Analysis of Strategic Management Issues

of


Group Members of Survivors

Md. Safiuddin 14119
Farhana Sultana Jhumi 14050
Masud Ali Khan 14010
Md. Shaikot Jahan 14089
Barun Chandra Dey 14176
Md. Ibne Nayeem Hasan 14095





Overview of
Md. Safiuddin 14119



IBM or International Business Machines is a well known
American computer manufacturer.

Founder Thomas J. Watson
Big Blue IBM is also known as "Big Blue" after the color
of its logo. The company has made everything from
mainframes to personal computers and has been immensely
successful selling business computers.

Company profile





"At IBM, we strive to lead in the invention, development and
manufacture of the industry's most advanced information
technologies, including computer systems, software, storage
systems and microelectronics.

We translate these advanced technologies into value for our
customers through our professional solutions, services and
consulting businesses worldwide."

Mission
statement




Solutions for a small planet




"Dedication to every client's success
Innovation that matters, for our company and for the world
Trust and personal responsibility in all relationships"

Vision
statement
values



IBM
History
1930
IBM began designing and manufacturing calculators
using the technology of their own punch card processing equipment
1943
IBM together with Harvard University financed the invention of the Mark 1
computer, the first machine to compute long calculations automatically
1953
IBM was ready to completely produce their own computers, which began with the
IBM 701 EDPM, their first commercially successful general-purpose computer.
1980
Microsoft's Bill Gates agreed to create an operating system for IBM's new
computer for the home consumer
1981
The first IBM PC ran on a 4.77 MHz Intel 8088 microprocessor. IBM had now
stepped into the home consumer market, sparking the computer revolution.




The IBM international corporate headquarters are located in
Armonk, New York

4,00,000 employees of IBM
around the world

Position # 19 out of Fortune
500 companies



IBM Corporation
International
Headquarters
:
Computer
industry
Hardware Software Services
Processing
service
Data entry
Credit card
automation
Billing
Pay off
processing

Network service
Electronic data
interchange
Electronic mail
delivery
File transfer
Electronic
funds transfer
Professional
computer service
consulting
Custom
programming
Systems
integration
Outsourcing
Computer service
industry











Computer service industry
Contracts with
customers with
designated time,
monetary value,
specifications
Solid
knowledge
about
revenues















Continue
Strong growth of
computer industry
(S & P survey)
USA, the
largest
producer
and user
segment 2012 2013 2014
Global service 56% 55% 56%
Systems and
technology
17 17 16
Software 24 25 25
Global financing

2 2 2
Internal service 1 1 1
total 100 100 100
Segment wise revenue



Macro environment Analysis
economic
Political
social
technological
legal

In general international operations are highly
influenced by the governmental policies and
their laws, but in this case there is little effect
because most of countries are looking for
developments and new technologies.

Heavy taxes in some countries make IBM
increase its products price.

Political


National growth rates.
Fuel Prices


Positive customers' perception toward new
technology around the world.
Increase in population and internet users




economic

Social


Advanced technology development.
Internet
Increase numbers of companies that need ERP systems



Cyber protection and the chemical use in making
hardware; like carbon, germanium, and silicon
Currency exchange
Legal registration for their business outsourcing
facilities


Legal
Technological
Star
(IBM)
Question
Mark
Cash
cows
Dog
Market Share
I
n
d
u
s
t
r
y

G
r
o
w
t
h

High Low
H
i
g
h

l
o
w

IBM Position Considering IT Skill

Farhana Sultana Jhumi - 14050
IBM-committed to technology , leadership &
rapid delivery of customers solutions.
Extensive investment in research &
development


Advantages
Brand recognition
Global reach
Continuous flow of new products & services

In 2000, IBM faced challenges
about whether to continue to be
everything for everyone or
shift towards providing solutions for
costumers facing E-Business challenges in
sourcing and implementation
Earlier IGS offered solutions to
Mainframe
Client Server
E-Business

E-business revenue grew 70% in 2000
Future Network Economy or E- Utility


Four main issues on the proper course of
action that IGS should adopt:
I. Shortage of needed IT skill in the industry
II. Segmentation of the market
III. Analysis of the current marketing situation
IV. Assessment of the competition and the
Key Success Factors in each segment
Lack of IT skill:
In an article by the BBC dated March 2000,
There is a serious shortage of skilled
information technology workers in Europe,
which major companies fear could slow
economic growth.



The main mitigate for them is to employ
people from different backgrounds and then
train them on the job for the needed skills.
Issues to be considered are:
a. Is the cost of such an action justifiable to
the bottom line of either of these
corporations?
b. Will these actions have any affect on other
industries, and could this cause a shortage in
other employment segments that are closely
correlated to IT skill?

c. Is the training of these professionals
according to specific company needs and
tactics more useful than hiring them directly
from the industry?
June 2000 in BusinessWeek, Ciscos strategy:
New Economy Shop
Cisco getting involved in the teaching of
student while still in High School, and gearing
them towards the IT industry.
According to the Federal Reserve Chairman
Alan Greenspan , the problem is that
we have developed a shortage of highly
skilled workers and a surplus of lesser-skilled
workers
Is there really a techie shortage?

