A Case Study on the Coming of a
Globally Integrated Enterprise
Framed by the year 2009, the International Business Machines Corporation (hereafter IBM) aims at becoming a ‘globally-integrated enterprise’ and is therefore facing the act of balancing between being deeply connected (in order to provide value for customers and society) and yet above the fray (to avoid divisive controversies). Over its nearly 100 year history, IBM moved from international (exporting form the U.S.) to multi-national (with subsidiaries in many countries) to global. At the end of the 20st century, tumbling profits from mainframe and PC businesses initiated a major competitive repositioning (i.e., strategic renewal) in which IBM transformed from primarily a manufacturer of hardware into a provider of software, services, and systems. IBM’s initial international expansion was rationalized by access to new customers to capitalize on its core competencies. Comparative advantages and an ‘open’ approach towards knowledge, skills and innovation initiated IBM’s focus on becoming a global integrated enterprise to enhance competitive advantage in every market they compete. However in early 2008, comments were solicited from large groups of employees and managers worldwide about the implications of IBM becoming a global integrated enterprise. A review of IBM’s business practice should reveal those implications and thereby identify IBM’s next steps in coming globally integrated.
1. What are the internal strengths of IBM and what are their weaknesses? The fact that IBM was one of the few computer manufacturers to survive more than 25 years and is heading for its 100th anniversary reveals its capable to create and maintain competitive advantages. IBM has proven to be agile and adaptive by transforming from a hardware to a technology solutions company and thereby obtaining the reputation of a leader in machine-independent “on demand” computing. A first important internal strength of IBM relates to the distinctive competence to being able to provide customers with an integrated IT ecosystem solution, consisting of consulting services and IT systems development and monitoring. This makes IBM an attractive business partner. In addition, the tight relationships which IBM manages to establish and maintain worldwide with business partners, governments, local communities and even competitors are key to the provision of IT solutions. Subsequent integrated solutions and tight relationships creates a certain lock-in to IBM’s services as switching costs for integrated systems are potentially high. The second internal strength relates to IBM’s technology and innovative capabilities. The emphasis on innovation is expressed by their numerous research, development, applications and innovation centres around the world. The focus on R&D has made IBM the largest U.S. patents owner company in the world. In addition, IBM holds an open approach towards knowledge and innovation, in line with current trends in which innovation can come from inside and outside the company. They make use of internal and external experts, set out programs to generate and discuss innovative ideas among everyone attached to IBM, and embraced open source computing by making IBM software patents available to anyone working on open source projects. The third strength relates to IBM’s intensive technology education for both employees and partner organizations. Education does not only provide IBM with high-skilled employees, it also provides new market opportunities as partners organizations become aware and capable of integrating IT solutions to their (business) practices. In emerging economies, IBM’s strategy is to be involved with the economy-wide development of IT in terms of academic education and (start) providing IT solutions to governments as well as companies. This focus on the development, education, and implementation of IT did not only secure short-term revenues for IBM,...
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