Case Study Of IBM

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PROBLEMS: The People lack DEEP KNOWLEDGE: With a gross cut in the number staff of about 200,000 as a result of noticeable decline in performance, IBM 's control continued to wane around 1990s. IBM reported its first huge loss in 1990; its income declined by 74.8% toward the end of the year. Resultantly IBM was relegated to 45th place in the Forbes records. IBM woes further deepened as a result of the promoters’ denial of the fact that their income and reputation were on the dwindling trend. Another factor responsible for the downward trend of IBM around this time is the incursion of new IT companies, Microsoft Corporation and Intel Corporation. The company lack of knowledge in the ensuing consumerism structure brought about by the internet…show more content…
With an asset structure of $77.7 billion which was too large, and with each dollar spent in assets bringing only 81 cents in revenue, the company was in great trouble. The company needed to acquire 17% after-tax return -on –assets to stay profitable, but the company was able to earn 6% after tax income in 1989. IBM was facing strong pressure from investors to improve its…show more content…
This indicate a gross inability of the Ackers’ team to make good DECISION. A very valuable lesson learned from IBM in this situation is that a restructure of company executive may prove to be the solution. This team of management staff led by Mr. Ackers was unable to formulate right courses to save the company from its decline. The investors were growing impatient with IBM’s lack of performance. Investors and the Board of Directors felt the need for a new VISIONARY management who could lead the company in that tough time. The IBM board of directors had to appoint Lou Gerstner as a new Chairman and CEO to oversee the transformation activities. Gerstner managed RJR Nabisco as a Chairman Nabisco for four years, and had previously spent 11years as one of the top executives at American Express. He also worked as a senior executive in other companies such as McKinsey & Company. Under his leadership, the company was able to make its first profit of $3 billion in 1994. A company’s organizational CULTURE is often called the "belief of goals the members of an organization should pursue”. By definition it is a company’s idea in the field of organizational studies and management which describes the psychology,

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