control & operation.

Financial performance and the availability of key resources are both drivers and enablers of
business model innovation. In the technology services industry, IBM has a track record of using
its financial strength to invest heavily in research and business model transformation during
periods of economic downturn. By investing in research and development during the depths of
the Great Depression in the 1930s, IBM was ready when the recovery began.13 similarly, today
IBM is investing heavily in the development of “Smarter Planet” initiatives based on its view
that virtually every process, system and infrastructure can be instrumented, interconnected and
infused with intelligence. This opens up new market opportunities for new partnerships
&business
4.CEO:
Arvind Krishna (born 1962) is an Indian-American business executive. He is the chief
executive officer (CEO) of IBM. Krishna began his career at IBM (almost 30 years long) as an
engineer in IBM Research, was promoted to senior vice president in 2015, and was promoted
to CEO in April 2020.In 2018, he led IBM's acquisition of Red Hat for $34 billion, which is
the largest software company acquisition in history. On his first day as CEO, Krishna wrote to
IBM staff, "I believe we can make IBM the most trusted technology partner of the 21st
century.Character is of the utmost importance.

LEADERSHIP CAPABILITIES:

Krishna joined IBM in 1990, rising to become senior vice president for IBM's cloud and
cognitive software division. He has made scientific contributions in a number of technical
fields, including wireless networking, security, systems, and databases. He has also led the
building and expansion of new markets for IBM in artificial intelligence, cloud, quantum
computing, and blockchain. He led IBM's 2018 acquisition of Red Hat for $34 billion.

He was appointed to become IBM CEO on January 31, 2020, succeeding Ginni Rometty who
had served as CEO since 2012.He joined Satya Nadella, Shantanu Narayen, and Sundar
Pichai as an Indian CEO of a major United States technology company.

5. BUSINESS MODEL:
The business model of IBM or International Business Machines Corporation revolves around
Cloud computing, Artificial intelligence, Computer hardware, and Computer software. There
are so many different business offerings that are provided by the company and hence the service
segments of the company are also on the increase too. The IBM Company provides lot of
services to the clients which make it reliable and dependable at the same time. Ever since its
existence, the company has been widely adopted in different countries and has about 175
different branches all over the world. There are also about 400,000 employees who are
currently working in the company.
CUSTOMER SEGMENTS:
IBM serves two customer segments: large enterprises looking to invest in virtualization, cloud
or other software or hardware solutions and services to streamline corporate operations
and end-users interested in personal computers and mobile applications.

VALUE PROPOSITION:

IBM has always been characterized by a powerful drive for innovation and development and
these continue to make the larger part of its value propositions. The company actively engages
in research in the fields of nanotechnology and mainframe and personal computers with recent
years seeing it slowly expand into digital data management, cloud services and virtualization.

It offers corporate clients high-value solutions based on its working model of integrating
technology and business model innovation to deliver scalable solutions. IBM also provides IT
consulting and implementation services for the design, setup, management and maintenance of
cross-industry and industry-specific processes.

CHANNELS:
After consolidating its channel sales and marketing groups for all business units IBM has
announced a single channel team to better support its business partner network. The One
Channel Team improves communication with clients who are now given a single point of
contact within the global giant. A single interface platform with increased functionality is also
available through the company’s web portal.

CUSTOMER RELATIONSHIP:

IBM customer relationships are primarily self-service, although as a hardware and software
developer there is a midmarket channel as well as one for larger enterprises. They have a
designated Marketplace on their official web page, which is easy to navigate and can be used
by both individuals and businesses to select the products and services that meet their needs and
requirements.

KEY ACTIVITIES:

IBM focuses on the development and distribution of hardware, software, business consulting
and IT services at enterprise-level. In recent years it has shifted its focus towards capitalizing
on business intelligence, data analytics, business continuity, security, cloud computing,
virtualization and green solutions as well as semiconductor manufacturing.

KEY PARTNERS:

In recent years IBM has struck a number of high-profile partnerships with other global
companies, such as Apple Inc. in mobile enterprise and Twitter for the integration of social
media data and cloud-based analytics. The company has been involved in a lot of mergers and
acquisitions, actively reshaping and changing the structure of its divisions through the
formation of new units to position itself better within a global context.

KEY RESOURCES:

IBM operates numerous research laboratories worldwide that are all bundled under IBM
Research. Major campus installations, science centres and a Linux Technology Centre make
the spine of the company’s development core with a collective working force of 435,000
employees worldwide, making it the second largest US firm in terms of workforce.
COST STRUCTURE:

IBM continuously directs investments into its growth initiatives in order to improve cost
structure. Its main goal is to focus on more profitable services and phase out products and
services that are no longer generating public interest. This has allowed the company to continue
to operate profitably despite seeing a decline in revenues in recent years. It currently combines
an increase in investments in cloud and analytics with leveraging lower-cost talent.IBM’s cost
structure is very much driven by investing into its people and customer acquisition.
Additionally, the shift towards service and app development has resulted in increasingly lower
qualified service employees that are cheaper to retain than skilled resources.

REVENUE STREAMS:

Despite a thirteenth straight decline in sales, IBM continues to invest in cloud technology and
data analytics as strategic imperatives. The company’s software business is responsible for a
big part of the drop in sales while the aforementioned categories contributed $25 billion and
represented 27% of IBM’s total revenue in 2014 alone. IBM investors are reassured with focus
on new growth areas will offset consulting business losses. Under Rometty’s leadership IBM
has shifted focus towards its membership-based cloud and data services, which it markets
through its web platform. With over 1,500 clients that consist of small and medium-sized
businesses worldwide – a significant portion of the company’s earnings are contributed to
service and maintenance fees. IBM’s service packages are currently sold in an annual
subscription format.

ASYN.HOME ASSIGNMENT 3(STRATEGIC PROFILE BUILDING)-

TASK 2
1. CRITICAL RESOURCES:
IBM operates numerous research laboratories worldwide that are all bundled under IBM
Research. Major campus installations, science centres and a Linux Technology Centre make
the spine of the company’s development core with a collective working force of 435,000
employees worldwide, making it the second largest US firm in terms of workforce.

CAPABILITIES OF CRITICAL RESOURCES:

 Global presence

 Brand image/Equity

 Technology

 HRM

 Customer Loyalty
Global presence:

IBM is operating globally across 177 countries. Its global presence is a major capability and a
sign of its success as well.

Brand image & Equity:

Brand image and brand equity that the brand has built are also important capabilities. Based on
its capabilities, the brand has built very high level of trust and that facilitates business success.

Technological capabilities:

Its technological capabilities are at the core of its business. They are also its main source of
competitive advantage and distinguish IBM from the crowd of brands.

HRM & culture:

IBM has maintained heavy focus on HRM and for having managed an excellent business and
organisational culture.

Customer loyalty:

Due to its excellent products and services, IBM has also managed very high level of customer
loyalty.

VRIO FRAMEWORK:
The VRIO Framework or VRIO analysis is a strategic management tool that is used to analyse
a firm’s internal strengths and resources. It helps identify which one of its internal strengths
and resources can be a source of sustained competitive advantage. The analysis is based on the
idea that a firm’s internal resources are a source of sustained competitive advantage if they are
valuable, rare, cannot be imitated by competition, and are organised to capture value for the
organisation. The VRIO analysis requires looking at a firm's resources based on these 4 factors.
Based on the analysis, each resource can either provide a sustained competitive advantage, has
a good competitive advantage, temporary competitive advantage, competitive parity or
competitive disadvantage. A sustained competitive advantage exists when a resource is
valuable, rare, non-imitable and organised. A good competitive advantage occurs if it is
valuable, rare, and non-imitable. A temporary competitive advantage exists if it is valuable and
rare. A competitive parity occurs if it is only valuable. Lastly, the resource is a competitive
disadvantage if it is neither of the 4. The analysis takes place in this order by first assessing
whether a resource is valuable, rare, imitable and organised.
 Resources/capabilities Valuable Rare Inimitable Exploited Implications

Sustained
Culture Yes Yes Yes Yes
Competitive
Advantage
Brand Image/equity Yes Yes Yes Yes Competitive
advantage
Global Presence Yes No No Yes Temporary advantage

Technology Yes Yes Yes Yes Competitive

advantage
Knowledge Yes No No Yes Competitive Parity

HRM & Culture Yes No No Yes Temporary advantage

Customer loyalty Yes No No Yes Temporary advantage

2. VALUE PROPOSITION
IBM has always been characterized by a powerful drive for innovation and development and
these continue to make the larger part of its value propositions. The company actively engages
in research in the fields of nanotechnology and mainframe and personal computers with recent
years seeing it slowly expand into digital data management, cloud services and virtualization.

It offers corporate clients high-value solutions based on its working model of integrating
technology and business model innovation to deliver scalable solutions. IBM also provides IT
consulting and implementation services for the design, setup, management and maintenance of
cross-industry and industry-specific processes.
PRODUCT: IBM WATSON

3. PESTEL ANALYSIS:
IBM’s office building in Bratislava, Slovakia. A PESTEL/PESTLE analysis of IBM reflects
strategic opportunities for expansion and competitiveness based on external factors in the
remote or macro-environment of the information technology industry.
International Business Machines Corporation (IBM) employs organizational capabilities to
continue growing the business, despite challenges based on the opportunities and threats in the
information technology industry’s remote or macro-environment, such as the ones outlined in
this PESTEL/PESTLE analysis of the firm. The PESTEL/PESTLE analysis is a strategic
management instrument that identifies the most significant political, economic, sociocultural,
technological, ecological and legal (PESTEL/PESTLE) external factors relevant to the
company. IBM, also known as Big Blue, succeeds by developing competencies to exploit the
opportunities and overcome the threats based on these external factors. For example, the
company can benefit from growth opportunities in the remote or macro-environment through
the use of high economies of scale, which is one of the business strengths identified in
the SWOT Analysis of IBM. Thus, this external analysis case helps determine the strategic
options for the company. Addressing the external factors increases IBM’s rate of success in
boosting the performance of its global business.

Managers can use the results of this PESTEL/PESTLE analysis of IBM as basis for developing
strategies and programs to strengthen the business. For example, the external factors in the
technological aspect of the external analysis can guide the company’s innovation programs.
The aim should be to maximize stability and growth while protecting the business from threats
in the remote or macro-environment. It is also essential to regularly monitor the external
environment to adjust the company’s strategic planning according to environmental changes.
A holistic approach to the threats and opportunities shown in this PESTEL/PESTLE analysis
can empower IBM in its growth and expansion efforts in the information technology industry.

