IBM Case Study – big player in the IT industry

IBM is a very big player in the IT industry. Thus, it has a vast pool of resources, brand name, programmers, research scientists, alliances with partners etc. It has no of patents in its name which gives it a competitive edge by increases the imitation * Endowed with managerial talent as well Like Appaloosa who can anticipate he change in the external environment and mould the company according to what market wants. * But extension of business requires long term commitment of resources.

Major commitment was in terms of people and training them to serve the new requirements. * It setup small SWAT teams to work with a handful of Minimal clients and launch businesses. * Over the years IBM built capabilities and diversified through its common threads .

IBM used advanced analytics software to serve its client D&8. In HER, it had set 21 standards for speed and accuracy. Took over part of P&G’s human resource In a 10 year deal valued at $400 million.

Apart from IT development and consulting, It Is scrounging for new markets. In addition to its original business- accounting, HER. Customer service, and procurement- 1 OFF It Is now plugging Into SIX toners. I nee Include rater sales services Tort consumer electronics, insurance-claims processing, and supply chain optimization. .

)Likely entry barriers IBM could face for its diversification into this industry. WHY? NAS. ) Potential entry barriers: I. Strong competition from players like Accentuate Ltd. : their domain knowledge, expertise ; experience and established customers (which is usually contract eased but duration of such contracts is long enough). It.

Other competitors like Indian companies Wiper and Data Consultancy Services Ltd. Which have Low Cost Service Design. Iii. Expected retaliation from these existing players in case it enters ‘v.

High Switching cost for companies to leave former providers and opt Business.

For MM. V. Brand Identity is rigid in terms that IBM is perceived genetically as a technology company so customers may not easily be attracted. V’. Access to distribution.

C) IBM’ competitive advantage if any for this industry in 2003 considering the attention & global competitive positions of its key rivals then in this industry. WHY? NAS. ) Vim’s Competitive advantage: I. IBM has an advantage in tech skills and research staffs.

So projects like consulting can turn into an outsourcing business as well.

This is what happened in 2002 when IBM did a consulting project for Marathon. It. Strong partnerships with companies like Boeing. This collaborative relationships team up to undertake the task of creating and marketing technologies for network-centric warfare. Iii.

A lot of patents under its name and a huge competitive technology base. Iv. IBM bought PricewaterhouseCoopers Consulting in 2002, which added to its consulting business and also bought in requisite talents like Saul J. Barman. V.

Capability to turn goals of alliances into new products and market opportunities. V’. Immense credibility in the technology service industry. SQ. Using the relevant diagram & strategic framework, comment on whether it would be a related or unrelated diversification for MM. Explain your strategic rationale.

NAS. ) IBM diversification into consulting and outsourcing seems to be a related diversification because it can be seen as a logical extension of the original equines I. E. IT enabled service. This is basically what Insofar referred to as the Common Thread.

The diagram is as follows: I Present Product I New Product I Present Market I Market penetration I Product development I New Market I Market development I Diversification I Vast talent pool in terms of software programmers, research scientists through which IBM can help its customers for they outsourced functions.

In addition to outsourcing requirement they also provide operational makeovers at clients place. SQ. What could be the benefits & risks of strategic outsourcing by Vim’s attention clients for Business Consulting ; Outsourcing Services? Why? NAS. Benefits: I Clients can Touch on Turner development ten areas AT tenet core competencies Ana use its management expertise to leverage that. It. Streamline its workforce and organization.

Iii. Cut-down operating costs/ overheads. Lb. Improve customer satisfaction. Risks: I. Outsourcing all or majority of administrative and strategic functions to one organization may lead to us becoming their hostage and they dictating the terms of this relationship.

It. Dependence on outsourced resources especially if all imitators do will lead to diminishing differences between the organizations.

IBM faces challenges in the business and cannot cope satisfactorily with it, then the activities outsourced to it will suffer. This ultimately means its clients might suffer because of failure of MM. ‘v.

What many companies (here clients) might fail to realize is that may be their success in their industry was due to the overall fit of all the activities. Thus they might feel a particular activity is not its core competence component and thus may decide to outsource it. This might lower the extent of distinctive competency. SQ.

Explain briefly your learning’s regarding corporate strategy from this case. WHY? NAS.

) The Following learning can be derived from this case: I. A manager should be proactive and watchful about the rapidly changing environment and consumer tastes. It should then steer the company’s wheels in that direction what the market demands. It. Make sure you are in the best attainable portfolio that matches your capabilities and resources with the opportunities iii. Keep in mind the strategic intent and architecture.

‘v. The case highlights how various strategic frameworks are useful in day to day business life.