International Business Machine Corporation, abbreviated simply as the IBM is a multinational technology company that is headquartered in the Armonk, New York. IBM is one of the Americans multinational corporations that has experienced success in their business. Apart from indulging in the technology, IBM is also a consulting corporation. IBM is renowned for both manufacturing as well as marketing of the computer and its accessories such as software, hardware, and middleware. Besides, they also provide consulting and hosting services in diverse fields such as nanotechnology and the mainframe computers. It was in the year 1911 that the company was established and was named as The Computing Tabulating Recording Company where it was abbreviated as CTR. CTR was a product of consolidation of various companies such as the International Time Recording Company, Bundy Manufacturing Company, as Well as the Tabulating Machine Company (Stierhoff & Davis 2015, p.30). In the year 1924, the name was changed from the CTR to the Computing Business Company.
Later on, the name again changed from the Computing Business Company to the International Business Machine Corporation with the initials of IBM. The company is called IBM until to date. It is worth noting that the company is renowned by the name Big Blue, a nickname that coined by the securities analysts because of its significant business operations together with the use of blue color in its logo, products, and packaging (Stewart 2015, p. 356). This report will aim at undertaking an in-depth analysis of the IBM Corporation in regards to its business environment. The other aspects that will be covered in this report are the current market trends of IBM and IBM’s future market trends. Moreover, this report will also cover the internal analysis of the corporation, its marketing strategy, together with the recommendations that can assist in taking the IBM Corporation to the next level. The reasons for covering all of these aspects in this report is to analyze the success factors that are behind the IBM’s success as well as the areas that they have failed to do well. Therefore, this report will be an important tool for the companies that are striving at following the footsteps of IBM Corporation as a blue print for success.
- Analysis of the IBM’s Business Environment
The IBM’s business environment is under the influence of very many factors that are categorized into two groups, namely internal factor and external factor. However, external factors have the greatest influence because they contribute immensely to the overall outcome of the company’s operations and the services that it offers. Therefore, this paper will emphasize on the external factors. It is worth noting that these factors can either be controlled or not be controlled by the company. Nonetheless, IBM’s decision makers have strived at providing the solutions to the factors that they can control and managing factors that they have little control. On a broader perspective, a business environment can be grouped as either microenvironment or the macro environment.
To start with, the microenvironments are the aspects that influence the overall growth of the company. They include customers, shareholders, and competitors.
Customers are one of the factors that determine whether a business succeeds or not. Therefore, it is the responsibility of the company to satisfy the needs of the customer through availing high-quality services as well as thoroughly researched products as a way of attracting the customers. In doing this, the company is likely to be in a position of experiencing a high volume of sales that can translate to the overall profitability of the enterprise. IBM has done exactly this by forming alliances with both the governments and the corporate bodies that have provided a client base for their products (Kelleher 2015, p.2). Examples of the alliances that the IBM has formulated include the business process management systems together with the smarter planet. Particularly, IBM sells their products and services mostly to the China and United States of America government. The other organizations that form the bulk of the IBM customer base are the Walmart, entire Fortune 2000, and Exxon Mobile. It is important to note that Walmart is the largest company in the world when it comes to the revenue. In these enterprises and government, the IBM participates by providing services, hardware, and software to them. Moreover, through constant research, the IBM has won the loyalty of most of the customers globally. The IBM products have become a brand for millions of customers in nearly all of the countries across the world. Therefore, the IBM as a company has enjoyed immense success through a high volume of sales across the globe (Dwyer 2012, p.139).
