I.

CASE BACKGROUND

The International Business Machines Corporation (IBM) is a manufacturer and retailer of

computer hardware, software, infrastructure, and consulting services on a global scale. IBM
began its existence in the 1800s with the Tabulating Machine Company and the International
Time Company. Recording Company, and the Computing Scale Company of America, all of
which operate independently as different businesses. Over 430,000 people work for IBM
globally, and they offer goods and services in information technology (IT). Business
analytics, mainframe computers, nanotechnology, infrastructure, hosting, and consulting
services are all provided by IBM in addition to the production and marketing of computer
hardware and software.

One of its core values is its dedication to each and every of its client’s success as well as the
innovation that matters for the company and the world. The company is lacking in its written
vision and mission to guide the company’s strategy and direction, although its workplace is
exemplary regarding equality and has ranked first in Stonewalls’ annual Workplace Equality
Index for the United Kingdom (UK). IBM's expansion was fueled mostly by sales of
tabulating devices. Established some of IBM's most successful commercial strategies,
including great customer service, a competent sales staff, and an emphasis on large-scale
corporate solutions. IBM was aware of the relevant trends. They discovered how its
advantages and disadvantages Resources may profit from them. They saw the expansion of
the internet and then assisted customers to use it to benefit their company.

II. ENVIRONMENTAL ANALYSIS

A. EXTERNAL ENVIRONMENT ANALYSIS
A. 1. GENERAL ENVIRONMENTAL (PEST ANALYSIS)

GENERAL Opportunities Threats

ENVIRONMENT
Political / Legal Political support for e- Threat of terrorist attack
technologies
Economic Rapid growth of developing Risk of interest rate
markets increasing to its Financial
Market Structure and
Availability of Capital
Socio-Cultural Increasing use of online Risk of Cybercrime
services
Technological Expanding global Internet The use of technological
accessibility systems might not be highly
innovative and up-to-date
causing the company to hit
rock bottom
 A. 2. INDUSTRY ENVIRONMENT (PORTER’S FIVE FORCES)

Industry Environment Opportunities Threats

Rivalry IBM is still larger in revenue The company’s rivalry might
than any other rival firms put put IBM to hit rock bottom
together due to consistent
comparisons between other
companies.

Bargaining of Power To attract more consumers, High number of costumers

Consumer concentrate on difference and
innovation. Product
distinctiveness and product
quality are vital to industry
buyers, and IBM may attract a
wide number of clients by
concentrating on them.

Bargaining Power of It would differ depending on The overall supply may not
Suppliers the nature of the commodity be enough to cater a large
offered. number of costumers.

New Entrants & Entry There is large fixed cost for The capital requirements for
Barriers setting up cloud storage setting up such a business
hardware and manufacturing are huge.
facilities for servers and has
an advantage of an established
brand name which would
provide significant entry
barrier in acquiring new
customers.

Threats from Product The cloud services itself can Availability of substitute
Substitution be an important substitute.
This means that IBM’s cloud
offerings would be
threatening the revenue of its
other hardware business.
B. INTERNAL ENVIRONMENT ANALYSIS
B. 1. The Functional Areas
FUNCTIONAL AREAS STRENGTHS WEAKNESSES
Finance IBM is the largest and most Expensive service and software
profitable information solutions
technology company in the
world, with over $103 billion in
sales, and holds more patents
than any other US-based
technology company.
Marketing Built the SAGE computer Focuses mainly on large
system for air defense in enterprises
collaboration with the
government. Launched the
breakthrough System/360
computers, which account for
almost 70% of all computers.
Organization & Management Founded some of IBM's most Both in 2014 and 2013, the
prosperous business techniques stock was the worst performer
like outstanding customer among the 30 in the Dow Jones
knowledge service a sales force industrial average.
and an emphasis on large-scale
fixes for companies.
Production IBM has maintained the record Both revenues and profits
for most patents produced by a decreased annually from the
firm for 22 years running. $127 billion and $30 billion,
Lenovo purchased from IBM in respectively, reported back in
2005 and 2014, respectively, for 2011.
$1.25 billion and $2.3 billion.
HR Saw the expansion of Poor Customer Service
Internet, followed by assisting
clients and utilizing it for their
companies, using their
eBusiness projects.
R&D IBM has made significant Management mentality and Lack
investments in its R&D sector of product differentiation
and will continue to do so.
About 30% of its yearly R&D
budget is allocated to long-term
research.
Information Tech Globalfoundries obtained Imitable Products
IBM’s global commercial
semiconductor technology
business, including intellectual
property and technologies
related to IBM
Microelectronics.
 C. INTERNAL and EXTERNAL ENVIRONMENT ANALYSIS (SWOT ANALYSIS)

STRENGTHS WEAKNESSES
1. IBM has three key strategic imperatives 1. Many analysts do not consider IBM’s
that they focus on. organizational structure to be exemplary.
2. It has more than a dozen of research 2. Expensive service and software solutions
laboratories worldwide 3. Focuses mostly on huge corporations.
3. Held the record for the most patents 4. Inefficient financial structure
generated 5. Focuses only on product customization
4. First to market with business cloud
computing solutions
5. Diversified business
6. Strong acquisitions expertise.

OPPORTUNITIES THREATS
1. Increase the number of the services and 1. The cloud computing sector is becoming
software divisions. more competitive.
2. Increasing demand of cloud based services 2. Slowing growth of world economy
3. Expansions and Acquisitions of software 3. Market competition
products 4. Currency Fluctuations
4. Interpreting Market Trends 5. Failure of innovation
5. Technological Advancements 6. A market crisis that decreases companies'
6. Investment in Research and Development investment in technology.
III. CENTRAL PROBLEM:

IBM's difficulty is a lack of revenue growth in any significant business division, since recent
expansion efforts have fallen short.

