IBM Case Analysis
The International Business Machines Corporation, IBM, is the world’s largest information technology company, with 80 years of leadership in helping businesses innovate. Drawing on resources from across IBM and key Business Partners, IBM offers a wide range of services, solutions and technologies that enable customers, small, medium, and large, to take full advantage of the new era of e-business. This paper will present a brief overview of the company, including a brief SWOT analysis, and a review of the marketing, management, and financial aspects of the firm. Finally, recommendations will be made for continued growth and success.
History
The company that was founded in 1888 as the Tabulating Machine Company by Herman Hollerith, in Broome County, New York. It was incorporated as Computing Tabulating Recording Corporation (CTR) and was listed on the New York Stock Exchange in 1916. IBM adopted its current name in 1924, when it became a Fortune 500 company. In 1951 the company entered the computer field.
Today IBM is the world’s largest provider of systems integration and technology consulting. It offers services in areas such as application development, data storage, infrastructure management, networking, and technical support. IBM Global Services is also among the world leaders in providing business consulting and outsourcing services. IBM Global Services is headquartered in Armonk, New York and employs 190,000 employees across the world.
The company recorded revenues of $48,291 million during the fiscal year ended December 2006, an increase of 1.9% over 2005.The operating profit of the company was $4,934 million during fiscal year 2006, an increase of 44.9% over 2005.
SWOT ANALYSIS
Strength
...
... middle of paper ...
... leadership is challenged by UNIX, Hewlett Packard, Sun Microsystems and Dell. All these players are large multinational companies with the finances and development expertise to pose a considerable threat to IBM’s market share and revenues.
In addition to this, many of the company’s end markets are getting consolidated. Consolidation in the banking sector appears set to continue in the US market. A number of large commercial banks, insurance companies and other broad-based financial services firms have merged with other financial institutions to diversify their offerings and reduce their corresponding business risks.
With the consolidation of its customers, the company is facing increasing competitive pressures in terms of services and price offerings. This trend could result in lower margins for IBM Global Services, adversely affecting its financial position.
anybody can do? IBM has taken on the leader of software with an innovative new
But divesture of three out of four divisions leads to a very small portfolio which leads to chances of high risks as well. The process of restructuring and forming a better portfolio would provide the firm with a lot many opportunities including exploring newer and more compatible product lines and segments, thus increasing its opportunities to earn better revenues with efficient management.
The financial data for the company is convincingly good-to-great. Its revenues has been rising constantly since 1998 as can be seen on the exhibit. Net income for 2002 was the highest in 5 years ? $5,710 million, rising by 58% since 2001. Its total assets have increased by 13.6%.
Net cash from operations rose from 2007 at $146.9 million to 2011 at $411.1 million
IBM was incorporated in the state of New York on June 15, 1911 as the Computing-Tabulating-Recording Company. But its origins can be traced back to 1890, during the height of the Industrial Revolution, when the United States was experiencing waves of immigration. The U.S. Census Bureau knew its traditional methods of counting would not be adequate for measuring the population, so it sponsored a contest to find a more efficient means of tabulating census data.
Since the time when computers began to become an everyday item, we have seen a leader emerge. Microsoft Corporation has over the ages proved through technological advances and new innovations that it is a leader among computers and new upcoming technologies. Microsoft offers a variety of products some of which include operating systems for laptops and desktops, cell phones and gaming consoles. They also offer services that help us with everyday questions and tasks such as Microsoft Office, which most people use in their daily life to write reports, make presentations and keep track of accounts. They have a search engine called Bing, which is a rival to Google and an instant messaging device, Windows Live. Microsoft with its vast categories of services and products has a market value of 215.44 billion dollars falling behind Apple inc. who has a staggering 306.23 billion dollars which leads the market. Market capitalization is the total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determining a company's size, as opposed to sales or total asset figures. The annual revenue for Microsoft in 2010 reached a record of $62.5 billion, an increase of 7 percent compared with the previous fiscal year. The number of employees employed at Microsoft as of 2010 was 89,000. Google who is a well know competitor has 24,400 employees and Apple who employs 49,400 employees.
International Business Machines, better known as IBM, is one of the worlds largest technology companies, currently ranking at number twenty in the fortune five-hundred. IBM was founded by Thomas J. Watson, not from scratch, but through the merging of three, already prominent, computer companies. IBM distinguished itself, not only through selling products, but primarily through research and development. IBM is currently one of the forerunners in the burgeoning field of internet clouds.
Sam Palmisano's team approach and dissolution of management sets the stage for improved morale in IBM. As the decision making process is extended communication improves across the organization and a learning culture is established. A collaborative environment inspires innovation of new products as the divisions are aligned with IBM's strategic goals. Palmisano's support of open-source platforms provides the vital ingredients necessary to build the backbone of the on demand system that he envisions IBM will provide to customers. As Sam's vision blossoms a symbiotic relationship is formed that will provide enhanced business applications and services to customers and a recurring source or revenue for IBM.
Total revenues: $672 million. Increased by 31%. Revenue share = 40% (Next year = 50%). Data revenues are relatively low at 6% of overall revenue, but low internet penetration of 10% provides significant upside.
was introduce in 1971. IBM then came out with more advance computers such as System/38 in 1978 and the AS / 400 in 1988.
In 1985 the company produced (in China) the first computer of its own design (the "Turbo PC").
The world has grown increasingly complex, resulting from the greater interdependence among world economies (Thompson, 2002). Successful organization is largely determined by how well the organization adjusts all its tangible and intangible properties to keep itself on track with its surrounding (Armenakes & Bedeian, 1999). Strategy was concerned to manage firm’s activities and resources to the environment in which it operates. This essay will analyse the micro and macro external environment in the part five years (2000 to 2006) of IBM Company by using PESTEL and five forces model to analyse in the first part. The second part will discuss about the advantages and disadvantages of the two possible alternative strategies for IBM.
Moreover, over time the company will lose its capability of extending service support to customers. This weakness can be exploited by the competitors who can enter the market with better service support and in turn eat the market share of Dell away.
Founded in 1911 through the merger of several companies under the name Computing-Tabulating-Recording Company (IBM, n.d.)
Globalization has lead to increase in international trade and a greater role for multinational corporations. With the rise of globalization many companies are turning to either off shoring or offshore outsourcing. In India and China, companies like IBM, Microsoft, Hewlett Packard, and Novell choose to get services from sub-contractors in these countries or move their development and support jobs there.