Political Economical
 Governments’ move for digitization.  Stable economic growth in major
 Political support for e-technologies . markets
 Improving governmental efforts for  Rapid growth of developing markets
data protection.  Rising demand for online products

Social Technological
 Rising purchasing capacities  Technological integration in various
worldwide industries and markets
 Rising use of customer service in  Cybercrime
evaluating product quality and  Expanding global Internet
business quality accessibility
 Increasing use of online services

Legal Environmental
 Improving overall intellectual  Increasing availability of renewable
property protections energy
 Weak legal protection for intellectual  Increasing availability of recycling
property in developing markets programs
 Expanding e-waste regulation  Rising interest for business
sustainability programs
4. SWOT ANALYSIS:

STRENGTH WEAKNESS

High-value brand High-value brand

Expertise in production processes and Imitable products
materials management
Shrinking product mix
Extensive intellectual property portfolio
Low degree of diversification
High economies of scale

OPPORTUNITY THREATS

Business diversification in various

industries Imitation of products

Alliances with firms from different Competition

industries or markets Cybercrime
Rapid innovation of new products

5. COMPETITOR ANALYSIS:

ACCENTURE

Accenture plc. is a multinational professional services company. A Fortune Global 500

company, it reported revenues of $43.2 billion in 2019 and had 492,000 employees, serving
clients in more than 120 countries. In 2015, the company had about 150,000 employees in
India, 48,000 in the US, and 50,000 in the Philippines. Accenture's current clients include 91
of the Fortune Global 100 and more than three-quarters of the Fortune Global 500.

SWOT ANALYSIS

Strengths

 World’s largest consulting firm: In terms of revenue it’s the world’s largest consulting
firm which mainly focuses on IT and business consultancy. It has fantastic business
ethics & uncompromising standards for high performance.
 Strong Clientele: It has a large client base with some top notch companies having
Accenture as their consultants. Nearly 90 out of the fortune top 100 companies & more
than three quarters of fortune global 500 companies have Accenture as a consulting
firm.
 Service Delivery Network: Accenture have global service delivery network with
presence in more than 200 cities, 56 countries & employing 390,000 passionate
employees continuously working to give optimum service delivery to end customers.
  Client Driven processes: Strong business relations & client driven approach by
Accenture helps them in creating industry based, sustainable value for their consulting
partners.
 Continuous improvement: Like Kaizen of Toyota, Accenture is always looking towards
improving its capabilities, hiring better and more talented manpower, thereby matching
their promise to the end customers.
 Diverse capabilities: With its five operating groups namely communications, Media &
technology, financial services, health &public services and product resources it has
created diverse capabilities within its team. Dedicated and trained manpower for each
vertical is what differentiates Accenture from the rest.
 Expertise: With its client base stretching out from health care to automobile to IT
services, Accenture has a lot of experience and the talent behind it to get things done.
Hence, Accenture has become the “specialist” or “experts” across different industries.

Weaknesses

 Lack of coordination: Accenture has 19 business units collaboratively working with the
clients and with each other. This leads to conflicts due to lack of internal coordination.
 Dependency on its consulting business: Although its business is in management
consulting, technology & BPO, but the consulting part forms the major source of
revenue for Accenture. This can be dangerous for the company in the long run because
running such a large operation requires that the firm be ready for bad financial days.

Opportunities

 Expansion of business: By targeting small & mid-sized projects & expanding to other
developing economies (Market development), Accenture can increase its revenue even
more.
 Acquisitions: Accenture recently acquired ‘Gaspo”, an analytics solution provider
based out of Brazil. It also acquired Agilex technologies, which is a digital & IT
services provider for U.S Govt. agencies. Such acquisitions can increase the analytic
strength of Accenture thereby helping it in expansion.
 Focusing on other businesses: More focus on technology & BPO, and making the
revenue equivalent to consulting, can help the firm to penetrate the market even better.
Also, this diversification will provide a cushion during harsh financial times.

Threats

 Competition: Tough competition from IT giants like IBM, Capgemeni, and Infosys is
the area of concern for the company.
 Bad financial times: During the recession period it was tough for the company because
of over dependability on premium clients. The large clients were the first ones which
got affected badly by the financial downturn. And hence the revenue drive to Accenture
dropped badly.
HEWLETT PACKARD

The Hewlett Packard Enterprise Company is an American multinational enterprise information

technology company based in San Jose, California, founded on November 1, 2015 as part of
splitting of the Hewlett-Packard Company. HPE is a business-focused organization with two
divisions: Enterprise Group, which works in servers, storage, networking, consulting and
support, and Financial Services. On October 31, HPE reported FY2019 annual revenue of
$29.135 billion, down 5.57% from the prior year period.
The split was structured so that the former Hewlett-Packard Company would change its name
to HP Inc. and spin off Hewlett Packard Enterprise as a newly created company. HP Inc.
retained the old HP's personal computer and printing business, as well as its stock-price history
and original NYSE ticker symbol for Hewlett-Packard; Enterprise trades under its own ticker
symbol: HPE. According to notes from 2015, HPE's revenue was slightly less than that of HP
Inc. In 2017, it spun off its Enterprise Services business and merged it with Computer Sciences
Corporation to become DXC Technology. It also spun off its software business and merged it
with Micro Focus. HPE ranked No. 107 in the 2018 Fortune 500 list of the largest United States
corporations by total revenue.
SWOT ANALYSIS:
Strength

 Brand Valuation: Hewlett Packard has a fantastic brand equity and its brand valuation
is a whopping 19.3 billion dollars, much ahed then many of the players in the consumer
durable segment. HP ranks 50th amongst the top 100 brands around the world.

 Sector Rank: Hewlett Packard is ranked 10th in the IT industry which has the likes
of Apple, Facebook and Google. This shows the fantastic popularity of Hewlett
Packard.

 Production excellence: HP ships two personal computers and two printers every second.
This shows its dominance in this sector. They hold the second position in the world for
shipping PC equipment. HP had a market share of nearly 20%. In the printer segment,
they hold a market share of 40.5%.

 R&D: They spend highly on research to stay ahead of the technology curve. HP Labs
research is focused on key growth areas that include advancing technologies like
sensing, natural language detection, audio/video analytics, and new information
displays.

 Differentiated products: Over a period of time, Hewlett Packard has produced products
which are differentiated and well advanced as compared to competitors. The latest HP
Spectre is a fantastic piece of equipment for a laptop. Similarly, they have bulk printers
and bulk Xerox machines which are excellent in performance and durability.

 Marketing: A company does not reach this level of brand equity without a smart
investment in marketing. Hewlett Packard is known to be a smart marketer and its ads
are always colourful, showing the capabilities of its printer and giving off an elegance
of its own.
Weakness

 Declining Demand: The demand for printing systems and personal computers have
decreased by 8.3% during FY 2015. Net revenue declined by a 17% in desktop PCs,
2% in notebook PCs, 9% in workstations and 8% in other net revenue. Smartphones are
fast overtaking laptops and Hewlett Packard is far behind the others in Smartphones.

 Weak Financials: they recorded a decrease of 7.3% in revenues compared to FY 2014.

The operating profits also decreased by 23.9% compared to FY 2014.

 After sales service in computers: HP’s laptop and desktops are known to have poor after
sales service especially in emerging countries.

Opportunity

 3D printing: According to estimates 3D printing technologies are expected to take high

growth. The 3D market will reach a value of $30.2 billion by 2022 with a CAGR of
28.5%. Worldwide shipments of 3D printers grew by 103% in 2016.

 Managed Print Services (MPS) Market: The MPS market is forecasted to become $94.9
billion by 2024 from $26.2 billion in 2015 at a CAGR of 14.8%.

 Electronics Market: The performance of electronics market is going to increase with a

CAGR of 2.7% till 2019. The value is expected to become $299 billion by 2019.

Threats

 Product Challenges: The growth of personal computer product line has slowed down.
The printing line also has many competitors and is facing a growth decline.

 Competition: Competition in the personal systems segment are Lenovo, Dell, Acer,
ASUSTeK, Apple, Toshiba, and Samsung and In the printing segment are Canon,
Lexmark, Xerox, Seiko Epson, Ricoh, Samsung and Brother Industries.

CAPGEMINI

Capgemini SE is a French multinational corporation that provides consulting, technology,

professional, and outsourcing services. It is headquartered in Paris, France. Capgemini has over
270,000 employees in over 50 countries, of whom nearly 120,000 are in India.

SWOT ANALYSIS

Strengths

 Technology – The main strength of the company is providing the concrete result for
people who are technology-oriented. It provides the right solutions to bridge IT and
business. It works with diversified technology to meet the business goals.
  Strong presence in Europe – Capgemini has a strong presence in the European
market. This enables the expansion of the right shoe model. Capgemini’srightshore
model has its main focus on cost reduction, business value, and the ability to
outsource IT operations.
 Strong leadership and solid values – Capgemini’s strong leadership and solid values
are the foundation of their business. The company’s core values – boldness,
honesty, freedom, trust, team spirit, modesty, and fun provides the basis of rules of
conduct within the team.
 Responsible Business Practices – Capgemini’s code of ethics is more than the
abstract ideas. It is a formalization of the longstanding commitment
to ethical behaviour that shapes the business practices at each level of the company.
 Employee strength – The Company has about 145,000 employees working in their
organization that has a global presence in about 40 countries.
 Domain expertise – Capgemini has a strong domain experience in the Government,
manufacturing, energy and utilities, financial, and telecom expertise.
 Strong brand portfolio – Capgemini has invested a lot to build a strong
brand portfolio over the years. This is important when it expands to new categories.

Weaknesses

 Dependence on consulting – Capgemini has a high dependence on consulting. It is

not so popular with regards to the service project. Their capacity to deal with the
service project is a little less as compared to its competitors.
 Poor marketing – Even though the product becomes a hit with respect to sales terms,
its position and selling proposition is not defined clearly. This is a major drawback
from its competitors.
 No scope apart from core business – Although Capgemini is a leading organization
in IT segment; it has seen a lot of challenges in moving towards other domain by
having its current culture.

Opportunities

 Business opportunity – As of now, Capgemini plays an important role in today’s

business. Their main domains like networking, cloud computing which is the most
prominent area for growth, see an opportunity for Capgemini to shine.
 Government green drive – The government green drive is a great opportunity for
procurement of the products of Capgemini by the state and federal government
contractors.
 Lower inflation rate – The low inflation rate brings more stability in the market that
enables credit at lower interest rate to the Capgemini’s customers.
 Customers from online – Over the years, Capgemini has invested a huge amount
into the online platform. This has provided a new channel for sales. This helps them
to further grow their business.

Threats

 European market presence – Having a strong presence in the European market is a

big threat as they are undergoing economic disorder. This is a limitation in their
business growth.
  Change of customer behaviour – Change of customer behaviour through the online
channel can be a threat to the existing physical infrastructure driven supply chain
model.
 Regulations – New environment regulations that are imposed in Paris agreement
can affect few existing product categories of Capgemini.
 Shortage of innovative products – Ever since its formation, the company has
developed many products that are often developed by other competitors also. New
innovative products are not regular from the company that leads to high and low
swings in the sales.
 Tough competitive market – The IT market sees many emerging payers which will
focus on low cost value proposition.