A. 1. Support Evidence of the Problem

- It was in the year 2013-2014 where IBM had invested to a lot of business venture in
the industry which led it lack of revenue growth. One of its evidences was written on
the history of IBM’s company.

A. 2. Time Context
- It was back in 2014 where IBM introduced a new mail service called IBM verse to
complement its IBM Notes software suite. And in early 2015, IBM had announced a
new product called the z13 which can complete a total of 2.5 billion transactions a
day, however during the second quarter of 2015 that ended in June 30, IBM’S
revenues fell 13 percent year-over-year to $20.8 billion, as well as the company’s
earning also declined 13 percent. Everything fell apart when IBM sold its System X
server to China’s Lenovo which led the company’s revenues to fluctuate to 35
percent.

A. 3. View Point
- It has been examined that during those years, IBM had tried its best to recover from
such damage that led their company to lack the growth of their revenues. They have
invested as well as introduced new products to the world but somehow it was not
enough to gain profit and revenue from it, instead, it cost them percent of revenues in
the company’s financial and production aspect. IBM have expanded their business
and technology services but still this segment revenues declined them year-over-year.

IV. ALTERNATIVE COURSE OF ACTIONS

Quantitative Strategic Planning Matrix (QSPM)

Market Penetration:
1. Increase the company's market share by creating new brands in each product portfolio or
product category.

Market Development:
1. Expand the potential market through new users or new uses for a product
2. Take a broader approach to deliver a better product and stronger revenue growth

Product Development:
1. Produce and develop a product that is innovative and a unique technology for the users
2. Develop a cloud service with artificial intelligence and machine-learning algorithms

Related Diversification:
1. Acquire smaller enterprises in different industries to achieve greater growth.
KEY FACTORS Weight Strategy 1 Strategy 2 Strategy 3
Creating new Produce and Expand the
brands in each develop a product potential market
product portfolio or that is innovative worldwide
product category.
Rating Score Rating Score Rating Score
Opportunities
1. Diverse consumer demands for new 0.12 4 0.48 3 0.36 5 0.60
and improved products
2. Investments from higher companies 0.30 5 1.50 5 1.50 3 0.90
3. Growing interest in support for 0.25 4 1.00 1 0.25 5 1.25
high-quality machines and technology
4. Worked closely with providers to 0.14 2 0.28 2 0.28 1 0.14
secure exclusive distribution of
products and services
Threats
1. Increase in competition between 0.18 1 0.18 1 0.18 1 0.18
technologies
2. Fragile Cyber Security 0.14 1 0.14 3 0.42 2 0.28
3. Global economic crisis 0.18 2 0.36 2 0.36 1 0.18
4. Risk due to rapid technological and 0.20 1 0.20 1 0.20 1 0.20
market developments

Subtotal: 1.51 4.14 3.55 3.73

Strengths
1. Diversified Portfolio 0.10 5 0.50 4 0.40 4 0.40
2. Practical Business Model 0.5 4 0.20 4 0.20 3 0.15
3. Wide Costumer Base 0.15 4 0.60 2 0.30 5 0.75
4. Horizontal diversification 0.11 2 0.22 2 0.22 1 0.11
Weaknesses
1. High Price 0.12 1 0.12 2 0.24 3 0.36
2. Software is limited 0.10 2 0.20 1 0.1 2 0.20
3. High Production Cost 0.25 1 0.25 1 0.25 1 0.25
4. Have to price under the market 0.18 3 0.54 3 0.54 3 0.54

Subtotal: 1.06 2.63 2.25 2.76

Overall Score: 2.57 6.77 5.80 6.49

V. RECOMMENDATION:

Base on the QSPM IBM should build up new products, brands and services

Primary Strategy: Market Penetration

Secondary Strategy: Market Development

 VI. ACTION PLANS

FUNCTIONAL OBJECTIVE STRATEGY TIMEFRAME BUDGET

AREAS

MARKETING Advertise and market Reflect on client

the product on all social engagement across For the next 5 years $5 M
platforms. all channels.
PRODUCTION To produce more high- To focus on helping
quality machinery and clients leverage the
eco-friendly used power of the hybrid By the end of 2023 $10 M
products cloud and AI.
ORGANIZATION Providing outsourced Apply more
services to help clients sophisticated analytics
optimize their existing across more diverse
IT infrastructures for data sources in more For the next 10 $2.4 M
risk management, sections of their years
flexibility, and financial organization.
value
FINANCE Provide finance To optimize cash flow
solutions that enable and enhance ROI.
businesses to launch
projects faster, improve For the next 10 $10 M
cash flow, and improve years
company success.
HRD Improving the To train old and new
management of human employees from the
resources to obtain and HR department and
preserve competitive train them to have a
advantage as well as better performance.
enhance profits.
INFORMATION To design strategies that To examine the
SYSTEM guarantee the organization's existing
information technology information
function and technology and create
infrastructures are matrices of the present By the end of 2024 $3.2 M
aligned with and assist information system in
the company in order terms of general
for it to achieve its functions.
business goals.
R&D The objective is to From performing
make it possible for AI background research
to learn more to testing ideas and
organically and assessing outcomes as For the next 3 years $6.5 M
efficiently well as building
unique methods to
accelerate the
scientific method.
VII. PROJECTED FINANCIAL PERFORMANCE