According to a 1998 article in BusinessWeek ,
the demand supply is not in shortage, instead
the demand is not for all people with IT skills,
instead it is for : 20 year old people who can
put in 80-hour week.
In terms of 5 porter forces?
bargaining power for the supplier & the IT
skilled professionals.


Decision should be based on focusing the cost
of the IT skill on one promising market and
reducing costs allowing them to grow faster
and more efficiently.

Segmentation of the market
Md. Shaikot Jahan 14089
Market segments
As the largest computer service provider
and Information Technology Company in
the world, IBM with its IGS provides e-
business solutions to two main market
segments, large and small enterprises.

Large Enterprise



IBM's Professional Computer Services segment offers a wide range of
computer services to large firms (more than 1000 employees) that seek
IT solutions for its competitive advantage. IBM is able to provide large
enterprises with:
Customized e-business solutions
Innovative e-business solutions
Integrated e-business solutions
All-in-one solutions (package of hardware and software products)
Business consulting services
System Recovery solutions




Small Enterprise

IBM e-business solution is also available for small and growing
up enterprises (fewer than 100 employees). As stated in its
website, IBM's products and services help small firms:

Streamline business operations
Improve employee productivity
Promote their products and services
Add e-commerce to their site
Conduct business over the Web more efficiently
Conduct business in a wireless environment
Providing outsourcing solutions

Key Success Factors in large and small firms
Major key factors would be:
Ability to retain small and large enterprise with integrated computer
services
Provide standardized solutions at competitive prices for small
business
Ability to power the system of government in government operations
Ability to adjust for enterprise costs and complexity
Providing co-location facilities to small firms


Provide consistent services to non-profit organizations at the lowest
cost possible
Talent to adjust to price sensitive businesses and markets
Employ trained professionals to sell their services in separate and
specific industry sectors.
Provide world-class skills and quality service on a global scale


Recommendation

Based on the apparent successful segmentation of the market, it is
the recommendation of this section that IBM should focus solely on
the E-business unit and try to become the market leader in
providing the service to both the large and small firms. Reasons are
by focusing only the e-business model, IBM will be able to
successfully beat out the competition from the smaller firms and
hence become the leader in this segment.
IBM can also rely heavily on its trusted brand name in building trust
in its services and beating out the competition.

Analysis of Current Marketing
Situation
Masud Ali Khan 14010
Current strategy
Building customer loyalty by using
differentiation strategy
High reliability, high quality and high
differentiation will build customer loyalty and
increase sales.
Industry Key Success Factors
Large Corporations
ability to provide a customizable, all-in-one
solution.
proven track record in fulfilling the specific
needs of the companys industry.

Industry Key Success Factors (contd)
Medium and Small corporations
ability to provide standardized solutions at a competitive price.
a strong direct marketing capability .

Government Institutions
have knowledge of and ability to leverage the bureaucracy found
in such organizations.


SWOT Analysis
Strengths
world renowned for its superior sales force for
many years.
highly trained and aggressive sales force.
global reach.



SWOT Analysis (contd)
Weaknesses
Complex management system due to its size.
Slow to bring new services to market.



SWOT Analysis (contd)
Opportunities
prolonged period of strong growth in industry
trend towards the use of computers and the
Internet

SWOT Analysis (contd)
Threats
increased competition
high acquisition and alliance activity
threat of new competitors
highly unstable and very difficult to predict



Porters five forces model
Intensity of rivalry
Competition is intense for the following
factors
Industry growth rate is fast which attracts new
competitors
Existence of powerful competitors like
Electronic Data Systems, Hewlett-Packard,
Digital Equipment, Computer Science,
Accenture etc.
Intensity of rivalry (contd)
Exit barriers are high for all the competitors.
Rivalry weakens a bit because switching costs
are high.
Bargaining power of the buyer
Bargaining power of the buyer is weak
because
switching cost of the customers is very high
the buyers volume is small in comparison to
overall sales of IBM
Bargaining power of the supplier
Bargaining power of the supplier is weak
because
IBM is a huge company.
It represents a very high percentage of the
turnover of the suppliers.
Revenues of the suppliers are highly affected
by IBMs purchases.