TASK 3-STRATEGIC PROFILE BUILDING

IBM FIVE FORCES ANALYSIS

Competitive Rivalry or Competition with IBM (Strong Force)

The degree or intensity of competition is evaluated in this aspect of the Five Forces analysis of
IBM. Competitors impose pressure on the company in terms of market share, pricing, and
profits, among other variables pertinent to the information technology industry environment.
In this case, the strong intensity of competitive rivalry against IBM is based on the following
external factors:

 Moderate degree of differentiation (moderate force)

 High imitation potential (strong force)
 High aggressiveness of firms (strong force)

IBM’s external environment involves moderately differentiated competitors. This considerable

but limited differentiation is evident in the variations in the features of products available in
the information technology industry. For example, some companies offer mainly data-mining
products, while other companies provide mainly transaction-processing products. This external
factor has a moderate contribution to the force of competitive rivalry against IBM. On the other
hand, the high imitation potential is a strong force that enables competitors to offer products
that are highly similar to those of the company. IBM’s generic strategy and intensive growth
strategies involve cost leadership and low emphasis on product uniqueness, leading to the
imitability of the company’s products. In addition, the high aggressiveness of firms further
intensifies the force of competition in the industry environment. This aggressiveness is applied
in marketing campaigns, product development, and other areas of business. Consequently, this
aspect of the Porter’s Five Forces analysis shows that IBM must strengthen its competitive
advantage to deal with the strong force of competition.

Bargaining Power of IBM’s Customers/Buyers (Moderate Force)

The power of customers or buyers to bargain or impose their demands is determined in this
aspect of the Porter’s Five Forces analysis of IBM. Customers are the source of the company’s
revenues, thereby directly affecting the profits and financial standing of the information
technology business. The following external factors contribute to the moderate intensity of the
bargaining power of customers in IBM’s industry environment:
 High number of customers (weak force)
 Moderate size of each order (moderate force)
 Moderate cost of changing (moderate force)

The high number of customers is an external factor that has a weak contribution to the
bargaining power of buyers in the information technology industry. This condition weakens
individual customers’ influence on IBM. However, the moderate size of each order strengthens
customers’ power in the industry environment. For example, a company with nationwide
operations in the food service industry orders thousands of machines from IBM. Such size of
purchase considerably intensifies the bargaining power of buyers. The cost of changing is also
included in this aspect of the external analysis of IBM. Such cost is moderate in the information
technology industry. For instance, even though changing a provider of business machines may
be costly, customers, especially large ones, can still do so to a limited extent. Thus, this aspect
of the Five Forces analysis reveals the moderate significance of customers’ bargaining power
in IBM’s strategic plans.

Bargaining Power of IBM’s Suppliers (Moderate Force)

Suppliers’ impact on IBM’s business and the industry environment is assessed in this aspect of
the Five Forces analysis. Suppliers have leverage in terms of their direct effect on the
company’s supply chain, as well as the quality and price of materials available to the
information technology business. In this external analysis, the following are the intensities of
the external factors that maintain the moderate force of the bargaining power of IBM’s
suppliers:

 High overall supply (weak force)

 Moderate size of individual suppliers (moderate force)
 Low ability to substitute supply (strong force)

The supply chain area of IBM’s operations management is under the influence of the moderate
force of the bargaining power of suppliers. Also, this bargaining power of suppliers is one of
the bases used for supplier-support programs included in IBM’s corporate social responsibility
(CSR) strategy. The high overall supply is an external factor that weakly intensifies this force.
For example, an individual supplier’s change in operations has low impact on the overall supply
level, thereby also having low impact on IBM. On the other hand, the moderate size of
individual suppliers has a correspondingly moderate contribution to supplier power. For
instance, because of the scale of its operations, a global supplier of raw materials for the
manufacture of computing hardware can have a considerable but moderate impact on IBM.
The power of suppliers is also strengthened because of the low ability of the company to
substitute its supply, based on the specific material requirements of the business. Based on this
aspect of the Porter’s Five Forces analysis of IBM, suppliers are a major strategic consideration
in the industry environment.

Threat of Substitutes or Substitution (Moderate Force)

The business performance of IBM is subject to the force of substitutes, as determined in this
aspect of Porter’s Five Forces analysis of the information technology industry environment.
Substitution threatens the company in terms of reduction in revenues. This external analysis
considers the potential of successful substitutes to put established firms out of business. The
 external factors that lead to the moderate intensity of the threat of substitution against IBM are
as follows:

 Moderate cost of changing (moderate force)

 Moderate availability of substitutes (moderate force)
 Moderate perceived level of product differentiation (moderate force)

The moderate cost of changing creates a considerable barrier against customers’ use of
substitutes to IBM’s information technology products. For example, customers may incur some
costs from changing their equipment, but such costs may be within their financial capacities.
In relation, the moderate availability of substitutes is an external factor that has a modest effect
on customers’ tendency to use substitutes instead of IBM’s products. On the other hand, the
moderate perceived level of product differentiation refers to customers’ perception of the
comparative uniqueness of products, including substitutes. This external factor
correspondingly encourages IBM’s customers to consider using substitutes that might have the
features they need. These factors lead to the moderate intensity of the threat of substitution in
the industry environment. Therefore, this aspect of the Porter’s Five Forces analysis of IBM
suggests the significance of substitution in influencing business performance.

Threat of New Entrants or New Entry (Moderate Force)

The effect of new entry on business performance is addressed in this aspect of the Five Forces
analysis of IBM. New entrants or new firms add to the overall level of competition and can
reduce the company’s share in the information technology market. IBM must consider the
following external factors that contribute to the moderate intensity of the threat of new entry in
the industry environment:

 High imitation potential (strong force)

 Moderate cost of changing (moderate force)
 High cost of entry (weak force)

Just as it contributes to the force of competitive rivalry, the external factor of high imitation
potential has a strong contribution to the threat of new entrants in the industry environment.
For example, new entrants could succeed by developing information technology products that
are highly similar to IBM’s. On the other hand, the moderate cost of changing has a
considerable contribution to the intensity of this force. This indicates that IBM’s customers are
moderately likely to use new entrants’ products. However, the high cost of entry, which
pertains to the cost of establishing operations in the industry, weakens the threat of new
entrants. Nonetheless, new entry motivation may remain, based on the technological
integration trend in different industries, as determined in the PESTEL/PESTLE analysis of
IBM. Still, the combination of the external factors in this aspect of the Porter’s Five Forces
analysis leads to the moderate force and significance of the threat of new entrants.

BCG MATRIX OF IBM:

BCG matrix(or growth-share matrix) is a corporate planning tool, which is used to portray
firm’s brand portfolio or SBUs on a quadrant along relative market share axis (horizontal axis)
and speed of market growth (vertical axis) axis.
 The BCG matrix is a strategic management tool that was created by the Boston Consulting
Group, which helps in analysing the position of a strategic business unit and the potential it has
to offer. The matrix consists of 4 classifications that are based on two dimensions. These first
of these dimensions is the industry or market growth. The other of these dimensions is the
relative market share of the strategic business unit. Strategic business units are placed in one
of these 4 classifications. The BCG matrix for IBM will help decide on the strategies that can
be implemented for its strategic business units.Strategic business units with high market growth
rate and high relative market share are called stars. Businesses should invest in their stars and
can implement vertical integration, market penetration, product development, market
development, and horizontal integration strategies. Strategic business units with high market
growth rate and low relative market share are called question marks. These strategic business
units require close considerations whether the business should continue with them or divest.
Strategic business units with low market growth rate but with high relative market share are
called cash cows. The business should invest in these to maintain their relative market share.
Lastly, the strategic business units with low market growth rate and low relative market share
are called dogs. The business should divest these strategic business units.

BCG Matrix of IBM

The BCG Matrix for IBM will help IBM in implementing the business level strategies for its
business units. The analysis will first identify where the strategic business units of IBM fall
within the BCG Matrix for IBM.

RELATIVE MARKET SHARE

M H
A I
R G
K H
E
T

L
S O
H W
A
R
E

LOW HIGH

Stars

 The financial services strategic business unit is a star in the BCG matrix of IBM. It operates
in a market that shows potential in the future. IBM earns a significant amount of its income
 from this SBU. IBM should vertically integrate by acquiring other firms in the supply chain.
This will help it in earning more profits as this Strategic business unit has potential.
 The Number 1 brand Strategic business unit is a star in the BCG matrix of IBM, and this is
also the product that generates the greatest sales amongst its product portfolio. The potential
within this market is also high as consumers are demanding this and similar types of
products. IBM should undergo a product development strategy for this SBU, where it
develops innovative features on this product through research and development. This will
help IBM by attracting more customers and increases its sales.
 The Number 2 brand Strategic business unit is a star in the BCG matrix of IBM as IBM has
a 20% market share in this category. It also the market leader in this category. The overall
category is expected to grow at 5% in the next 5 years, which shows that the market growth
rate is expected to remain high. IBM should use its current products to penetrate the market.
This could be done by improving its distributions that will help in reaching out to untapped
areas. This will help increase the sales of IBM.

Cash Cows

 The supplier management service strategic business unit is a cash cow in the BCG matrix
of IBM. This has been in operation for over decades and has earned IBM a significant
amount in revenue. The market share for IBM is high, but the overall market is declining as
companies manage their supplier themselves rather than outsourcing it. The recommended
strategy for IBM is to stop further investment in this business and keep operating this
strategic business unit as long as its profitable.
 The Number 3 brand strategic business unit is a cash cow in the BCG matrix of IBM. This
is an innovative product that has a market share of 25% in its category. IBM is also the
market leader in this category. The overall category has been declining slowly in the past
few years. IBM has the power to influence the market as well in this category. It should,
therefore, invest in research and development so that the brand could be innovated. This
will help the category grow and will turn this cash cow into a star. The overall benefit would
be an increase in sales of IBM.
 The international food strategic business unit is a cash cow in the BCG matrix for IBM.
This business unit has a high market share of 30% within its category, but people are now
inclined less towards international food. This change in trends has led to a decline in the
growth rate of the market. The recommended strategy for IBM is to invest enough to keep
this strategic business unit under operations. If it no longer remains profitable and turns into
a dog, then IBM should divest this strategic business unit.

