IBM’s core strength lies in its System/360 and System/370 mainframe series. These mainframes have become the industry’s benchmark that competitors try to match. Moreover, IBM’s high-priced lease strategy, supported by excellent customer support, enhances the company’s fortunes. Over the years, IBM’s excellent service, along with a successful sales team has given it an advantage over the competition.
IBM’s successful ventures with computer, software, and marketing companies such as Intel and Microsoft give it a competitive edge.
IBM’s major weakness is it focuses too much in protecting its mainframe market because they think that nothing can beat mainframes and that ‘big machines mean big revenues’. This in effect, obscured their vision from threats emerging from the emergence of new kinds of computer technology. Moreover, they incur significant amount of costs, especially advertising costs, before they even become a key player in any developing markets, hoping for high profits. With high costs, and high profit margins, it comes as no surprise that the company’s products are high-priced as well, hence, it proves to be a setback when low cost products enter the market.
The major opportunities for IBM come with the frequent changes in technology. In a technologically driven society, new products are launched frequently. These open new markets for the corporation to develop and thus increase revenues. As it has huge strength in its innovation and development the opportunity is rife for IBM to enter these markets.
The main threats to IBM are its competitors and the industry IBM is in. As with the growth of any industry, the competition seems to grow as well. What makes matter worse for IBM is that often the completion offers low cost solutions to the high end products sold by IBM. Moreover, the technology industry is extremely competitive when it comes to innovating.
2. PESTEL Analysis