Ibm Risk Analysis

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Relative Size in the Industry
IBM is part of the technology sectors in the diversified computer systems industry (IBM: Summary for International Business Machines- Yahoo! Finance). The market cap is 254 billion with IBM making up 218.6 billion. IBM is the largest company relative to the diversified computer systems industry. In a less specific industry of computers IBM only trails Microsoft Corporation by 12 billion dollars ("International Business Machines Corp."). Because of IBM’s large size relative to its industry the relative size does not pose a large business risk to IBM because they can leverage their large market share, capabilities, and achieve economies of scales. Acceptable audit risk is affected by the relative size of IBM in the industry it operates. IBM is a large global corporation and thus there are a very large number of financial statement users. The large number of financial statement users causes the auditors to set acceptable audit risk at a lower number and thus lowering planned detection risk and increasing the amount of evidence that must be accumulated. Major Competitors

IBM’s major competitors in the diversified computer systems industry are Hewlett Packard Company Common, Teradata Corporation, Cray Inc., and Silicon Graphics International (IBM: Summary for International Business Machines- Yahoo! Finance). These competitors do not pose a large risk to IBM because they have much smaller market-shares than IBM Hewlett Packard Company Common IBM’s closest competitor only has a market capitalization of 24.4 billion and the next closes which is Teradata Corporation only has a market cap of 10.5 billion (IBM: Summary for International Business Machines- Yahoo! Finance). In the computer industry IBM’s major competitors are Microsoft, Apple, Oracle, Cisco Systems, and Intel Corporation ("International Business Machines Corp.") IBM due to operating in over 170 different countries in multiple different industry segments and competitors vary by segment from large international enterprises to smaller narrowly focused entities and thus IBM recognizes 100s of competitors (International Business Machines Corporation 2011). Intense competition regardless of IBM being a leader in almost all segments however does increase risks for IBM such as price competition which lowers gross margin ratios, losing market share, and obsolescence of current products. IBM’s major competitors by business segment are discussed in the next section. Major Products & Competition by Product

IBM’s major business segments are Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing. Global Technology Services includes strategic Information Technology outsourcing services to transform clients existing infrastructures, global process services which includes process platforms and business process outsourcing, integrated technology services which are a project based portfolio of services to optimize IT which is built around key assets and patented software to drive efficiency, flexibility, productivity, and reduce costs, and the GTS services delivery which is responsibly or delivery of IBM technology worldwide. (International Business Machines Corporation 2011) Global Business Services provides consulting and system integration which bring value to the customer by improving strategy and transformation, application innovation services, enterprise application, and business analytics and optimization. Global Business Services also includes application management services which provide assistance in application development, management, maintenance and support for software and custom and legacy applications. (International Business Machines Corporation 2011) IBM faces major competition in the global services segments global technology services and global business services from the broad based competitors Accenture, Computer Sciences Corporation, Fujitsu and...
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