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Transcript of IBM Analysis
By Brendan, Andy, Jarrad, Chris and Josh
1911 - Incorporation under the Computing - Tabulating-Recording Company (C-T-R), under the leadership of Thomas J. Watson, Sr.
1921 - C-T-R acquires the Ticktograph Company as well as patents and property from the Peirce Accounting Machine Company.
1924 - The companies name became too constraining and was formally changed to International Business Machines Corporations.
1930's - IBM provide group life insurance, survivor benefits and paid vacations during the Great Depression.
1933-35 - Completion of the IBM Schoolhouse and creation of the Electric Writing Machine Division.
1940's - All facilities placed at the disposal US government (WW2). Creation of the Automatic Sequence Controlled Calculator.
1950's - This decade saw the introduction of IBM's first computers which contained the first Random Access Method of Accounting and Control (RAMAC) disc storage device as well as the introduction of FORTRAN (a computer language based on algebra, grammar and syntax rules).
1960's - Under the new leadership of the new CEO, Thomas J. Watson Jr, IBM furthered its marketing strategy to sell computers and software individually.
1970's - CEO Thomas J. Watson Jr. steps down and passed onto Frank T. Cary. During this time IBM introduced the "price scanner" to supermarkets and the IBM 6314 Consumer Transaction Facility which allowed bank customers to withdraw, transfer and other functions to take place.
Also the "floppy disk" was introduced.
1980-85 - John R. Opel was appointed as CEO and the introduction of the IBM Personal Computer (PC) came to families.
1985-89 - John F. Akers becomes CEO and focus was redirected to streamlining operations and the redeployment of resources.
1990's - With revolutions in technologies (PC's in the hands of millions and client/server) IBM recorded a net lose of $8 billion.
In 1993 a new CEO, Louis V. Gerstner, Jr., arrived on the scene. the first CEO from outside the company.
2012 - New CEO, first woman, Virginia Rometty
The 6 Elements
IBM debt-to-equity ratio 1.922
GFD used for activities such as financing customers
IBM is in a strong financial position
IBM has business and technology capabilities in 18 industries
e.g. Aerospace and Defend, Automotive, Life Science and Electronics.
Main headquarters in Armonk, New York
12 Research Facilities
Different Departments situated worldwide
1993 - 2012 near 67,000 patents (6478 in 2012)
Top 3 IBM patents over last 20 years that have shaped the technology industry:
US patent No. 8,005,773 - Cortical Stimulation
US patent No. 7,555,566 - Parallel Supercomputing
US patent No. 7,693,663 - Earthquake Software
Human Resources (HR):
Power to attract specialized staff.
Primary focus on giving power to HR and the managerial capability to create a strong workplace and culture.
Nearly half a million employees conducting research in 18 different industries, IBM's capacity to innovate is always increasing.
Latest breakthroughs include:
Giving back to the Grid
A Boy and his Atom
Strong brand recognition through its focus on service, product quality and reliability as recognized by Newsweek, Barron's and Fortunes.
Global Logistics Initiative. IBM reduced IT logistics by 80%, saved $1.1 billion in the first 10 years.
IMB's network is comprised of a team of logistics service providers. Global Logistics orchestrates these teams into a series of choreographed physical movements.
Efficient and reliable packing.
2012 IBM saved nearly $17.3 million
Reuse of packaging
Thermoformed PE Cushioning
Sophisticated networking system understands customers requirements.
The team remains flexible through the use of a centralized dashboard.
IBM provides technology and transformation services with the intention of improving their clients ability to innovate:
IT Orientated Technology Services.
IT Infrastructure Delivery.
Transformation and Innovation Services.
Marketing and Sales
Comprehensive selection of products via website
Customer Assistance through help center
IBM strong focus on management as well and infrastructure, helps in enhancing the value of the firm.
2002 - IBM formally established a single global supply chain organization.
Human Resource Management
Integration of HRM and Practices
IBM spends approximately 5-6 billion on RnD annually.
IBM research has received many awards.
Procure-to-pay is a critical process which encompasses purchasing and payment of suppliers.
1994 - IBM establishes global sourcing councils.