Question Marks

 The local foods strategic business unit is a question mark in the BCG matrix for IBM. The
recent trends within the market show that consumers are focusing more towards local foods.
Therefore, this market is showing a high market growth rate. However, IBM has a low
market share in this segment. The recommended strategy for IBM is to invest in research
and development to come up with innovative features. This product development strategy
will ensure that this strategic business unit turns into a cash cow and brings profits for the
company in the future.
 The Number 4 brand strategic business unit is a question mark in the BCG matrix for IBM.
This strategic business unit is a part of a market that is rapidly growing. However, this
strategic business unit has been incurring losses in the past few years. It has also failed in
 the attempts made at innovation by research and development teams. The recommended
strategy for IBM is to divest and prevent any future losses from occurring.
 The confectionery strategic business unit is a question mark in the BCG matrix for IBM.
The confectionery market is an attractive market that is growing over the years. However,
IBM has a low market share in this attractive market. The low sales are as a result of low
reach and poor distribution of IBM in this segment. The recommended strategy for IBM is
to undergo market penetration, where it pushes to make its product present on more outlets.
This will ensure increased sales for IBM and convert this strategic business unit into a cash
cow.

Dogs

 The plastic bags strategic business unit is a dog in the BCG matrix of IBM. This strategic
business unit has been in the loss for the last 5 years. It also operates in a market that is
declining due to greater environmental concerns. The recommended strategy for IBM is to
divest this strategic business unit and minimise its losses.
 The Number 5 brand strategic business unit is a dog in the BCG matrix for IBM. This is
operating in a market segment that is declining in the past 5 years. The company also has
negative profits for this strategic business unit. However, it is expected that the market will
grow in the future with environmental changes that are occurring. The recommended
strategy for IBM is to invest in the business enough to convert into a cash cow. This will
ensure profits for IBM if the market starts growing again in the future.
 The synthetic fibre products strategic business unit is a dog in the BCG matrix of IBM. The
market for such products has been declining, and as a result of this decline, IBM has been
facing a loss in the past 3 years. The market share for it is also less than 5%. The
recommended strategy for IBM is to divest this strategic business unit to minimise any
further losses.
 The artificially flavoured products strategic business unit is a dog in the BCG matrix for
IBM. These products were launched recently, with the prediction that this segment would
grow. However, with increasing health consciousness, people are now refraining from
consumption of artificial flavours. The market is shrinking, and IBM has no significant
market share. The recommended strategy for IBM is to call back this product.

Some of the strategic business units identified in the BCG matrix for IBM have the potential
of changing from their current classification. For example, a dog changing to a cash cow. These
have been identified in the BCG matrix of IBM and recommended strategies to ensure such
change have also been made.
STRATEGIC PROFILE BUILDING-TASK 4

1.FUNCTIONAL LEVEL STRATEGY

Functional level strategies are the actions and goals assigned to various departments that
support the business level strategy and corporate level strategy. These strategies specify the
outcomes business want to see achieved from the daily operations of specific departments (or
functions) of the business.The functional level strategies reflect the fact that corporate and
business objectives typically require the involvement of multiple functional areas (e.g., HR,
production, R&D, etc.). So, continuing with the corporate level strategy of increasing market
share, the functional level strategy would then be:
 HR: increase hiring of highly-trained employees
 Marketing: improve brand identification
 Production: reduce rejections
Once these strategies are set, department managers can devise individual employee
assignments to support the departmental goals.

1. MARKETING STRATEGY OF IBM

1 Marketing Mix of IBM
The marketing-mix model is applied to discuss the Marketing Strategy of IBM.
1.1 Product
This Marketing Strategy element reflects the solution to the customers’ needs. IBM should
develop unique product design, name and features to stand out in the competitive market.
Following factors should be considered to develop the product strategy- quality, variety,
features, packaging, brand name and augmented services.
1.2 Pricing
This Marketing Strategy element requires an evaluation of the value of products for targeted
customers. The pricing strategy of the IBM will focus on setting the list price, credit terms,
payment period and discounts.

 If IBM decides to choose the price penetration strategy, it will have to set the lower price
than competitors. The company will be able to win market share based on discounted
pricing. However, management should be aware of the potential retaliation from
competitors in the form of an undesired price war.
 The choice of skimming strategy will require clear communication of differentiation basis
and how such differentiation justifies the extra price.

Today's customers are not interested in knowing the ‘price' but a total cost involved in
acquiring, consuming and disposing of the product.
1.3 Place/distribution
This Marketing Strategy element requires IBM to make some important decisions when
developing its distribution plan. It should decide:

 Whether the company wants to make the product available to targeted customer segments
through its channels, or it needs a distribution partner to serve the customers' needs.
 Whether the distribution will be direct (involving no middlemen), or indirect. If indirect
distribution strategy is adopted, the number of middlemen must be selected (wholesalers,
retailers etc.)
 Whether it is interested in: traditional brick and mortar distribution network, online
distribution or a combination of both. Certain online retailers like Amazon are available if
online distribution strategy is chosen. The company can also develop its online website to
sell the product.

Modern customers give high importance to the ‘convenience’ and ‘easy availability’. The
selection of ‘right’ distribution channels will require IBM to:
 Firstly, consider the product characteristics. Involving various middlemen to distribute
perishable products will not be a wise decision if the product is perishable.
 Analyse the market dynamics, customers' preferences and own resources and capabilities.
If customers place high importance to personalised services and prefer shopping from
traditional stores rather than online channels and firm also has enough resources to open
their outlets, than distribution strategy should be set accordingly.
 The competitors’ distribution strategies also need to be studied. A comprehensive cost-
benefit analysis of each channel and comparison with own resources and capabilities will
help IBM develop an effective distribution plan.

1.4 Promotion
This is one of the most important elements of IBM Marketing Strategy. IBM can blend above
and below the line promotional strategies to achieve its marketing objectives. The above the
line promotion options for IBM are- television, radio and print advertising. Below the line
promotion options are- catalogues, tradeshows and direct mail campaigns.
The promotional plan of IBM Marketing Strategy requires the company to consider the
following factors:

 Start with clearly defining your unique selling propositions and understand why customers
need the product and how it is different from available alternatives.
 Craft the message content and evaluate how the crafted message will help customers in
creating a clear image of the offered product. Consider the AIDA (awareness, interest,
desire, action) when developing the message.
 The promotional strategies like direct selling or high profile advertising will suit if the
company wants to push the product. However, the pull strategy will require the development
of a prestigious brand image that could attract the customers towards the offered product.
 Collect the following target market information- who will buy the product? (Age, gender,
income and social status), what is price sensitivity level? And what are customers’ desired
communication modes? Incorporate this information into the promotional plan.
 Filter out the promotional options based on the above information and conduct a cost-benefit
analysis of selected promotional alternatives.
 For example, the selection of TV advertising as a promotional strategy will allow the
company to target the mass market, increase brand awareness and brand recall. However,
it is an expensive promotional strategy and suits if the company has adequate resources
available for the promotional efforts.
 The popularity of social media marketing has raised significantly during the last few
years. Use of this promotional strategy will enable IBM to reach the mass market
economically. It will also offer an opportunity to actively interact with customers,
develop a personalised relationship and manage e-WOM to get better results. However,
the risk of uncontrollable negative e-WOM remains there.
 Lastly, consider the budget constraints and allocate budget to chosen promotional strategies
according to their nature, importance and frequency.

2 Customer Analysis of IBM

The development of effective marketing mix strategies depends on IBM’s knowledge of its
potential customer base. The strategies will be more effective if the company understands the
needs, expectations and attitude of its customers. The detailed analysis leads towards the
identification of different customer profiles or segments (as explained in detail in the next
section).
IBM can follow three steps to conduct customer analysis:

 Firstly, IBM should clearly define who current and potential customers are? At this step, a
whole group of customers is identified so that it could be divided into different segments
based on their motivations, traits and characteristics. Identification of potential customers
can be more challenging than current customers.
 The customer analysis should offer information about how the needs and expectations of
different groups differ from each other and what can be possible reasons.
 Lastly, IBM should analyse how it’s offered product/service serves the needs of different
groups and which customer groups have more profit and growth potential. This information
will help IBM develop customer profiles and personas.

IBM consider following factors when developing the customer profiles:

 The customer analysis must identify the total market size including current and potential
customers that could be divided into small measurable segments.
 The customer profiles must have some observable differences.
 The company should also conduct behavioural analysis to identify the psychographic
profiles. It involves identifying and weighing the relative importance of factors considered
when making a purchase decision or more commonly called buying criteria. Common
buying criteria are- prestige, convenience, quality and price.
 IBM can then develop the customer personas. Important elements to be included in
developing customer personas are:
 Demographic information (e.g. gender, family, age, location etc.)
 Preferred communication channels.
 Possible influencers (publications or celebrities they follow)
 Challenges they face due to unserved needs and desired solutions.

The customer analysis and development of segmentation strategies run in parallel. IBM can
use the information obtained from the customer analysis to develop the segmentation, targeting
and positioning strategies as discussed below:
3 Segmentation of IBM
The development of IBM Marketing Strategy requires identifying segmentation basis to
understand the specific buying behaviour of customers. The needs, expectations and buying
behaviour of customers are heterogeneous and depend on multifaceted factors- like:

 Age
 Gender
 Income
 Lifestyle
 Values etc.

By using the segmentation technique, IBM can narrow down the large, diversified target
audience into specific and narrowly defined groups. Market segmentation surveys are common
methods of obtaining the customer-specific information that could be used to create groups
sharing common characteristics.
After understanding the unique buying behaviour of customers and getting the required
information through surveys, IBM can divide the market into small homogeneous groups. It
can be done by exploring the geographic, demographic, behavioural and psychographic
characteristics of customers.
The company can use one or more of these segmentation strategies to choose the right market
segments and develop an effective Marketing Strategy.

 The geographic segmentation divides the market according to geographic areas, like- city,
country and region.
 The demographic segmentation will require IBM to divide market according to
demographic characteristics, like- gender, age, income and ethnicity.
 If IBM chooses behavioural segmentation, then customers will be divided according to their
buying pattern like usage frequency, benefits sought, usage occasions and brand loyalty.
 Use of psychographic segmentation will result in customers' grouping according to their
lifestyles, interests, attitudes, values and traits.

4 Targeting and Positioning of IBM

After dividing the large diversified customer market into smaller groups with homogeneous
characteristics, IBM should wisely choose the target segment/segments whose needs and
expectations match the company’s resources and capabilities.
The targeting can be done by evaluating the commercial attractiveness and growth potential of
identified segments. IBM can choose one or more segments depending on the segments’
characteristics and the company's resources, capabilities and growth objectives.
The commercial attractiveness and growth potential of each segment can be evaluated by using
the following indicators:

 Identified segments have the appropriate size

 Have concrete differences.
 The estimated profits should exceed the additional marketing costs.
 Segments are easily accessible.

