Term Paper on "Strategic Management on IBM Company - Answering"

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IBM has a various palette of stakeholders, including customers, employees, shareholders, business partners or public organizations. IBM employees are offered continuous opportunities for professional formation and integration in the global context (IBM 2007 Annual Report). The customers are also emphasized on and the company constantly develops market research to identify and best serve their needs. To satisfy the demands of their shareholders, International Business Machines Corporations develops investment plans that are aimed to increase the company's revenues and consequently the earning per share, relevant to the stockholders in the payment of their adherent dividends. In regard to the business partners, the corporation sets the basis and further develops strategic partnerships that come to the benefit of both parties. Finally, in regard to public institutions and organizations, IBM implements all legal stipulations, human rights and tries to develop more environment-friendly technologies.

Part 2

Due to market liberalization and growing globalization, the need for qualitatively superior technologies and the high revenues registered by the companies activating in the it industry, the competition has increased significantly during the past decade.

Threat of new entrants

Developing a cutting edge technology does not require massive resources and can be achieved by basically any it student with access to internet, computers and a great commitment to his cause. Setting the basis for a large company to compete in the global context on the other hand is rather difficult to achieve; reaching such a status where to challenge the international leaders would require years of efforts and sustained resources.

Bargaining power of suppliers

The suppliers in the it industry have a great power to influence the corporations, in the meaning that a potential conflict could result in major financial losses or that a modification in the price of commodities would materialize in a modification of IBM's retail price. A reduction of their power has been achieved through the outsourcing of such services to less developed countries that offer high quality items, cheap workforce and seldom argue the contractual stipulations presented by the it corporations.

Bargaining power of buyers

This is extremely important because the customers are no longer the force that buys whatever companies produce, but they have come to influence the production process by clearly stating their demands. As such, companies had to move from supply management to demand management.

Availability of substitutes

There are limited products that can substitute the products commercialized by the it industry, the largest threat coming from competing products, rather than substitute ones.

Rivalry among competing firms

Increasing rivalry among competing firms is a vital characteristic of the it industry and it forces all companies to stay alert to the changes occurring, increasing their competitive advantages and differentiating their products.

Macro-environmental changes affecting the it industry refer to increasing globalization which increases the competition in both national as well as international context. Then, focus is also being placed on the way in which corporations operate their plants in foreign countries. These controls could force IBM and other organizations to improve the working standards and increase the wages paid to the foreign workers. All these would then materialize in increased expenditure and an increased retail price of the IBM's products.

The formation of strategic groups is rather of an element of novelty within the it industry, but its importance is growing by day. Strategic groups have been formed to help two or more companies work together to reach common goals, such as achieving a leading position within the industry. Some of these groups are even formed as to over-throne a competitor. A most relevant example in this sense is the ongoing discussion about Microsoft's taking over of Yahoo! As to gain more competitive advantages over Google.

The formation of strategic groups, the development of strategic partnerships, the search for cheaper resources (including human resources) or the increased focus on the complete satisfaction of customers' needs are all the result of increasing global competition due to market liberalization. Corporate efforts to consolidate their leading positions and even further increase their market share are likely to increase even more in the global context of liberalization.

Part 3

IBM offers high quality hardware and software products and services to its customers. Most of its sales are based on the incorporation of the latest technologies, the corporate brand and good reputation. For software products, IBM holds the net comparative advantage of offering open source applications. This basically offers the buyers the possibility to customize their applications to best suit their needs.

In terms of efficiency, quality, innovation and customer responsiveness of the IBM's operations, products and services, the following can be said:

However the company is extremely successful, with revenues next to $100 billion, the efficiency of IBM's operations is reduced in comparison to other companies in the industry; for instance, IBM revenue/employee was of $255,550 in 2007, whereas the industry's average was of $324,521; net income per employee was of $26,948 compared to a $47,285 in the industry; receivable turnover was of 3.69 (industry: 5.09), inventory turnover was of 20.85 (21.60 average in the industry) and the asset turnover ratio was of 0.88, as compared to 0.99 the industry's average (Stock Reuters, 2008)

IBM offers high quality products developed through high quality operations. However the quality is rather satisfactory, the company feels the need to further improve it

The company is committed to integrating the latest technologies in their processes and products as to increase customer satisfaction and the efficiency of internal operations

The company maintains constant communications with their customers and the latest strategies in developing communication channels in several languages have increased customer responsiveness primary distinctive force for IBM is their long tradition and good reputation, backed by extensive expertise and a strong brand. Then, the staff at IBM is highly motivated and committed to supporting the organization reach its goals. A competitive edge in the software sector is given by their open source applications.

Part 4

IBM became aware of its reduced efficiency in comparison to other companies in the industry and in response, it "draws upon the world's leading systems, software and services capabilities. [...] the company continues to derive business value from its own globally integrated supply chain, reinvented as a strategic advantage for the company to create value for clients and shareholders [...] the company has also been focused on increasing productivity to expand margins and improve efficiency" (IBM 2007 Annual Report).

To further increase the quality of all operations, products and services, the company integrated the IBM Product Data Management, application which aims at maximizing "intellectual assets internally and externally, from innovation to production while meeting regulatory compliance, through a collaboration network. Our solution delivers industry-specific best practices, predefined work processes, data models, reports, role-based user interfaces and document management capabilities" (Official Website of IBM, 2008)

The innovation improvement strategies refer to the efforts made for the development of newer and better technologies that improve both the quality of corporate operations but also the final quality of the IBM products and services. "Impelled by this new global arena and new technology -- driven both model, business leaders expanded their horizons by competitive pressures and a remarkable array of new innovation capabilities" (IBM 2007 Annual Report). An innovative feature brought in by this desire is the POWER6, an improved microprocessor. Innovation has also been present in regard to the nature of the technologies used and the effects they generate upon the public and the natural environment. All novelty elements introduced by IBM have been based on the quality… READ MORE