Business Model Development through Corporate Strategy Design: IBM SWOT Analysis
Prathamesh Muzumdar, The University of Texas at Arlington.
The research tries to understand the ongoing process in products and services offered by technology giant IBM. Using extensive secondary research and text mining as a primary approach to collect information to the current portfolio of IBM, multiple corporate strategies are designed. SWOT analysis is used as an extensive tool to take step by step approach in understanding the opportunities that exists in the general environment. At the same time SWOT also helps to understand the strengths that IBM can exploit through value chain analysis and how the internal core competencies produce a fit in IBM’s operational activities. Overall the study is strongly qualitative in nature and explores multiple avenues that a techno-functional company can implement to penetrate and gain greater market share.
Keywords: SWOT analysis, Value chain analysis, core competencies, Porter’s five forces, VRIN analysis.
IBM was founded in 1911 as CTR initially with the aim of developing hardware and software components for computers.
IBM’s mission is to develop technology in efficient way and deliver it to the customer for greater satisfaction. Overall IBM tries to create value through its product. IBM’s main domain is IT and its business varies from hardware to software development. As shown in figure IBM has many functions through which it delivers and creates value.
Electronic copy available at: http://ssrn.com/abstract=2367123
In 2012 IBM was ranked no 2 in terms of employee, no 4 in market capitalization1 , and no 9 most profitable2 .
Trade- New open markets and new trade regulations have opened market for consumer electronic goods all over the globe. This initiative has helped many overseas companies to launch and sale products to different countries.
Exchange rate/ Pricing- Pricing flexibility with the exchange rate fluctuations has helped many companies to launch their products in different countries with a reasonable price tag. Outsourcing- In recent times outsourcing has become a big source to cost cutting. Out sourcing has opened opportunities for IT consulting companies. Many companies prefer to outsource their in house software development project to other companies to save money on tax, benefits, and employee insurance.
Economies of scale- With outsourcing the concept of reducing the costs using economies of scale have grown up. Fixed capital is eliminated using contract staffing and increasing the amount of production.
Labor laws- Stagnation in labor law has resulted in more leniency in work culture. Work culture has become friendly as companies try to find out more ways of getting employees involved in various forms of work. Leadership and managerial skills are assorted from these programs.
Immigration- New immigrations have made it easy to recruit talent from other parts of the globe. Many engineers and managers are recruited with different backgrounds this increases their skill set.
Political support- Boom in IT industry has brought into the notice of the government the increasing revenue and employment in this sector. Many governments of different countries have opened their hands for new ventures in IT. Tax perks and infrastructure support have been the important agenda of such support.
Patent- Patents for new technology in recent years has been a strong supporter for increasing investment in research and development of technology. Patents safe guard a company’s interest in developing new technology.
Technology- Cost saving and increasing dependency of automation has given rise of new technology. More and more sophisticated software are required to run on such automation. Sustainability- Energy conservation and saving trees through less consumption of paper has become a big motto in today’s corporate...
References: 1. “Fortune 500: IBM employees". Fortune. 2012.
2. “Fortune 20 most profitable companies: IBM". Fortune. 2012.
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