Apart from the customers, competitors are other factors that directly reflect the success opportunities for an organization. Though, competition can result in the eventual downfall of the organization, and it can also provide the much-needed platform for the company to dominate the market. Take advantage of the shortfalls of the competing firms with the aim of dominating the market. The main and the direct IBM competitors are Microsoft Corporation, Accenture plc, HP Inc. and industry (Information Technology Services) (Stone.2014, p.37). These corporations are constantly giving IBM a run for their money. As a result, they keep on competing for the share of the market. Microsoft has an edge over all the other companies by claiming the largest share of the 446.60B, IBM follows from a distant second by 136.23B, then Accenture comes third with market cap. Of 68.17B. Industry comes last with a value in the region of the 617.77M. In regards to the operating margin, Microsoft Corporation still has an edge over its competitors with a margin of 0.30. The IBM having the margin of 0.21 then follows it, Accenture comes third with the margin of the 0.14. The fourth and the fifth are the HP Inc. and the industry having a margin of the 0.08 and 0.06 respectively (Stewart 2015, p. 371). Concerning the ranking by sales of the computer service companies for the IBM when compared to the other competing firms, IBM fares well with only Microsoft Corporation selling more than it in the American market does. Apart from the four listed companies above, other IBM competitors include Ingram Micro Inc., Tech Data Corp, Computer Service Corporation, T-System International, Inc. CAP GEMINI, and NTT Data Corporation (Kelleher 2015, p.4).
The major IBM shareholders can be categorized into two broad classes namely the institutional and mutual fund owners share and institutional and mutual fund owners’ floats. Each of them is holding a massive 60% of the total IBM shares. However, it is important to note that IBM has over 1816 number of the institutional holding shares. However, the major direct IBM shareholders include Rometty Virginia M, who holds 10,158 shares as reported during the 27th August of the year 2015. Another major shareholder is the Mills Steven, who holds a massive 155,414 shares as at the 6th of August, 2015. The third major IBM shareholder is the Leblanc Robert holding 57,271 shares as at the 1st of February 2015. Loughridge Mark is also another shareholder holding 51,105 shares on the 28th October 2013. The last major IBM shareholder is the Sanford Linda that boast of over 9,775 shares as at the 18th of November the year 2014. It was revealed from the IBM website that they act as the stewards on behalf of their shareholders. Therefore, they recognize investments as one of the ways of not only making profit but also earning revenues. In addition, at the IBM, they have moved from the culture of just raising the additional equity capital. Consequently, the IBM Corporation is striving at making her shareholders enjoy the highest possible dividends out from their shares. In fact, IBM will be celebrating their 100th anniversary of their initial public offering (Dwyer 2012, p.137).
- IBM current market trend
4.1. Analytics and big data
IBM has experienced a remarkable growth in the analytics and big data since the year 2012 by a massive 39%. As a result, IBM is currently deploying a considerable 40% range of the analytical and the powerful solutions capabilities. Every business organization will admit that analytics and big data is one of the variables that are fundamental to realizing the salient business objectives (IBM. 2015, p.2).
Apart from the advancement of the IBM as far as the analytics and data is concerned, it has also experienced a significant growth in the deployment and providing the cloud services. Particularly, IBM has experienced a massive 92% growth in the cloud since the year 2012. It is important to note that cloud business has gained momentum in the modern corporate world. This is because over 75% of all the companies are currently deploying cloud whereas about 45% are currently deploying a considerable range of the cloud capabilities. The above statistics just show how the IBM Corporation is likely to benefits in regards to the revenue by offering cloud services (IBM. 2015, p.2).
In regards to the offering the mobile services, IBM has also enjoyed a formidable success sin the year 2012. Their mobile services have witnessed a growth by a significant 59%. This has been possible from the fact that over 78% of the business enterprises are currently deploying mobile. Additionally, over 42% of the enterprises are also deploying remarkable range mobile capabilities. Therefore, IBM is currently enjoying a wide range of the market for their mobile services that is translated to the improved revenues the corporation is experiencing lately (IBM. 2015, p.4).
