2. 1
Customers:
IBM is known for its wide array of service and with the same it has become one of the largest
firm around the world. Considering the range of services it provides, there are different
customers, however all of them are large sized enterprise. IBM provides services in case of the
technical solution, analytics, software development and integration (Lesser and Storck 2014.
Large firms like Microsoft, Cisco, Intel, Google and others are the most valuable customers of
the brand. As far as the demographics is concerned, then it can be seen that the firm provide
their service all around the world and as per the reports there is no such intention of the brand
to reduce its service prices for enhancing their customer base. In order to understand the
opportunity and threat of the firm, few points have been highlighted below.
Opportunity Threat
Expansion of service for all type of
enterprises
Increase cloud computing within its
framework (Chowdhury et al. 2016)
Governmental move of digitization
Increasing competition in the market
Growth in the firms like Apple, HP, Oracle
and others
Slow growth of world economy and political
turmoil leading to fall in outsourcing
As per this analysis, it can be seen that the firm has great amount of threat and opportunity
because competitors of the same is aimed to have higher market share is competitive pricing
strategy.
Company:
IBM is one of the largest tech companies around the world and it has earned $18.8 billion dollar
during third quarter of 2018. As per the operating performance ratio, it is as high as $3.42 and
the free cash flow is $12.2 billion demonstrating its strong financial condition (Ibm.com 2018).
On the other hand, considering the market strength of the same it stands 81st position as per
Fortune Global 500 and ranks 17th as per the Global CSR RepTrak 100 demonstrating its
market acceptance and the market reputation. There are more than 434,246 operational
employees in IBM and it has business all around the world (Bergeron et al. 2018). In order to
understand the internal situation of the IBM Company, a strength and weakness analysis of the
same has been given below.
Strength Weakness
Diversified business
Wide range of integrated services
Expensive services and solution
Focus is limited to large enterprises
3. 2
High brand reputation Lack in market expansion during recent
years
As per the above explanation it can be seen that the firm has wide ability to perform its business
around the world, however, considering the limited service to large enterprise has restricted the
same. The brand has failed to market in the third world countries owing to its high value
services and lack of cloud computing structure has limited its access in the world arena
(Melville et al. 2014). Moreover, as per the recent financial data, cloud computing segment of
the firm has faced flat performance showcasing unstable future.
Context:
IBM presently is working enormously to capture market around world, though it has been
pioneer organization to harness cloud computing, yet it lagged sufficiently compared to its
competitors. In order to understand the current business environment of the organization,
PESTL analysis of the same has been given below:
Political: political climate within which IBM operate is not stable enough as political turmoil
in European zone, African region and south-east Asian economies has been facing political ups
and downs during the recent year that has sourced potential impact on the business performance
of IBM.
Economic: growth of world economy during the recent years has been flat and expectation of
recession in US marketing 2019 has showcased serious threat to the business performance of
IBM.
Social: social environment under which, IBM operate is stable because the firm has wide social
acceptance and social reputation. It has enabled the firm to become where it is now.
Technological: IBM being a technology firm harness the latest techs and try to produce such
technological environment in which firm can operate smoothly (Cherbakoy et al. 2015).
Legal: IBM always thrives to keep its business along with the local legislative rules allowing
the same to perform better in coming years.
Considering the external environment of the same it can be stated that IBM have certain amount
of threats and stability as well within its operational market.
Collaborators:
IBM is a sole entity, however it has senior level collaborators who perform executive partner
roles. These partners are not similar kind of partner as joint ventures have, rather it is kind of
partner that aid the IBM to perform its business smoothly. For instance, there is delivery partner
like TCS, Accenture and Deloitte who provide service as software integration organization
4. 3
(Malhotra 2015). Besides this, there is software organization partners that provide regular
implementation of system upgrades and service check. As per the report, there is no such
announcement from the brand that it can go into joint venture during recent future.
Competitor:
IBM has wide range of competitors because it is one of the leading brand in the tech market.
As per the ranking, HP is one of the largest competitor of the brand and second largest
competitor of the same is Dell. Thirdly, there is Apple who produce similar products as IBM
does. These competitors has been chosen for IBM because all these firms provide same kind
of service as IBM does and they are operational in same market. Moreover, their products are
supplementary to each other, thus there is high amount of competition in the market within
these firms.
Recommendation:
Considering the above discussion following recommendations can be made in case of IBM:
The firm need to enhance its range of service as the alternative brands are galloping
with their basket of services that can lead to fall in the market share of IBM.
IBM need to come out with alternative pricing strategy that can enable it to serve
medium and small size enterprises as well, otherwise it will lose out to its competitors.
It is essential for the brand to enhance it architecture of cloud computing integration
because it is the future and as per recent financial data the brand has showcased no great
performance in this region.
5. 4
Reference:
Bergeron, F., Raymond, L. and Rivard, S., 2018. Ideal patterns of strategic alignment and
business performance. Information & management, 41(8), pp.1003-1020.
Cherbakov, L., Galambos, G., Harishankar, R., Kalyana, S. and Rackham, G., 2015. Impact of
service orientation at the business level. IBM Systems Journal, 44(4), pp.653-668.
Chowdhary, P., Bhaskaran, K., Caswell, N.S., Chang, H., Chao, T., Chen, S.K., Dikun, M.,
Lei, H., Jeng, J.J., Kapoor, S. and Lang, C.A., 2016. Model driven development for business
performance management. IBM Systems Journal, 45(3), pp.587-605.
Ibm.com. (2018). [online] Available at: https://www.ibm.com/investor/att/pdf/IBM-3Q18-
Earnings-Charts.pdf [Accessed 9 Dec. 2018].
Lesser, E.L. and Storck, J., 2014. Communities of practice and organizational
performance. IBM systems journal, 40(4), pp.831-841.
Malhotra, Y., 2005. Integrating knowledge management technologies in organizational
business processes: getting real time enterprises to deliver real business performance. Journal
of knowledge management, 9(1), pp.7-28.
Melville, N.,Kraemer, K. and Gurbaxani, V., 2004. Information technology and organizational
performance: An integrative model of IT business value. MIS quarterly, 28(2), pp.283-322.