Entry Barriers
Entry barriers are high:
Presence of a lot of giant corporations
Very high capital requirement
Existing companies already have a loyal customer
base
Existing companies enjoy the advantages of
economies of scale
Existing companies have professional and
complete sales force and distribution channels

Substitution threat
There is a low substitution threat:
Switching costs are very high
Brand loyalty is significant in the computer services
industry
Customers are not very price sensitive
Customers are willing to pay a high price for better
products and services.
Recommendation
IGS should offer all service products to all
customers, because
Its abilities to reach all markets and customers
with greater ease than a smaller less
developed competitor.
Economies of scale
Recognizable brand name
Scope of diversification

Competitors Analysis

Barun Chandra Dey 14176
Analysis of ACCENTURE model
Mission: to help its clients
create the clients future.
long-term goal: To become a
network of businesses that
will be a market maker of the
new e-business economy.
Specialization: consulting and
system integration
Others: ACCENTURE also
provides outsourcing of
business operations and
custom programming services
Strengths:
Global Presence
operating in 48 countries with
65,000 employees.
leading management and
technology consulting firm.
Scope: very wide, serve large,
small and medium companies
by providing all-in-one
solutions.
Broad Industry Coverage:
ACCENTURE targeted 16
industry segments, grouped
into five global markets
Unite: Financial services,
products, communications
and High Tech. resources
and Government.
Strong research and
development effort
Weaknesses:
Competitive market:
competitors are expanding
their operations into related
technology consulting and
outsourcing operations.
Limited service offerings:
solely focusing on
consulting and systems
integration, leaving
outsourcing
Analysis of EDS model
EDS offers the following
services: management
consulting, e-business
solutions, business process
management, and information
solutions




Strengths:
It is a global corporation.


It has more than 121,000
employees worldwide and
solves challenges in a wide
variety of industries like
communications, energy,
government, and healthcare
outstanding operational
efficiency.
Weakness: Its aggressive
buying of market share for
competing against outsourcing
leader IBM Global Services.

Analysis of HP model
HP focuses on its original core product and wrapped services.
It was seeking to provide e-business support and services, but
did not have the full range of services as some of the other
categories of competitors.
Finally HP is weak in the areas of consulting, custom
programming, system integration, and outsourcing.
Analysis of the competition by
computer services market segments:
In this industry, ACCENTURE is the biggest threat to IBM. Consulting
and system integration is the specialty of this company
In the consulting arena, ACCENTURE has a strong position because
previously, the company was a business-consulting firm
(accounting).
Offer their clients a wide range of consulting services including both
business and information technology services.
Financially strong, having a strong global presence and broad
industry coverage,
ACCENTURE is a very tough competitor. And in order to overcome
it, IBM should differentiate its consulting services and offer better
quality solutions that will be better perceived by the target
customers.
Being a Full-Service Provider, we believe IBM should
take advantage of the situation by stealing away the
market share of the other services industry such as
outsourcing and e-business solutions in which
ACCENTURE was weak or didnt focus on.
Since IBMs revenues from the custom programming
remained constant year to year, while those from the
consultant services were steadily increasing, we think
that IBM should focus more on the consulting services
and aggressively compete with ACCENTURE in this line
of business.
Full services providers:
EDS is the main threat. They pioneered the concept of
outsourcing. the largest growth rate among all other
industries
That is why IBM focuses a lot on outsourcing & compete
aggressively against EDS who are financially strong and
globally present. IBM provides the outsourcing services
through IGS Strategic Outsourcing (SO) line of business.
The best way to compete against EDS is to identify the
customers business strategy and differentiate core from non-
core operations.
EDS has a limited Internet presence and this weakness should
encourage IBM to prove its Internet presence and launch its e-
business program and provide top quality e-business solutions
to its 36 customers
IBM being a large company, the process to implement the e-
business strategy was slow and not flexible
IBM should supports its services by using the Internet in order
to communicate, advertise, sell online, and offers their online
services using e-business (e-business consulting, e-business
systems integration, e-business hosting services).
Evaluation And Final Decision


Md. Ibne Nayeem Hasan 14095
Potential Alternatives
Concentrate
Solely On
E-Business
Service Offerings
Expanding Full
Range of
Professional
Services but
Emphasis on
E- Business
Consider Third
Alternative
1 2
3
Shortage of IT
Skill
Expanding Full
Range of
Professional Services
but Emphasis on E-
Business
2
Market
Segmentation

Concentrate Solely
On
E-Business Service
Offerings
1
Current
Marketing
Situation
Expanding Full
Range of
Professional Services
but Emphasis on E-
Business
2
Competitors

Concentrate Solely
On
E-Business Service
Offerings
1
Shortage of
IT Skill
Market
Segmentation
Current
Marketing
Situation
Competitors
1
1
2
2
Best Alternative
Concentrate
Solely On
E-Business
Service Offerings
Expanding Full
Range of
Professional
Services but
Emphasis on
E- Business
Consider Third
Alternatives
1 2
3
Any Queries ?
Thanks All