Porter's Generic Strategies
1. A low cost strategy (Hyundai, Virgin Blue)
2. A differentiation strategy (Mercedes Benz and Rolex are differentiated by their high quality)
3. A focus/niche strategy (Coopers beer in South Australia, Dome Coffees in WA)
Miles and Snow Typology
-A prospector (innovative)
-A defender (protects its current markets and customers and is stable)
-A analyser (has moderate focus on innovation, maintains current markets and customers)
-A Reactor (just reacts to environmental changes)
Single Business (95%)
Related Linked (IBM)
Since 2003 - $11.8 Billion on 54 acquisitions
Downsizing (which is getting rid of staff or operating units -IBM did this in the early 1990s)
Downscoping (the divestiture of businesses unrelated to the core business – IBM did this with its sale to Lenovo)
Leveraged buyouts (which is purchasing the company’s assets in order to privatise it).
Acquiring Foreign Companies
Establishing New Subsidies
Increased Diversification & Innovation
Access to Local Markets
IBM implements cooperative strategies, joint ventures, with SAP, Sun Microsystems, Lenovo, Orange, Samsung and Verizon Wireless.
IBM is a multinational company operating in many countries, often resulting in IBM needing to navigate conflicting regulations. What may be legal in one country may not be in another, financial practices may differ. Worker’s rights, patent laws, export controls are all factors that need to be taken to consideration.
Workers are growing older day by day as boomers move toward retirement. The needs and desires of employees change as workforce becomes more diverse. Employees are able to collaborate and work far away from each other with the help of technology while on the other hand there are some downsides such as isolation and separation which needs to be addressed.
IBM is the trendsetter and market maker for new technology for IT automation and business. It is likely that old standards can be disrupted overnight with introduction of a new technology. IBM needs to continuously innovate as anything can be copied or adopted by rivals.
Porter's 5 Forces
Threat of New Entrants
Rivals are small compared to IBM, but can compete on at least one specialized front, such as narrow or unique services or products, or more often, on price.
Market is easy to enter, but growth and sustained advantage is difficult.
Threat of Substitution
Low for IBM's recent technology from RnD efforts, or products given away for free by IBM.
High is services is copied or available from the competition.
Bargaining Power of Suppliers
Suppliers are skilled workers employed by companies, specialized skills can be rare and expensive.
Bargaining Power of Buyers
High if the services or product cab be bought elsewhere, low if the service is proprietary, or the vendor has a close relationship with client.
Intensity of Rivalry
IBM, as the dominant player in the market, is the natural focus of rivals, IBM can expect small outfits to attempt to chip away at every weakness it has.
Strong brand reputation
Strong competency of acquisitions (as of the last 13 years IBM has acquired over 140 companies in different areas. IBM also plans to invest $20 billion over the next two years into acquisitions)
First mover in cloud computing solutions for enterprises
Service can be expensive (needing to cross sell products as integrated custom solutions often require a mix of software, hardware and service)
Has a primary focus on large and medium enterprises (captures only a small share of the market)
Growing Economies such as Iraq, Libia Sudan
Technology as core focus (RnD)
Employ personal from round the world
Find new sources of materials and labour to reduce cost
Global Market means more legal restraints
Microsoft and Apple
Capital (2013 ~ $110 billion)
Research and Development
Cooperative Strategy cont.
IBM Cooperative Strategy
Advantis - 1995
Dominion Semiconductor - 1997
InfoPrints Solutions Company - 2007
Equity Strategic Alliance
5% equity in EZchips
"the 4 C's of business level cooperative strategy"
a strategic alliance between two individual organisations to satisfy mutually beneficial goals
A strategic response to competitors positions.
Point Alliance and Websphere Software
Reducing the risks associated with RnD failure.
IBM acquisition of SoftLayer
Corporate Cooperative Strategy
What year did IBM become incorporated?
Where is the IBM headquarters located?
Name 2 strengths IBM possess.
Over 10 years, IBM saved $1.1 billion by reducing IT logistics. By how much did IBM reduce this area?
Name 1 Joint Venture and 1 Equity Strategic Alliance