4.4. social services
Social services are an area that IBM has experienced the most improvement. IBM has enjoyed a significant growth in offering social services by a staggering 106% since 2012. This growth was realized because of a vast number of enterprises embracing the deployment of the social services. To be exact, 70% of nearly all of the enterprises are currently deploying social services with a further 33% deploying a remarkable range of the social capabilities services. Studies revealed by the pacesetters claims that business enterprises are well placed at actualizing their fundamental business objectives through the deployment of the social services (IBM. 2015, p.4)
5.IBM’S future trends in the market
The future is quite promising for the IBM Corporation. This promising future was initiated when the corporation unveiled a strategic plan in the year 2013. They named this initiative IBM’s Growth Market units (GMU). The GMU comprised of a total of eight growth market teams having headquarters in nearly all the eight continents. This initiative was further boosted by the formulation of the 2015 growth market roadmap that streamlined the objective of the corporation in regards to the improvement of the market performance for the period of 2010 and 2015. Through this initiative, the IBM Corporation has witnessed a considerable growth in the market that has resulted in the improvement of the revenue collection of the corporation. To experience this growth for an extended period, the IBM (Stewart 2015, p. 369) Corporation has come up with three primary strategies that would ensure the corporation to enjoy an extensive period of success. These three strategies include the development of the IT infrastructure, venturing in the primary industries that are experiencing rapid growth in the economies, and expansion of their market reach. It is worth noting that the corporation has set a target of fifteen years as the timeframe for the realization of all these set targets. Alongside the three long-term target, the IBM Corporation is setting their eyes on the short-term target by focusing at internet services to the emerging users. This is because it has been established more than half of the world’s users of internet originates from the emerging IT. This implies that the IBM Corporation is targeting to dominate the market for unforeseeable future (Dwyer 2012, p.138).
- Internal Analysis of The IBM Corporation
6.1. SWOT Analysis of the IBM Corporation
- Highly competitive when it comes to the acquisitions
- Boasting of the reputation of the brand
- One of the organizations that is in the forefront of providing cloud computing to the enterprises
- Best in regards to the services and the products integration
- Highly profitable organization because of the business diversification.
- Overlooking the smaller enterprises that form the bulk of the consumers
- Their offer expensive services that are unsuitable for the emerging markets
- Expansion plan that would ensure market dominance
- The ever rising demand for the cloud computing provides a ready market for the IBM Corporation services.
- Availability of finance for research put them on a platform of coming up with new ideas and products.
- The slow growth rate of the global economy is a threat to the anticipated growth of the corporation in the near future.
- Cut throat competition, especially from the other established companies such as the Microsoft corporation, is a potential threat of enjoying the lucrative market of the cloud computing.
6.2. Current Strategic Position and Tactics of the IBM Corporation
IBM is on the forefront of implementing the strategy of the marketing concepts and theory as a way of realizing the goals and objective of the organization. The company believes that proper use of the information is the key towards achieving their strategy. Their strategy can be divided into three spheres namely IBM marketing strategy in regards to their general organizational strategy, IBM e-business strategy concerning the market domain, together with the IBM marketing strategy when it comes to the global context (Kelleher 2015, p.3).
6.2.1. IBM marketing strategy in regards to their general organizational strategy
Through this strategy, IBM is able to evaluate their general performance using the three fundamental criterions namely the sustainability, feasibility, and the acceptability. These three approaches operate as a unit in evaluating the general performance of the performance of an organization. For example, suitability assists in the identification of the variables that are essential for supporting the designated strategy. Feasibility spans around the actual execution of the designated strategy whereas acceptability is all about expected reaction that will be received by the organization upon execution of the designated strategy. It should be noted that the IBM Corporation has provided a conducive atmosphere where any employee can come up with workable but creative marketing tactics to be assessed and implemented by the company (Dwyer 2012, p.138).
6.2.2. IBM marketing strategy when it comes to the global context
As for the global context, IBM has successfully sustained one of the most difficult and documented scenario. The company has navigated turns and twists over the recent times to emerge even as a stronger company by the use of the bricks and click strategy. Even though the much publicized IBM marketing strategy has played a vital role in the success of the company, the brick and click strategy has been helping the company to navigate the difficult moments. Therefore, the brick and click strategy is behind the venturing of the IBM in the global market. The brick click strategy involves creation of the global brand blueprints as a marketing strategy for the organization. In most of the cases, IBM is renowned for the formulation of the central framework before coming up with the appropriate consumer experience as a way of achieving brand consistency on the global front. Below are the structures that the IBM Corporation always follows as a way of realizing diversity (Kelleher 2015, p.4).