After segmenting the customer market and choosing the right target market, IBM now requires
to set a clear positioning statement that could create a positive image of the offered product in
the customers' mind. IBM can follow the following steps to develop an effective positioning
strategy:

 Develop the positioning statement for IBM Marketing Strategy by answering the following
questions:
 What your brand stands for?
 What are the needs and wants of your target market?
 How your brand serves those needs?
 How different is your offering from competitors?
 Answers to these questions will yield enough information to develop a positioning
statement.
 The comparison of their communication and messaging strategy with competitors will
reveal the potential areas that could be addressed with targeted positioning message.
 Identify the strengths/weaknesses of business by comparing with competitors to find that
gaps that offered product can fill.
 Analyse positioning of competitors and evaluate own position in the market.
 By using the analytical data collected from a different market, customer and competitor
surveys, develop a positioning statement and periodically test its effectiveness by collecting
qualitative and quantitative data (like focus groups, polls, interviews etc.).
 Use the test results to make necessary adjustments in the brand positioning.

5 Company Competitive Advantage in the Marketing Strategy of IBM

The survival in the increasingly competitive market requires IBM to set the clear differentiation
basis that could provide an edge against rivals. IBM Marketing Strategy should focus on
identifying unique selling propositions (USPs). Some examples of USPs are the highest quality,
lowest cost or uniqueness of idea. Identifying USPs is not sufficient as the effectiveness of the
Marketing Strategy of IBM will directly depend on management's ability to communicate the
identified unique selling propositions.
The IBM can apply Porter's generic strategies model to explore how competitive advantage
can be created. The pictorial presentation of the Porter Model is given below:
The company can set a competitive advantage based on cost or differentiation.
5.1 Cost based competitive advantage

 The cost leadership strategy will suit if IBM has developed capabilities to reduce the cost
below the industry average and achieve the economies of scale. Moreover, it will require
IBM to develop close collaboration between different functional areas.
 Developing most effective distribution channels, access to latest technological tools to assist
production processes, using lean production methods and strong bargaining position when
negotiating with suppliers are some indicators of setting competitive advantage based on
cost leadership.

5.2 Differentiation based competitive advantage

The differentiation strategy focuses on developing brand loyalty by offering premium products.
The company can find different ways to develop differentiation leadership, such as- by
focusing on the reliability, durability, benefits and distinctive features of products, by
developing strong brand recognition and by increasing expenditure on marketing efforts like
celebrity endorsements and sponsorships etc. IBM can set achieve competitive advantage by
adopting product, service, quality, image, people or innovation differentiation.
5.3 Competitive advantage model
Following the model shows how IBM can develop an effective Marketing Strategy by
evaluating its resources and capabilities, identifying distinctive competencies and leveraging
those competencies by adopting either cost or differentiation orientation:
6. BCG Matrix in the Marketing Strategy of IBM
IBM should continuously evaluate its product line by assessing their growth potential and share
in the market. The products can be classified into the following categories:

 The products with high growth and high market share are classified as stars. IBM should
increase the investment after identifying the stars in its product lines.
 Products with high market growth but low share are classified as question marks. IBM
should analyse why market share is low despite the high growth rate.
 Products with low growth but high market share are cash cows that need to be milked for
continuous good performance in the market with low growth and limited opportunities.
 Lastly, products with low growth and low market share are dogs’ IBM should divest as it is
difficult to make profits and get an adequate return by investing in dogs.

The high number of stars and cash cows will indicate good performance, whereas, a high
number of question marks and dogs will be a cause of concern for IBM. The product
classification is necessary for evaluating the success of the Marketing Strategy of IBM.
7. Market Analysis of IBM
IBM Marketing Strategy development requires a comprehensive market analysis. It can be
done by quantitatively and qualitatively assessing the customer market. The information
obtained from the market surveys will help IBM management in identifying the emerging
opportunities, exposing the potential threats and understanding how they relate to the
company’s major strengths and weaknesses.
IBM can follow the following steps to conduct the market analysis:
7.1 Market size analysis for developing Marketing Strategy of IBM
IBM should evaluate the market potential and volume to determine the size. The market
potential includes potential customers and considers upper demand limit. The market volume
includes certain indicators like realised sales and total turnover. IBM can take information from
different sources to accurately determine the market size, such as- financial data of industry’s
major players, government data, customer surveys, published industry reports and trade
association data.
7.2 Market trends analysis for developing Marketing Strategy of IBM
It is important to analyse the emerging market trends, particularly when environmental
turbulence is high. IBM can use different trend analysis techniques for this purpose, such as-
marketing mix modelling, risk analysis, choice modelling and customer analysis. IBM should
also monitor the political, legal, regulatory, social and economic changes as these
environmental forces play an important role in shaping the market trends.
7.3 Market growth analysis for developing Marketing Strategy of IBM
IBM can extrapolate the historical data to determine the market growth rate. This information
can help a company in determining the current lifecycle stage of the industry.
7.4 Market profitability analysis for developing Marketing Strategy of IBM
IBM can use Porter's five force framework to determine market profitability. The high buyer
power will negatively affect market profitability, showing IBM’s customers have different
options. Low supplier power positively influences profitability and indicates IBM has a strong
position during the negotiation process with suppliers. High entry barriers show that there will
be lesser new entrants in the market. High substitute product threat and high competitive rivalry
will also decrease the market profitability and attractiveness for IBM.
7.5 Cost structure analysis for developing Marketing Strategy of IBM
IBM can use Porter’s value chain model (as given below) to determine the industry’s cost
structure.
It will help IBM in isolating the costs and identifying critical success factors. IBM can also use
the information obtained from cost structure analysis to develop cost advantage.
HUMAN RESOURCE STRATEGY

IBM is a multinational corporation. It is operational in all the continents of the world. Thus, in
the course of its operations, the company normally meets with customers and clients who come
from different cultures and backgrounds. In most cases, the expectations, tastes, and
preferences of these people will normally vary.

In the course of operations of an organization, it is evident that talent and human capital are
vital to its long run success. IBM is one of the few companies that have realised this and to
have a competitive edge over their rivals, the company has developed a strong team that not
only comes up with effective and efficient products and services to its clients but they also
possess the expertise and deliver practical solutions to their clients.

To achieve this advantage, IBM has come up with strategic measures that impart necessary
knowledge and skills to its vast workforce. Motivation and strategic deployment have also been
put in place. These are but some of the human resource management strategies that have been
put in place to ensure that the talent of its workforce is natured and developed.

However, to ensure that IBMs operations are effective in the different regions of the globe, the
company has adopted the IHRM strategy. IHRM can be defined as a management strategy that
focuses on a wide array of functions, processes and activities that operates on more than one
nation. It is the strategy that is used in the management of human resources at a global level.
The following approaches can be used with regards to IHRM:

I. Ethnocentric approach – Home country approach

II. Polycentric approach – Local approach
III. Regiocentric approach – Regional approach
IV. Geocentric approach – Global approach

With respect to this, a firm has the option of recruiting the following kinds of employees:

I. Parent country nationals (PCNs)

II. Host country nationals (HCNs)
III. Third country nationals (HCNs)

IBM has been using the IHRM concept due to its global operations. To ensure that its
operations are effective and efficient, the company has adopted the geocentric approach. Here,
the most qualified personnel are chosen to hold specific positions within the organization.
However, due to the fact that different clients from different regions have different needs, IBM
has come up with a concept of deploying HCNs on subsidiary offices while PCNs and TCNs
are located at the headquarters. This ensured that the products and services offered by the
company meets the expectations, needs and preferences of their clients from different regions
in the world. ‘

IBM has also appreciated the ideology of corporate social responsibility. The main aim of IBM
is to make the world a better place through technology and innovation. Thus, to achieve this,
IBM is always involved in programs that aim at improving communities. IBM has been
investing in local secondary schools to improve the quality of education and creating
technological awareness and e learning. In addition, the company has been offering over 3,500
internship positions annually to nature and develop the talent of the youths.

IBM is also gender sensitive and ensures that women are part of its workforce. As of 2011,
18% of its workforce comprised of women. This figure is expected to increase in the coming
years. Finally, IBM has been facilitating a number of projects and has facilitated open door
policies to ensure that the views and ideas of its employees and stakeholders are adhered to and
implemented in order to ensure that the company has a competitive edge over its rivals and is
sustainable in the short run and in the long run.

2. BUSINESS LEVEL STRATEGY OF IBM

1. Differentiation Strategy:

 The adoption of differentiation as a secondary generic strategy allows IBM to expand the
customer base by emphasizing over the unique product features.
 IBM's strategic objective of using this strategy is to differentiate by embedding the
innovation and address the consumers’ growing health concerns. For example, IBM has
extended its product line after studying the consumers’ changing interests to differentiate
itself from competitors and expand the scope of opportunities within the industry. The
combination of the differentiation and cost leadership has helped IBM build a strong and
loyal customer base.
 Through differentiation generic strategy, IBM positions its product offerings in a way to
stand out and be different from the available alternatives. Being the experienced brand with
strong foothold, the company uses differentiation as a tool to reduce the pressure by other
brands. Heavy investment in marketing, advertisement and celebrity endorsement is made
just to differentiate the IBM from other brands.
 Extensive experience, the oldest brand and strong presence in all over the world are some
differentiation factors that are highlighted in the company's marketing and communication
strategies.
 Other than these, the brand logo is also used to set the differentiation basis. The unique and
distinctive brand logo has established a strong brand image in consumers’ mind. Although
the brand has undergone many revisions, the essence has remained the same, which also
serves as a strong differentiating factor.
2. Cost Leadership Strategy

IBM's generic strategy for competitive advantage is cost leadership. This strategy entails
maintaining low costs in business processes, so as to establish competitive pricing or to
maximize profit margins. Because of its large-scale operations, the company is capable of
minimizing costs in providing cloud platform products and technology services. In relation, as
a cost leader, IBM can implement competitive pricing for these products and services. In
addition, the cost leadership generic strategy supports competitive advantage through expertise
in production processes and materials management. In this case, IBM’s more than 100 years
of business experience equates to expertise and high efficiencies in various processes in
developing, producing and providing information technologies and related services. The cost
leadership generic competitive strategy leads to the strategic objective of expanding the scale
of business processes to further enhance economies of scale that strengthens IBM’s information
technology business. For example, the company must invest more in expanding software
development mechanisms to increase the cost effectiveness of developing new solutions for
customers. Another strategic objective based on this generic competitive strategy is to invest
more in research and development (R&D) to boost IBM’s competitiveness based on product
value. This generic strategy contributes to the foundation used for the company’s intensive
growth strategies that support competitive advantage.

3. Focus Strategy:

 IBM adopts the focus strategy both in terms of low cost and offering the best value. The
low-cost focus strategy is adopted by serving the needs of a niche market segment at the
lowest possible price. While, best value focus strategy is adopted by emphasizing over the
taste, size and design of the product that could best match the customers’ needs and
requirements.
 By focusing on product attributes, IBM revises its branding strategies and brings continuous
changes in the product designing and packaging to satisfy the customers’ psychological
expectations and maximize value for money.

