International Business Machines Corporation - Term Paper Example

International Business Machines Corporation (IBM) –United States This is the third largest publicly traded technology American Multi-national Corporation, with it’s headquarter in New York, USA (Benjamin, 2010). The company is based in the IT industry, where it is involved in the manufacture and production of computer hardware and software, which it sells to its customers, who are both organizations and individuals. The company is also involved in offering infrastructural services for its customers. This infrastructure includes the facilities and structures necessary for the computer hardware and software it manufactures to function (David, 2007). In the line of products and services offered by the company to its customers, is the internet hosting service, where the company operates servers through which other customer organizations access the internet and the e-mail services. The company also offers consulting services for its customers, helping them understand the best applications for which the hardware and the software provision by the company can be put into by customer organizations. The company was established in 1911, through a merger of three technology companies, and adopted it’s current name in 1924. In the year 2011, the company was ranked as the 7th most profitable company in the US, being the 18th largest company of the US (Walters, 2011). On the global chart, the company is ranked the 31st largest company of the year 2011. Therefore, International Business Machine Company is a force to reckon with in the global arena that has curved a competitive edge in the technology industry, which many other companies have not been able. The history of IBM dates back in the 1880s, where the company manufactured a range of machinery such as weighing machines, meat slicers, time keepers, under the name of Computing Tabulating Recording Corporation (CTR), which later changed to the present day IBM (Buck, 2006). The company diversified its production activities to include computer components later, to extend the risks of business failure and low profitability associated with specializing in a single product line for a business. The organizational culture of the company was effectively established in 1914 by the president of the company, who required that the organization focus on the customer as the key to the success of the company. Employee motivation, participation in business decision-making and in running the affairs of the company dates back then. This culture of the company has been maintained to date. This culture was entrenched in the organization through hiring a disabled worker in 1914 and establishing employee education department in 1916 (Walters, 2011). These occurrences were meant to base the success of the company on the satisfaction and professionalism of the employee, who would then serve the company’s customer with diligence. Due to the high rate of growth that the company was experiencing, including geographical expansion to other countries in Europe, the name of the company was found to be too limiting (Benjamin, 2010). Consequently, the company sought to change its name, adopting its present name from the CTR’s Canadian publication in 1924, a name meant to reflect the company’s mission and aspirations (Doug, 2008). To reduce costs and improve shareholders value, IBM has adopted a supply chain that enables it to bring better and cheaper products in the market. Such areas covered by the supply chain include product development, procurement, supply chain planning and logistics (Buck, 2006). The company collaborates with trading partners to reduce the costs of operation and improve its revenue growth, through negotiating with its suppliers for cheaper supplies, which it procures in bulk. As an element of its supply chain management, the company has adopted business process outsourcing, allowing it to have its services run by other agencies such as PWC. This contributes to operational efficiency and financial gains for the company. The company does the supply chain management in such a way as to help avoid holding excessive inventory at any one given time. The company therefore procures its inventory through a system allowing it to hold only the requisite inventory and replace it just in time to avoid any shortage. To enable this, the company has adopted electronic procurement system, which is more effective and allows real time communication with the stakeholders in the supply chain (David, 2007). However, there are challenges faced by the company in dealing with on-time delivery. This aspect seeks to ensure that customers are served with the desired products and services just when the demand arises for them. To enhance its customer service, the company needs to improve in this area. There are some strategies that the company has adopted that allows it have a competitive edge over the others in the global IT market. Patenting is one of these strategies, where the company holds more patents than any other US based IT company (Benjamin, 2010). This strategy serves to ensure that the company is always in a position to undertake the production and provision of goods and service that are limited from other companies. The possession of a patent gives the company an exclusive right to specialize in some areas of product and service provision. This way, the company has always had an upper hand over the others operating in the same industry. Innovation is another strategy that the company has adopted, which serves to enable the company be in a position to keep abreast with the current technological advances. The company has established nine research laboratories worldwide (Doug, 2008). This way, the company guarantees the provision of advanced products and services to its customers. It is also a strategy meant to ensure that the company is not outdone by the others in new product development and launch in the market. Such are the strategies that have served to propel the company to rank among the most profitable companies in the world. The aspect of innovation has been integrated into the mission of the company, serving as one of the basis of organizational culture that the company upholds. Innovation allows the company to launch new products and services consistently into the market. The company has adopted global business operation strategy that enhances its expansion and growth aspirations. The expansion strategy has seen the company introduce its products and services to over 170 countries, where it serves corporate clients (Emerson, 2006). In the bid to expand its operations globally, the company has adopted an acquisition strategy, that allows it acquire other companies that offers supportive role to its core line of business. The company