The first structure is the involvement of the process of the analyzing the context of variables such as how, when, and where in regards to the collection of the customers’ data. This structure is performed in accordance with the provision of the systematic market survey of the IBM Corporation. The second structure is the creation of the framework that concerns absolute governance that focusses on the overall practices together with the management policies. In doing this, the corporation has succeeded in the safeguarding of the privacy of the customers and the encouraging of their centricities. The third structure is the institution of the processes that are geared at the targeting of the next customer. IBM is achieving this by engaging in the management across all the spheres of the sales (Kelleher 2015, p.4).
6.2.3. IBM e-business strategy concerning the market domain
Any electronic business has a sole objective of realizing the demands of the consumers by the help of the internet networking. Therefore, the IBM has identified the use of the internet as a tool of accessing a large volume of customers all over the world with very minimum investments. Apart from using the e-business strategy as a tool of accessing large volume of the consumers across the globe, IBM has also used the same strategy to create a link with the external environment as one of the strategies for fostering a relationship with the other corporations and diversified groups. Through the e-business strategy, IBM has achieved flexibilities and the efficiency of the data processing systems. Moreover, the e-business strategy has assisted the IBM to achieve the brand loyalty by building a bridge between them and the consumers. The activities that the e-business has assisted in building a bridge between them and the consumers include electronic purchasing, electronically purchasing of orders, management of the supply chain, and the handling of the customer service (Kelleher 2015, p.5).
- IBM Corporation marketing strategy
It should be noted that IBM corporation’s marketing strategy has been in existence since the 19th century, and it is still in existence to date. This strategy has ensured that the IBM remain competitive in the world market, and it has also catalyzed the much-documented success of the company that is still realized up to the current moment. As part of its marketing strategy, IBM has adopted the use of strict infrastructural services coupled with the engagement in the different consultation services in various fields. Examples of the fields that the corporation has been actively engaging in consultation services include the nanotechnology and the mainstream computers (Stone.2014, p.37).
The corporation has put more weight in the decision making because it is critical in the coming up with marketing ideas that are needed in the creation of the competitive advantage over their competitors in the market. As evident in the IBM official website, they purport that through their strategies together with their change services to be responsible for assisting their clients in regards to the transformation of their economy and their businesses. They achieve this by identifying the relevant strategic options on behalf of their clients. Apart from identifying the strategic options available for their clients, IBM also grants provisions on behalf of their clients for the purpose of developing the strategic change planned programs that are to the specifications of their customers (Stone.2014, p.38).
In spite of the fact that IBM has an ambitious long-term plan, it is also experiencing potential problems. One of such problems with this technology giant is that they are likely to be weighed down by their past mistakes and challenges that they failed to address adequately. Therefore, it is prudent if they first address those problems before venturing on the future challenges. Another problem that the IBM Corporation has faced is the inability to exploit emerging markets. It is important to note that emerging markets are the most lucrative sources of market owing to the fact that they are numerous and still not exploited adequately. Most importantly, cloud computing is still young in the emerging markets especially around the developing countries (Dwyer 2012, p.142). The one problem that is prohibiting the IBM Corporation from venturing in the emerging market is the fact that they offer very expensive services that the emerging market cannot afford.
Therefore, the company should restructure their service delivery based on the type of market. They can do this by subsiding the cost of their services for the emerging markets. It was reported in the IBM Corporation’s website that one of the factors that undermine the corporation’s fast growth is the slow rate of growth of the global economy. However, the corporation has endlessly diversified their operations even in the fields that are less profitable. It should be noted that diversification is one of the strengths that a company should venture, but an organization should venture in relevant and profitable areas that can improve the overall company’s revenue. Therefore, the corporation should undertake analyzation of all their business operations with the aim of eliminating the company ventures that are not profitable and concentrating in those that are more profitable (Kelleher 2015, p.7).
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