Ibm Case Study
SUBMITTED BY:
SWATI AGARWAL
ROLL NO-01
PGDB-IB
STRATEGY CASE STUDY: IBM
Q1. Outline the relevant trends in IBM"s external environment which could have prompted its then CEO to consider long term changes in IBM's business portfolio.
Ans.) IBM’s CEO Samuel J. Palmisano, was considering a change in long term change in business portfolio in terms that instead of just using in-house resources for merely selling and servicing technology, they could help big conglomerates rethink, remake and even run their business i.e., venture into business consulting and outsourcing activities i.e., change the business model from International Business Machines to International Business Model. The trends in the external environment that led to such a step were: a) Computing is becoming commodity which implies little scope for differentiation of products and image and that buyer’s willingness to pay is also less. The industry is growing at a rate of just 6% which might decrease if commoditization continues. b) Dell’s backward integration to provide service and tech services, so consumer is becoming competitor. c) IBM expects the field of outsourcing to grow at the rate of 8% to 11% per year.
Q2. Using the relevant strategic frameworks & diagrams, analyse IBM's proposed diversification into Business Consulting & Outsourcing Services based on each of the following strategic considerations as of 2003: a.) IBM's resource endowments, capabilities & core competencies then. Ans.) * 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 lag. * Endowed with managerial talent as well like Palmisano who can anticipate the change in the external environment and mould the company according to what market
SWATI AGARWAL
ROLL NO-01
PGDB-IB
STRATEGY CASE STUDY: IBM
Q1. Outline the relevant trends in IBM"s external environment which could have prompted its then CEO to consider long term changes in IBM's business portfolio.
Ans.) IBM’s CEO Samuel J. Palmisano, was considering a change in long term change in business portfolio in terms that instead of just using in-house resources for merely selling and servicing technology, they could help big conglomerates rethink, remake and even run their business i.e., venture into business consulting and outsourcing activities i.e., change the business model from International Business Machines to International Business Model. The trends in the external environment that led to such a step were: a) Computing is becoming commodity which implies little scope for differentiation of products and image and that buyer’s willingness to pay is also less. The industry is growing at a rate of just 6% which might decrease if commoditization continues. b) Dell’s backward integration to provide service and tech services, so consumer is becoming competitor. c) IBM expects the field of outsourcing to grow at the rate of 8% to 11% per year.
Q2. Using the relevant strategic frameworks & diagrams, analyse IBM's proposed diversification into Business Consulting & Outsourcing Services based on each of the following strategic considerations as of 2003: a.) IBM's resource endowments, capabilities & core competencies then. Ans.) * 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 lag. * Endowed with managerial talent as well like Palmisano who can anticipate the change in the external environment and mould the company according to what market