3.BUSINESS LEVEL STRATEGIES OF HP

1. Cost Leadership Strategy:

 The primary objective of using this strategy is to preserve the market leadership position
through efficient value chain management.
 This strategy allows HP to expand the market share by targeting the middle class, which
makes the largest proportion of overall consumer market mix in most of the countries.
Middle class consumers generally place high importance to the pricing factor and cost
leadership is the best strategy to cater the needs of this consumer segment.
 HP focuses on affordability and easy accessibility of its produce across the globe, which
leads towards high brand awareness and high sales growth and provides a strong
competitive advantage basis.
 Other than charging low prices by lowering production cost and maximizing supply chain
efficiency, HP frequently offers discounts and coupons to achieve sales targets and handle
the competitive pressure by its closest rival. The intended outcome of these discount and
promotional campaigns is to increase brand popularity and encourage consumption.
2.Differentiation Strategy:

 The adoption of differentiation as a secondary generic strategy allows HP to expand the

customer base by emphasizing over the unique product features.
 HP's strategic objective of using this strategy is to differentiate by embedding the innovation
and address the consumers’ growing health concerns. For example, HP has extended its
product line after studying the consumers’ changing interests to differentiate itself from
competitors and expand the scope of opportunities within the industry. The combination of
the differentiation and cost leadership has helped HP build a strong and loyal customer base.
 Through differentiation generic strategy, HP positions its product offerings in a way to stand
out and be different from the available alternatives. Being the experienced brand with strong
foothold, the company uses differentiation as a tool to reduce the pressure by other brands.
Heavy investment in marketing, advertisement and celebrity endorsement is made just to
differentiate the HP from other brands.
 Extensive experience, the oldest brand and strong presence in all over the world are some
differentiation factors that are highlighted in the company's marketing and communication
strategies.
 Other than these, the brand logo is also used to set the differentiation basis. The unique and
distinctive brand logo has established a strong brand image in consumers’ mind. Although
the brand has undergone many revisions, the essence has remained the same, which also
serves as a strong differentiating factor.

3.Focus strategy:

 HP adopts the focus strategy both in terms of low cost and offering the best value. The low-
cost focus strategy is adopted by serving the needs of a niche market segment at the lowest
possible price. While, best value focus strategy is adopted by emphasizing over the taste,
size and design of the product that could best match the customers’ needs and requirements.
 By focusing on product attributes, HP revises its branding strategies and brings continuous
changes in the product designing and packaging to satisfy the customers’ psychological
expectations and maximize value for money.

CONCLUSION

Based on the analysis of the business-level strategies of the two companies, IBM is most likely
to remain successful in the long-term as compared to HP. This is because of economic crisis,
most global corporations, which rely on competitive advantage like Hp are likely to be affected
due to the confirmed fragile economic system. Due to the economic crisis, it has become clear
that cost advantage or product differentiation is not a sufficient competitive advantage for the
current business order. The culture followed in IBM is great when compared to HP and they
are keep growing. IBM embraces differentiation strategy in order to remain unique in the
market and separated from its competitors as one of its business-level strategies. In this case it
embraces both product and service differentiation strategies. Production of new products for
new markets and globalization are some of IBM’s key corporate strategies.
 STRATEGIC PROFILE BUILDING-TASK 5

COOPERATE LEVEL STRATEGY OF IBM:

Diversification Strategy:

 The IBM's portfolio diversification is supported by its cost leadership generic growth
strategy as cost minimization ability, and existing infrastructure makes it possible for the
organization to explore new product opportunities in new markets.
 The strategic objective linked with diversification intensive growth strategy is to expand the
portfolio through effective acquisition strategies. Due to risk factors, the company focuses
on the related diversification and avoids risky experiences into unknown regions. Rather,
the company utilizes the brand awareness and strength to launch related products in the
global drink industry. However, some examples of IBM’s unrelated diversification are
offering merchandise from fridges, shirts, glasses to pens.
 The related diversification strategy is applied by acquiring profitable businesses after
analyzing market trends and changing customer expectations. For example, in response to
the growing criticism by environment protection groups, the company attempted to offset
the loss from declining sales by investing in green business practices and making business
partners with the positive brand image.
 Strategically wise application of the related diversification growth strategy enhances
business sustainability and helps the organization achieve long-term growth objectives
despite high market turbulence. A well-managed product portfolio with related
diversification also offers risk hedging ability as declining trends in some product areas can
be balanced by emerging trends in related product areas.

Growth Strategy:

 IBM uses market development as a growth strategy that supports market penetration and
product development. The organization has extensively applied this strategy, and as a result,
it is currently present in more than Competitor countries. The successful entry in new
consumer markets has played a key role in making IBM a global brand. Main reasons behind
the worldwide presence are- affordable prices, strong brand name and flavor. Besides these
factors, the successful marketing and celebrity endorsed promotional campaigns have also
helped IBM in capturing new customers and becoming the market leader in many countries.
 Through on-going investment in research and development, the company continuously
expands the distribution network to reach every corner of the world, particularly in
developing countries where the presence is currently weak. However, a company is already
entered in most of the markets all over the world; market development now only acts as a
supporting strategy and has secondary importance.
 The IBM’s strategic objective of applying this strategy is to expand the value chain so that
it could support the distribution network growth. IBM's ability to minimize the costs and
attain the cost leadership position allows the organization to apply this intensive growth
strategy successfully. The cost minimization supports the additional investment made by
the IBM to enter in new consumer markets.
 Multinational firms like IBM have four ways available to apply this intensive growth
strategy- developing new distribution channels, creating new market segments by charging
varying prices, developing new product dimensions or considering new geographic areas.
The geographic expansion requires substantial resource commitment, and it is also
 necessary for an organization to evaluate whether current distribution network and other
resources support the decision to enter in that particular geographic region. Entry in
culturally distant markets is riskier as it requires an organization to be culturally intelligent
and built effective knowledge management mechanisms.
 IBM understands the importance of understanding culture and integrating local norms and
values in marketing campaigns when entering new geographic regions. High cultural
intelligence has helped IBM gain acceptance in culturally diversified consumer markets.
The effective application of this strategy also requires companies to conduct detailed
competitor and market intelligence. Well researched operational, financial and market data
is needed to make right market entry decisions. However, applying this strategy involves
the risk of alienating existing customers.

. Product Development Strategy:

 IBM has considerably extended its product line, and its product array has become too broad.
It allows the company to hedge the risks as it can compensate the losses incurred from one
product line with the gains received from others. Currently, the organization has more than
Competitor product brands being served all over the world. Product development is an
important tool to attract more customers.
 The strategic objective linked with using this intensive growth strategy is to increase the
research and development investments for innovation and new product development. IBM’s
ability to use the differentiation generic growth strategy supports the product development
process and enhances an organization's ability to offer novel or new products to achieve
growth in existing consumer markets.
 Cost leadership strategy used by IBM also supports this intensive growth strategy as it
allows the organization to minimize the costs and use existing infrastructure to launch new
products. Although the company can use the same resources to extend the product lines,
successful new product development requires IBM to emphasize research and development
and use new technologies required to pursue this strategy.
 In terms of new product development, three main approaches are available to IBM.
 First is to offer new products that share a close association with current product lines.
 Second, to offer new products that resonate the purchase behavior of current customers.
 The third strategy is to develop new products that refresh or reinvent current products.
IBM manages to successfully introduce new products through on-going assessment of
customers' needs.

Market Penetration Strategy:

 Adoption of this strategy requires IBM to lower the prices and use different marketing and
promotional strategies to push the sales in the existing customer market. The organization
offers various price discounts and deals, frequently runs the promotional campaigns and
offers the product in new attractive packages to achieve sales growth target while staying in
the same market. Aggressive marketing tactics are required when using this strategy in a
competitive consumer market.
 IBM’s strategic objective associated with market penetration strategy is to increase sales by
lowering the prices through cost leadership. A correlation between low cost and low price
leadership is assumed in this case. Another way to achieve this growth objective is to
integrate the innovation for setting clear differentiation basis. It helps IBM in expanding the
customer base despite the market becomes saturated. However, it is also important to note
 that market penetration becomes increasingly costly when a market reaches its saturation
point. In that case, investment in different marketing and promotional activities brings a low
return, which encourages the company to consider other intensive growth strategies.
 The adoption of market penetration as a primary intensive growth strategy is linked with
IBM’s ability to differentiate its offerings besides attaining the cost leadership. The
combination of cost and differentiation of generic strategies supports this intensive growth
strategy. During the initial growth time period, market penetration strategy played an
important role in making the IBM successful in its home market. Later, recognition at the
national level was used to target new markets all over the world. The brand awareness
gained through high market penetration was also used as a tool to offer new products to
existing and new consumer markets.

Retrenchment Strategy:

The manufacturing sector of IBM Power Systems moved from its Tampines plant in Singapore
to IBM Guadalajara, Mexico, the tech major had confirmed that the manufacturing of IBM Z
is moved from Singapore to Poughkeepsie, New York, USA.This mission transfer was part of
IBM's continual review of the most efficient way to source our products."IBM laid off lot of
workers by providing "an equitable separation package" to impacted employees. This is one
form of retrenchment strategy followed by IBM.

COOPERATE LEVEL STRATEGY OF HP

The overall corporate strategy of HP is to continue to offer high quality products and services
in the information technology sector. Meanwhile, HP is trying to align all the other departments
of the company such as R&D to coincide with the strategy. In the last year, HP has focused on
moving that strategy to the international scene. They have created several jobs with the recent
expansion of the R&D department to Ireland. The constant expansion of HP overseas shows
that the company is committed to the customers growing and changing needs in a new complex
global environment.

Diversification Strategy:

 The HP's portfolio diversification is supported by its cost leadership generic growth strategy
as cost minimization ability, and existing infrastructure makes it possible for the
organization to explore new product opportunities in new markets.
 The strategic objective linked with diversification intensive growth strategy is to expand the
portfolio through effective acquisition strategies. Due to risk factors, the company focuses
on the related diversification and avoids risky experiences into unknown regions. Rather,
the company utilizes the brand awareness and strength to launch related products in the
global drink industry. However, some examples of HP’s unrelated diversification are
offering merchandise from fridges, shirts, glasses to pens.
 The related diversification strategy is applied by acquiring profitable businesses after
analysing market trends and changing customer expectations. For example, in response to
the growing criticism by environment protection groups, the company attempted to offset
the loss from declining sales by investing in green business practices and making business
partners with the positive brand image.
 Strategically wise application of the related diversification growth strategy enhances
business sustainability and helps the organization achieve long-term growth objectives
 despite high market turbulence. A well-managed product portfolio with related
diversification also offers risk hedging ability as declining trends in some product areas can
be balanced by emerging trends in related product area.

