IBM Case Study
IBM Case Study
1. What factors led to IBM’s success during the 1960s and 1970s and its problems during the late 1980s and early 1990s? Watson Jr. hit a home run when he invested $5 billion to develop the System/360 computer family, which utilized an integrated semiconductor chip and modular components. Taking full advantage of this innovative momentum, IBM debuted other products during that time which enabled the company to rise to the top of the IT industry. These products included hard and floppy disks, a new computer language and the company’s first personal computer. In the mid 1980s, IBM started to run into trouble when its returns and market share began to slide. Customer needs were changing and emerging technologies led to the demise of IBM’s main product focus—the mainframe. Customers were looking for interconnected mainframes and mobile personal computers with distributed data sources and applications. Instead of devising a strategy to satisfy customer demands and set itself apart from competitors, IBM chose to transition from a lease oriented business to a sales oriented business. This lack of customer focus was coupled with an inefficiently designed workforce that would rather fight with each other than work together. Additionally, the company was so successful in the past that no attempt was made to cut costs/expenses and identify/correct inefficiencies. Adding more salt to the wound was the fact that top level executives were so far removed from daily operations that they were unaware of the severity of IBM’s growing list of problems.
2. What did Gerstner do when he assumed the role of CEO in 1993? Evaluate Gerstner’s approach to crisis management. How well did he perform as a turnaround manager? What challenges did he face as he attempted to position the company for growth? Instead of running the company at arm’s length like some CEOs, Gerstner chose to immerse himself in every aspect of the business. Although he did not have an IT background, he
1. What factors led to IBM’s success during the 1960s and 1970s and its problems during the late 1980s and early 1990s? Watson Jr. hit a home run when he invested $5 billion to develop the System/360 computer family, which utilized an integrated semiconductor chip and modular components. Taking full advantage of this innovative momentum, IBM debuted other products during that time which enabled the company to rise to the top of the IT industry. These products included hard and floppy disks, a new computer language and the company’s first personal computer. In the mid 1980s, IBM started to run into trouble when its returns and market share began to slide. Customer needs were changing and emerging technologies led to the demise of IBM’s main product focus—the mainframe. Customers were looking for interconnected mainframes and mobile personal computers with distributed data sources and applications. Instead of devising a strategy to satisfy customer demands and set itself apart from competitors, IBM chose to transition from a lease oriented business to a sales oriented business. This lack of customer focus was coupled with an inefficiently designed workforce that would rather fight with each other than work together. Additionally, the company was so successful in the past that no attempt was made to cut costs/expenses and identify/correct inefficiencies. Adding more salt to the wound was the fact that top level executives were so far removed from daily operations that they were unaware of the severity of IBM’s growing list of problems.
2. What did Gerstner do when he assumed the role of CEO in 1993? Evaluate Gerstner’s approach to crisis management. How well did he perform as a turnaround manager? What challenges did he face as he attempted to position the company for growth? Instead of running the company at arm’s length like some CEOs, Gerstner chose to immerse himself in every aspect of the business. Although he did not have an IT background, he