acquired PWC consulting in 2002 and the SPSS in 2009 (Paul, 2009). These acquisition has enabled the company expand its consulting provision services in most of these countries that the company has expanded its operations to, making it possible for its clientele to accesses desired services locally. Combining the company’s expansion and acquisition strategies serves to increase its competitive advantage over the other IT companies. Diversification is yet another strategy adopted by the company to keep it ahead in competing with the other technology companies globally (Walters, 2011). By increasing its range of services to include internet hosting, infrastructure provision and consultancy services, on top of hardware and software provision for sale, the company taps revenues in a wider front. This way, the company is assured of obtaining profits from other areas, when some are not performing well in the market. The company sells different lines of products that it has invented and produced to other companies, when they do not match its line of product and service provision. This is still a strategy to keep the company continuously innovating and developing new products. The production process of computer hardware and software by IBM Company is customer focused. The company allows customer interaction through its online service as well as its diverse consulting services (David, 2007). These services acts as the rich ground from which the company collects information regarding their customers’ expectations of the products and services that the company offers. Since most of the customer base of this company is formed by organizations, the company continuously interacts with its clientele to establish what are the products and services that they desire or deem necessary for their operations. With specific information obtained from different clients, the company manufactures hardware and produces software that matches the particular specifications of each of its clients. Therefore, the clientele of the company obtains customized products and services. The company applies a production process that entails computer systems with identical designs that control the manufacturing process. The newly introduced manufacturing process is the air-gasmic with vacuum manufacturing process that allows the company to improve the production process by 30% and reduce the power requirement in the production process by 15% (Paul, 2009). The computer systems used are similar for all its production centers in both Europe and the US, where one or two central computer system are attached to several satellite computers by a high-speed transmission unit of control (Paul, 2009). This serves to ensure the similarity of all computer hardware and software produced, to eliminate chances of different production centers giving out products that are different, which could hinder the provision of identical products to all customers. IBM applies an inventory control system known as optimizer, which allows the optimal control of service levels and spare parts inventory in a more flexible manner (Walters, 2011). Since the US service network for IBM is complex, the inventory system integrates large-scale data, which it sorts out to ensure that the inventory levels are maintained at their optimum levels, reducing any chances of the company holding excess inventory or running short of it. This system serves to reduce investment in inventory and reducing the operation cost, while improving on the timely delivery of products to its customers (Robert, 2009). The system serves as a planning and control tool for the company, due to its flexibility. Job design in this company is done in such a manner that each employee is bestowed with certain responsibilities they need to fulfill in serving the company’s goals and meeting customers demand and expectations. As a result, employees are thoroughly trained in their respective areas of operations (Benjamin, 2010). The bulk of the workforce of this company is designated as engineers, sales professionals and consultants. All of them are trained in their respective areas, with a greater emphasis on customer focused product and service delivery. The motivation of employees is inscribed as one of the organizational culture, with the company providing the best possible working environment for its employees, with all the sufficient conditions. Employee teamwork is one of the goals of the organization (Buck, 2006); where all the employees are required to work as a team in order to serve the continuous innovation objective of the company. The company has made several moves towards leaning the organization. Once known to have 270,000 employees in the US only, the company has reduced this to a 90,000 mark. This has been done in an attempt to reduce the operation cost and increase the company’s profitability. The experience level requirement for the company has also drastically reduced. The average experience level for the employees of this company was 12-15 years, some five years ago. This has reduced to an average of 5 years of experience for the company’s’ employees currently (Paul, 2009). Since year 2007, the company has reduced its US workforce by 21,000 employees. Though such a move is said to increase the productivity of the company, while reducing the operational cost, it is a detrimental move towards the culture and goodwill of the company. Since the establishment of the company, it has acted as a model company of good organization-to -employee relationship. However, the move to lay off its employees has of late caused agitation among them, since the company is laying them just before their prime age of obtaining pension. As a result, the good image held by the organization regarding its employee relationship has been tainted. The movement has also changed the long held culture of the organization to value employees and teamwork. This move has reduced the efficiency of the company, because the role of teamwork is undermined by the move, as the previous and experienced employees are constantly moved out of the system, making teamwork a hard aspect to achieve (Paul, 2009). Works Cited Benjamin, F. (2010). In the IBM Image: Honoring the Corporation's Buildings. Washington Post. Buck, R. (2006). The IBM Way. Harper & Row. David, M. (2007). IBM: How the World's Most Successful Corporation is managed. Kogan Page. Doug, G. (2008). IBM Redux: Lou Gerstner & the Business Turnaround of the Decade. Harper Business. Emerson, W. (2006). Building IBM: Shaping an Industry. MIT Press. Paul. C. (2009). Big Blues: The Unmaking of IBM. Crown Publishers. Robert, S. (2009). Saving Big Blue: IBM's Lou Gerstner. McGraw Hill. Walters, E. (2011). The Essential Guide to Computing: The Story of Information Technology. Publisher: Prentice Hall. Read More