.Market Penetration Strategy:

 Adoption of this strategy requires HP to lower the prices and use different marketing and
promotional strategies to push the sales in the existing customer market. The organization
offers various price discounts and deals, frequently runs the promotional campaigns and
offers the product in new attractive packages to achieve sales growth target while staying in
the same market. Aggressive marketing tactics are required when using this strategy in a
competitive consumer market.
 HP’s strategic objective associated with market penetration strategy is to increase sales by
lowering the prices through cost leadership. A correlation between low cost and low price
leadership is assumed in this case. Another way to achieve this growth objective is to
integrate the innovation for setting clear differentiation basis. It helps HP in expanding the
customer base despite the market becomes saturated. However, it is also important to note
that market penetration becomes increasingly costly when a market reaches its saturation
point. In that case, investment in different marketing and promotional activities brings a low
return, which encourages the company to consider other intensive growth strategies.
 The adoption of market penetration as a primary intensive growth strategy is linked with
HP’s ability to differentiate its offerings besides attaining the cost leadership. The
combination of cost and differentiation of generic strategies supports this intensive growth
strategy. During the initial growth time period, market penetration strategy played an
important role in making the HP successful in its home market. Later, recognition at the
national level was used to target new markets all over the world. The brand awareness
gained through high market penetration was also used as a tool to offer new products to
existing and new consumer markets.

STRATEGIC PROFILE BUILDING-TASK 6

IBM’s Organizational Structure Type and Characteristics

IBM has a product-type divisional organizational structure. The main characteristic of this type
of organizational structure is the representation of business processes involved in managing the
development, production, distribution and sale of products. For example, product-type
divisions are a primary structural feature that determines how the business addresses
opportunities in the information technology market. Thus, the company’s corporate structure
supports strategies and tactics that push for competitive products. The following characteristics
define IBM’s corporate structure:

 Product-type divisions
 Function-based segments
 Geographical divisions

Product-Type Divisions: These product-type divisions in the organizational structure

represent the core business offerings of IBM. These divisions are recognized as reportable
segments in the company’s annual filings with the U.S. Securities and Exchange Commission.
This primary structural attribute is based on efforts to focus on the firm’s core businesses that
match the transformation of the industry and market. For example, through the Technology
Services & Cloud Platforms division, the company addresses an increasing market demand for
cloud-based solutions. IBM’s corporate structure has the following product-type divisions:

 Cognitive Solutions
 Global Business Services
 Technology Services & Cloud Platforms
 Systems
 Global Financing

Function-Based Segments: This secondary characteristic of IBM’s organizational

structure focuses on key functions that support the global information technology business.
The main objective of having this structural feature is to provide organization-wide support
for each of the product-type divisions. For example, in terms of sales and distribution, the
company’s Global Markets segment supports all of the product-type divisions. These
segments are officially called IBM Worldwide Organizations. The Research, Development
and Intellectual Property division contributes to the company’s competitiveness despite
significant competition from other technology firms (Read: Porter’s Five Forces Analysis
of IBM). For instance, significant R&D investment in the division ensures that the company
continues developing and offering competitive products in the global market. The following
are the function-based segments in IBM’s corporate structure:

 Global Markets (formerly Sales and Distribution)

 Research, Development and Intellectual Property
 Integrated Supply Chain

Geographical Divisions: This characteristic of IBM’s corporate structure is based on the

need to effectively manage the global business despite differences among regional markets.
For example, the company has a geographic division to address the market issues specific
to the Asia Pacific region. This structural element also provides support for strategies and
tactics in implementing IBM’s marketing mix or 4Ps in different regional markets for
information technology products. Thus, geographical divisions facilitate effective business
management despite the complexity of market-based variables. IBM’s organizational
structure has the following geographical divisions:

 Americas
 Europe/Middle East/Africa
 Asia Pacific

IBM’s Organizational Structure: Advantages & Disadvantages, Recommendations

A major advantage of IBM’s organizational structure is its alignment with the company’s
aims for continued business growth based on innovation. For example, the corporate
structure enables the business to prioritize efforts to develop products that match market
demand and emerging trends in the information technology industry. Such efforts are
aligned with IBM’s generic strategy and intensive growth strategies. Another advantage of
the organizational structure is the integrative effects of the function-based segments on the
company’s global operations. For instance, in spite of the priorities for product
management, the structural characteristic of function-based segments ensures organization-
wide support for all of these segments, with consideration for IBM’s corporate goals.

A disadvantage of IBM’s corporate structure is its limitation in addressing imitation in the

global market for information technologies. In using a cost-leadership strategy with minimal
emphasis on product uniqueness, the company’s advanced and high-quality technological
products are imitable. This threat is identified in the SWOT analysis of IBM. Another
disadvantage is the organizational structure’s limited support for diversification.
Diversification is seen as a potential growth factor for the company, especially because of
the rapid and radical technological advances happening in different industries and markets.
A more integrated and organization-wide structure could address this issue. For example,
additional structural elements that support universal strategic positions can promote
managerial and corporate decisions that could lead to diversification and related growth.
Thus, in summary, the following are the recommendations to improve IBM’s corporate
structure:

 Shift the structure to one based on function-type groups to further emphasize

research and development efforts that address the threat of imitation.
 Create a new structural division that addresses opportunities for diversification
based on the trend of technological integration in various industries and markets.
 Split current geographical divisions into multiple smaller ones to account for
significant differences among regional markets, such as differences between the
European market and the market in the Middle East.
IBM LEADERSHIP:

 Virginia M. (Ginni) Rometty-Executive Chairman

 Arvind Krishna-Chief Executive Officer
 Jim Whitehurst-President
 Howard Boville-Senior Vice President, IBM Hybrid Cloud
 Michelle H. Browdy-Senior Vice President, Legal and Regulatory Affairs, and General
Counsel
 Mark Foster-Senior Vice President, IBM Services
 Diane Gherson-Senior Vice President, IBM
 Dr. Dario Gil-Director of IBM Research
 John Granger-Senior Vice President, Cloud Application Innovation and COO, IBM
Global Business Services
 Martin Jetter-Senior Vice President and Chairman, IBM Europe
 James J. Kavanaugh-Senior Vice President and Chief Financial Officer
 Dr. John E. Kelly III-Executive Vice President
 Nickle LaMoreaux-Senior Vice President and Chief Human Resources Officer,IBM
 Bob Lord-Senior Vice President, Cognitive Applications, Blockchain and Ecosystems,
IBM
 Obed Louissaint-Senior Vice President, Transformation and Culture, IBM
 Christina Montgomery-Vice President and Chief Privacy Officer
 Michelle Peluso-Senior Vice President, Digital Sales and Chief Marketing Officer
 Fletcher Previn-Chief Information Officer, IBM Corporation
 Tom Rosamilia-Senior Vice President, IBM Systems Chairman, North America
 Rob Thomas-Senior Vice President, IBM Cloud and Data Platform
  Bridget van Kralingen-Senior Vice President, Global Markets
 Juan Zufiria-Senior Vice President, IBM Global Technology Services

IBM’s Core Value:

IBM's core values have remained consistent and are embedded in all our citizenship
activities.
Guiding principles:
 Dedication to every client's success.
 Innovation that matters, for our company and for the world.
 Trust and personal responsibility in all relationships.

IBM’s Organizational Culture Type and Characteristics:

IBM has an organizational culture of THINK. This type of organizational culture is based
on Thomas J. Watson Sr.’s efforts to integrate the company, which was originally known as
the Computing-Tabulating-Recording Company (CTR), formed from the amalgamation of four
companies. Watson’s goal was to unify the whole organization and ensure its long-term
success. His efforts created the foundation for IBM’s current corporate culture of think. The
cultural characteristics have been formally redefined based on the results of the 2003
ValuesJam, which was the company’s way of establishing key values through the participation
of employees. At present, the following elements are most notable in IBM’s corporate culture:

1. Radical thinking
2. Dedication to every client’s success
3. Innovation that matters
4. Trust and personal responsibility in all relationships
Radical Thinking. Radical thinking is the primary and most defining characteristic of IBM’s
organizational culture. This cultural trait continues as a major influence in the company’s
development through its more than 100 years of operations in the information technology
industry. IBM managers encourage employees to engage in thinking that has potential to
disrupt the status quo and deviate from traditional ways in the business. In this way, the
corporate culture promotes creative and innovative thinking that leads to technological
breakthroughs. For example, based on contributions from radical-thinking employees, the
company introduced the IBM System/360, which was the first easily upgradable computing
system family for customers, especially businesses. Such technological breakthrough
reflects IBM’s vision statement and mission statement.

Dedication to Every Client’s Success. This feature of the organizational culture focuses on
client’s needs, which guide employees’ decisions for business development. In relation, IBM
aims to maintain high quality customer service to address the needs of the information
technology business. This cultural feature indicates the importance of customer relations in
determining business success. The concern on customer service quality is a sociocultural
external factor relevant in the industry, as identified in the PESTEL/PESTLE analysis of IBM.
For example, customers are more likely to develop a favorable perspective of and response to
the company, based on product effectiveness and quality of service. Thus, this characteristic of
IBM’s corporate culture supports business goals for customer loyalty and a growing and stable
share of the market.

Innovation that Matters – for Our Company and for the World. The emphasis of this
feature of the corporate culture is on addressing market demand through product development,
which is one of the company’s intensive strategies for growth and competitive advantage
(Read: IBM’s Generic Strategy and Intensive Growth Strategies). To ensure that innovation
matters, this cultural attribute points to excellence as a key success factor in the information
technology business. For example, excellent computer systems provide long-term benefit to
customers in terms of solving their business problems. Thus, the organizational culture
contributes to the value of the company’s brand, which is one of the business strengths
identifiable in the SWOT analysis of IBM.

Trust and Personal Responsibility in All Relationships. This cultural characteristic

promotes trust, personal responsibility and respect for the individual. These factors affect
relationships that involve IBM employees, business partners, suppliers, and others. Through
this element of the organizational culture, the company expects benefits to the business. For
example, such trust and respect lead to positive relationships that support high employee
morale and stronger alliances with business partners. In this regard, IBM’s corporate culture
contributes to business resilience despite challenges linked to competition in the information
technology industry.

IBM’s Organizational Culture: Advantages & Disadvantages, Recommendations

IBM’s organizational culture has the advantage of motivating employees to creatively approach
problems and challenges. Such creativity, based on radical thinking, is a key success factor in
the information technology business. Another advantage of IBM’s corporate culture is its
emphasis on personal responsibility, which increases organizational competence in solving
problems at all levels of the business. For example, based on this cultural characteristic,
individual employees are encouraged to take responsibility in reasonably addressing solvable
 problems encountered in their jobs. Thus, IBM’s organizational culture contributes to business
growth.

