Presented By

Ritu Lakhotia-

Ronak H Patel

Presentation On Rebirth Of

HISTORY OF IBM

International Business Machines [IBM] is an American multinational technology and consulting corporation headquartered in Armonk, New York, United States. IBM manufactures and sells computer hardware and software, and it offers infrastructure, hosting and consulting services in areas ranging from mainframe computers to nanotechnology. As of December 2011, IBM was the third-largest publicly traded technology company in the world by market capitalization.

The company was founded in 1911 as the Computing Tabulating Recording Corporation through a merger of three companies: the Tabulating Machine Company, the International Time Recording Company, and the Computing Scale Corporation. CTR adopted the name International Business Machines in 1924, using a name previously designated to CTR's subsidiary in Canada and later South America.

Two CEOs who made IBM where it is today.

Louis Gerstner

Samuel J.Palmisano

Current CEOs of IBM

Samuel J.Palmisano

Virginia Rometty

IBM

Market capatilization : Over $155 billion Employs : Over 3,19,000 Operation : Over 150 countries One of the most profitable globle companies

in 2004 Its surpassing competitor : EDS, Accenture,

CAP Gemini and HP

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AKERS’S LAST STAND

To improve the performance of the IBM, former CEO thought to break up the IBM into 13 different company.

Akers also did cost reduction Between 1991-93, he laid off half of the

employee. Restructuring charges increased. Several competitors came at this time also. It started loosing its clients. As a result of which akers resigned in 1993 And thus louis Gerstner was appointed as the new

CEO of the company.

GERSTNER’S IMMEDIATE MOVE

Analyst found that gerstner has no work exprience in this industry

First task of gerstner was that, break up the company into 13 parts or let it be as a single company.

He found that IBM have the ability to provide its client with hardware, software & service including business consultancy.

What more it needed to add was to give customized to its client

He changed the culture.

He gave instruction to the employee regarding the meeting.

He adopted the autocratic leadership style.

He made campus style headquarter.

NEW BUSINESS MODEL

He focused on internet.

Gerstner’s effort was to make IBM a customer-driven company.

To sale customized product.

CHANGES IN COMPUTER HARDWARE With decline in the sale of mainframe , it reduced

the cost of mainframe computing and increased the scalability of its computers.

IBM started positioning smaller mainframes as Enterprise server

They launched ThinkPad computing devices for corporate customers.

Started developing new and advance microprocessor chips.

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CHANGES IN COMPUTER SOFTWARE

With rapid pace of change in the computer s/w and so many market leader in s/w like Oracle, SAP , Microsoft etc has led IBM to come with new idea of developing network s/w.

IBM began to buy companies that possessed unique network s/w.

In 1995 , IBM acquired a company called Lotus(which had developed the popular lotus Notes collaborative s/w).

Developed middleware s/w that links h/w & s/w.

CHANGES IN SERVICES & CONSULTING

Company established a service division called ISSC(Integrated system solution corporation) to provide IT service.

This division provided the first computer outsourcing service.

Renamed the service division into global service to offer client an outsourcing and business consultancy service.

E-BUSINESS AT IBM

E-business is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners.

IBM coined the term E-BUSINESS . Acquisition with Lotus helped to understand

how powerful is the internet for e- business. In 1996, started its global marketing

campaign about value chain transactions with other companies and client online.

CONTD..

Soon it became leader in e-business which gave competitive advantage over companies such as SAP , Oracle , HP.

Companies like Wal-mart , Goodyear formed contract with IBM .

Even it targeted SMBs for e-business. E-business helped with its own cost-cutting

efforts.

GERSTNER TRANSFERS POWER TO PALMISANO

By 2000, IBM had replaced EDS has the world leader in computer services, it had a backlog of outsourcing contracts worth over

$100 billion . Until he retired as CEO of IBM in february

2002,Gertsner continued to work to strengthen his new services driven business model across all IBM’S U.S and global operations.

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CHANGE

Pay for Performance evaluation Stock option system – incentive structure to

encourage employees. Change in IBM’s culture

Conservative, hierarchical & product oriented

Entrepreneurial , collaborative and customer

oriented

SAMUEL PALMISANO

The in-charge of global services, became Gerstners hand-picked successor.

IBM’s organizational structure

Sam Palmisano

CORPORATE HEADQUARTERS

Global services Hardware Software Global financing R & D Global sales and distribution

E-business initiative – IBM gained success and started creating customized solutions for the need of different problems of different industries.

New services driven business model.

Consultants knowledge of competitive information-acquisition of services and software offerings throughout 1990’s

IBM has spent more than $7billion on acquisitions since 2000.

SIX MAJOR GROUPS WITH SIMILAR TYPE OF COMPUTING

•Consumer products, retail.

•Travel , transportation.

Distribution

•Energy

•Media and telecommunications

Communications

•Less than 1000 employees

SMB’s

•Banking

•Financial markets, Insurance.

Financial services

•Education , Government.

•Healthcare, life sciences

Public

•Aerospace, automotive.

•Defense ,electronics.

Industrial

•The systemization of sales force according to the client’s future business objectives and it integrated among different operating groups.

IBM’s new operating structure

R & D

IBM’s R&D was another area that has allowed the company to differentiate from its rivals. It has been awarded more U.S. patents that any other company each year for the last 11 years. IBM spends about $5billion annually on R&D and concentrates on developing new software.

RECENT DEVELOPMENTS IN THE OPERATING GROUPS.

Competitors altering their business model in order to compete with IBM.

Eg. HP’s merger with COMPAQ IN 2003 ORACLE’S merger with peoplesoft in

2005.

GLOBAL SERVICES IBM global service is the biggest contributor to

revenues and profit of 48% as of 2003. It still continues to offer clients the “best of breed” such as Peoplesoft’s HRM software and SAP’s ERP software.

Indeed, in the early 2000s IBM invested over $3billion to develop Linux- based operating and applications software to reduce Microsoft dominance.

Global services have 3 main line of business:

1. Strategic Outsourcing Services2. Integrated Technology Services;3. Business Consulting Services.

FINAL THREE KINDS OF SOLUTIONS IBM OFFERS ARE:-

1. Financial management.2. Human capital management [HRM]3. E - business integration

HARDWARE

The 2 main hardware segment recognized by IBM in 2003 are System and Technology Group and the Personal Systems Group.

The former deals with the clients of large enterprise while the latter was going under major transformation.

SOFTWARE

Gerstner’s hope to obtained 2million from SMB clients by 2001 didn’t succeed because of early recession in 2000s.

But however, the software division has been rapidly working to develop the open source middleware solutions that can be scaled to the needs of SMBs

To built strength in application software it made many strategic acquisitions after the success of Lotus acquisition such as Tivoli Systems and Rational Software in 2003 for $2.1billion.

IBM hopes that when the economy recovers sales of software will increase dramatically.

GLOBAL FINANCING

IBM’s global financing division allows it to provide its clients with the financing they need to purchase its computer products and services.

This division is a major source of profitability. Indeed, it is currently the largest IT financier

in the world. Although not a major contributor to total

profits, financing is a very profitable operation with high gross margins.

RESEARCH AND DEVELOPMENT

The research division’s focus is to contribute to IBM’s success by balancing projects that have an immediate impact with those that are long term investments.

It helps to develop innovations that support customized industry-specific solutions.

It also focuses on emerging technologies like nanotechnologies and automatic computing that may pay off decades in the future.

CHANGES BROUGHT BY PALMISANO

He was appointed as CEO in 2002

Company works to achieve sustainable competitive advantage over its rivals

Many acquisitions took place to support Palmisano’s idea of “e-business on demand” initiative

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PROBLEMS FACED BY PALMISANO

Prevalence of poor economic conditions in early 2000s.

Dip in IBM revenues. Dip in its stock price as its existing and

potential clients slashed their IT budgets. Companies searched for newer avenues to

diversify their market in areas of new computer hardware and software.

To convince potential client to buy new kinds of software and hardware.

SOLUTIONS SOUGHT BY PALMISANO

Identification of objectives to achieve from advanced IT applications

Further innovation Significantly reduce cost structure Integrate activities across a company’s value

chain Accurately forecast potential return on

investment from capital expenditures on new products

CREATION OF “ON-DEMAND BUSINESS”

A customized IT platform based on IBM hardware and software

Respond quickly to any and all opportunities demands and threats from customers and environment.

Completely integrate their company’s value chain activities

Integrate with external strategic partners, suppliers and distributors.

BENEFITS OF “ON DEMAND IT”

Companies would obtain millions or billions of dollars in savings in operating costs.

Companies can plan and stretch their IT budgets as far as possible.

Companies would be strategically positioned better to meet future business challenges.

PROMOTION OF “ON-DEMAND BUSINESS”

Information and computing power to be thought as “fluid” like water.

This water is contained in thousands of computers like “reservoirs” or lakes of a large company’s IT system.

Water flows between enterprise and network servers through fiber optic cables.

Computing power like water can be moved between both inside and between companies

CONTD…

Computer hardware and software are connected seamlessly

Prevention of “logjam” that disrupt flow of information and computing power

ADVANTAGES OF E-BUSINESS SOFTWARE

Computers both inside and between companies can work seamlessly together

Computer operators at remote location can monitor hundreds of different computers at same time

Computers can shift work from one machine to another to distribute company’s computing power

ADVANTAGES FOR COMPANIES USING “E-BUSINESS” SOFTWARE

Companies can run their computers to maximum efficiency

Company’s productivity increases and operating cost decreases

Companies will never experience “drought” as IBM will provide its own vast mainframe computer capacity as a bank

Clients can tap IBM’s mainframe when their own system gets overloaded

SWOT ANALYSIS OF IBM

Competitive nature of the company

Innovation of the products

Research and development

Numerous acquisitions

E-business service

Development in operating groups

John Akers vision

Change in business level strategies

Decentralization

Strengths Weakness

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Acquisition of small companies.

Know the customer want needs and preferences

Rival performance

Future mergers

Increase of SMB’s sectors

Opportunities:Threats:

FROM OUR SIDE:CONCLUSION

Thus with the rebirth of IBM, it can be said that with the potential to improve and to get back the previous position IBM made a huge changes to taste its success with the help of its CEOs

As regards to strategic management, it can be said that the company dealt with various terminologies like 4P’s, STPD, changes in its internal environment and adopting the external environment, r&d,dealing with competitive advantage, and utilizing all the business level and corporate level strategies wherever required.

Thank you