The disadvantage of limited support for business process flexibility is considerable in IBM’s
corporate culture. This issue is based on the company’s focus on innovation and excellence.
Employees have actual flexibility in their jobs, but this flexibility is not necessarily directly
translated to the flexibility of business processes involving employees. Another disadvantage
of IBM’s organizational culture is the lack of formal support for self-checking and self-
correction of groups and departments in the company. For example, the company does not
provide formally established institutional and cultural support for department or teams to
become more effective in addressing mistakes linked to challenges in the information
technology industry. The following recommendations are applicable in efforts to improve
IBM’s corporate culture:

1. Implement a cultural trait that increases the flexibility of business processes.

2. Integrate self-checking and self-correction in the cultural trait of trust and personal
responsibility in all relationships.

IBM ETHICS:

IBM is committed to principles of business ethics and lawful conduct. It is IBM's policy to
conduct itself ethically and lawfully in all matters and to maintain IBM's high standards of
business integrity.
Employees must at all times comply with IBM's business conduct and related guidelines.
Violation of any IBM guideline is cause for discipline, including dismissal from the company.
Employees should consult their management immediately if they have any question whether
their actions could violate an IBM guideline.
Furthermore, it is IBM's practice to voluntarily and promptly disclose known violations of
government procurement laws to appropriate officials of government. In the event that IBM
benefited economically from such known violations, it is our practice to reimburse the
government customer accordingly. IBM employees should immediately make known to
appropriate levels of management, either directly or through the Open Door or Speak-Up
programs, any and all allegations of violations in connection with any government contract.
The Senior Vice President and General Counsel is responsible for providing specific
instructions regarding business conduct and ethics and, as appropriate, directing periodic
reviews, including business conduct guideline certification programs, to ensure compliance.
Each operating unit or subsidiary is responsible for implementing such instructions, including
administering certification programs.

IBM’S CORPORATE SOCIAL RESPONSIBILITY STRATEGY &

STAKEHOLDERS
An IBM 7070 data processing system, which was introduced in 1958. International Business
Machines Corporation (IBM) has a corporate social responsibility (CSR) strategy that
holistically considers the interests of stakeholders in the information technology business.
International Business Machines Corporation (IBM) actively engages its stakeholders and their
interests through a holistic corporate social responsibility (CSR) strategy. Archie B. Carroll’s
theory of corporate responsibility establishes the mutual significant influence between
businesses and stakeholders. Stakeholders are individuals or groups that have interests in the
 business or its effects. IBM’s case involves emphasis on sustainability and related initiatives
to ensure that the information technology business gradually reduces its impact on the natural
environment. Also, Big Blue works on its corporate citizenship by supporting enhancements
in its supply chain. For example, the company implements its standards to influence its
suppliers into enhancing their corresponding CSR activities. As a major firm in the global
market, IBM has significant influence on its stakeholders. It is essential that the company take
steps to address its corporate responsibilities to help lead other organizations in various
industries and markets. Such leadership is reflected in IBM’s corporate social responsibility
strategy.

Customers can gauge IBM’s attractiveness as an information technology business, based on its
corporate social responsibility standing. For example, the company’s corporate responsibility
initiatives for employees represent an aspect of this CSR standing. Business sustainability
efforts also represent the company’s status as a corporate citizen. Ideally, IBM’s corporate
social responsibility programs should address the interests of all major stakeholder groups. The
quality and effectiveness of such programs and initiatives are a reflection of the company’s
long-term approach to strengthen the business and improve its brand image through stakeholder
fulfillment.

IBM’s Stakeholder Groups & CSR Initiatives

As a global information technology company, IBM has many stakeholders in various areas of
society. These stakeholders have interests in the different aspects of the business, thereby
requiring a multi-pronged corporate social responsibility strategy. For example, the company’s
CSR strategy must include initiatives for investors as well as programs for the environment,
such as sustainability programs. In aiming for corporate citizenship, IBM addresses its
corporate responsibilities to the following stakeholders:

1. Environment (most significant)

2. Communities
3. Suppliers
4. Investors
5. Employees

Environment. IBM considers the environment as its most significant stakeholder. Such
significance is based on the dependence of the supply chain on resources from the natural
environment. The interests relating to the environment are environmental conservation and the
minimization of the environmental impact of business operations. In this regard, IBM’s
corporate social responsibility strategy should emphasize sustainability to address this
stakeholder. In this case, the company has multiple programs to support environmental
protection and conservation. For example, IBM’s CSR strategy includes energy conservation
and climate protection programs, which has been ongoing for decades. Since 2000, the
company’s water conservation initiative has saved more than 20 million cubic meters of water
in microelectronics and semiconductor manufacturing processes. In addition, IBM has a
worldwide environmental management system (EMS) for aligning operations with
environmental conservation and protection goals. The EMS contributes to the company’s
fulfillment of its corporate citizenship through waste reduction, energy conservation, and
related initiatives. As a testament to the effectiveness of its corporate social responsibility
efforts for addressing corporate responsibilities to the environment, IBM received the 2017
Climate Leadership Award for Organizational Leadership. Thus, the corporate social
responsibility strategy addresses the opportunities based on the information technology
industry’s ecological external factors identified in the PESTEL/PESTLE analysis of IBM.

Communities. The significance of communities in corporate social responsibility is based on

their impacts on customers’ perceptions. For example, satisfaction with corporate citizenship
programs can boost communities’ popular support for the company’s high-value brand, which
is one of the main strengths identified in the SWOT Analysis of IBM. Thus, this stakeholder
group is interested in the company’s beneficial initiatives that target developmental and other
needs in communities. IBM’s corporate social responsibility strategy involves a partnership
with the International Finance Corporation (IFC) of the World Bank Group to provide
investments and advisory and asset management services for for-profit organizations in
communities. The corporate responsibility aim is to support community development through
entrepreneurship and enterprise. IBM also offers its information technologies to help nonprofits
and other community-based organizations develop solutions to complex issues facing this
stakeholder group, such as community housing needs and social services for sustainable
development. Consequently, these CSR initiatives tackle the various interests of communities.

Suppliers. IBM’s corporate social responsibility strategy involves standards and policies for
corporate citizenship in the supply chain. Thus, suppliers are included as significant
stakeholders in the information technology business. This significance is based on suppliers’
moderate influence on the production capacity and product quality of the company
(Read: Porter’s Five Forces Analysis of IBM). To address this stakeholder group, the company
must focus on relevant business interests. For example, suppliers are interested in growing their
business operations as they continue transacting with IBM. The company’s corporate social
responsibility programs must consider supporting and satisfying these interests. In this case,
IBM provides technical support for suppliers to improve their operational efficiencies. In
addition, the company expects parties in all levels of the supply chain to comply with corporate
responsibility standards and related initiatives in the industry. For example, suppliers are
expected to comply with the Electronic Industry Citizenship Coalition (EICC) Code of
Conduct, which includes requirements on conflict-free minerals, among other concerns. The
IBM Global Procurement Ombudsman Office exists as a way to ensure compliance. These
corporate social responsibility initiatives on the supply chain contribute to the sustainability of
the company and its suppliers, thereby also supporting these stakeholders’ interests by helping
them enhance their corporate responsibility statuses. These CSR programs and initiatives are
among the considerations in the supply chain management area of IBM’s operations
management.

Investors. The significance of investors in corporate social responsibility is their effect on the
capital of the business. These stakeholders are interested in growing their investments through
IBM’s profitability and growth in the information technology industry. In this regard, the
company’s corporate responsibility strategy involves initiatives that fulfill corporate
citizenship while strengthening or growing the business. For example, the company has
corporate governance policies to ensure responsible leadership and decision-making processes.
Moreover, the IBM Government and Regulatory Affairs corporate function addresses the need
to cooperate with governments in ways that benefit the business. For instance, the company’s
CSR approach involves working with governments to facilitate digital market development
programs and data protection policies, as well as sustainability programs that promote
renewable energy measures for business. IBM’s generic strategy for competitive advantage and
 intensive growth strategies also contribute to the satisfaction of these stakeholders’ interests.
Thus, the corporate social responsibility strategy satisfies investors’ interests regarding sound
business operations.

Employees. IBM’s corporate citizenship programs include employees as a major stakeholder

group. Employees are interested in high salaries and wages, as well as effective career
development programs. IBM’s CSR approach must address these interests, considering that
employees are significant in determining the capabilities of the business, such as innovation
capabilities for competitive advantage in the information technology industry. The company’s
corporate social responsibility strategy includes fair hiring practices and competitive
compensation, as well as diversity and inclusion programs that promote employee morale and
help minimize workplace conflict. Also, the IBM Integrated Health Services Organization
maintains well-being programs for the health and wellness of all IBMers. In addition, the
company has corporate responsibility initiatives for leadership development. For example, the
HR Internship Program and the HR Leadership Development Program support employees’
leadership development in the field of human resource management. Furthermore, IBM’s
corporate social responsibility efforts encourage employee involvement in community-based
sustainability projects. Such involvement enriches this stakeholder group’s experience and
effectiveness in addressing real-world problems. IBM’s organizational culture also supports
talent and skills development, especially in terms of radical thinking for successful innovation.

IBM’s CSR Performance in Addressing Stakeholders’ Interests, Recommendations

Based on the various programs and initiatives in its corporate social responsibility strategy,
IBM has an effectively holistic approach to achieving corporate citizenship. For example, the
company develops information technologies not just for financial gains, but also for helping
communities and sustainability projects. This CSR approach addresses the most significant
stakeholders’ interests in the business. IBM also continues to improve its corporate
responsibility efforts to strengthen the business through stakeholder satisfaction and support.
These CSR endeavors contribute to the fulfillment of value and technological breakthrough
specified in IBM’s vision statement and mission statement.

There are a few areas where IBM can improve its corporate social responsibility strategy. For
example, the company can strengthen its corporate citizenship through an expansion of
initiatives for communities. The stakeholder group of suppliers can also benefit by including
business development in corporate responsibility programs for the supply chain. In summary,
to improve the corporate social responsibility status of the business, it is recommended that
IBM:

1. Develop and implement a program for cooperation with suppliers, focusing on their business
growth, as a way to ensure supply sufficiency and sustainability, while addressing the interests
of suppliers as stakeholders.
2. Expand support for community development programs to encourage investment in information
technologies, and to strengthen IBM’s role as an industry leader in developing countries, where
economic and business growth opportunities are significant.
 TASK 7-BALANCED SCORECARD

VISION: To be the world’s most successful and important information technology company.
Successful in helping out customers apply technology to solve their problems.
DATA GOVERNANCE SCORECARD OF IBM: