Credit Analysis of Potential Customers of IBM Global Financing - Dissertation Example

This report examines the risks posed in the issue of credit and in financing arrangements, and also examines different kinds of credit models, applying them in the context of IBM Global, to examine its credit appraisal process and suggest recommendations to improve the efficacy of the credit rating process.


 CHAPTER ONE
Aim and Objective of this Study:

               The recent financial crisis that has affected most of the world economies highlighted the grave problems that can arise when credit and financing arrangements are entered into indiscriminately, without a rigorous credit analysis system in place. IBM Global Financing is one arm of IBM that aids and assists credit-worthy clients to develop a comprehensive investment strategy by offering them financing options for the purchase of new IT equipment, or lease of equipment and other applications. This study proposes to examine the importance of assessing the risk of credit default risk and entering into a discussion of credit risk models so that they can be applied in the context of the credit analysis process that is in use at IBM Global Financing. This analysis would provide some insight into the appropriateness of the appraisal systems that are being used at IBM Global and the measures that can be taken to address any limitations that are identified.



               Background to the project:

               IBM Global Financing is one arm of IBM’s business, focused on the financing business. As the website of this business subsidiary of IBM announces, the company has been set up primarily with the objective of capitalizing on “opportunities that can emerge from intelligent and interconnected systems.” (www-03.ibm.com). Many of the IT systems that are already in existence at various organizations all around the world are legacy systems that are no longer optimum and effective in terms of functionality in a fast-paced global environment. IBM Global Financing helps several corporations and businesses acquire IT solutions that can help to meet the needs of the businesses in the most efficient and cost-effective manner possible. It offers different kinds of financing options to address the unique needs of a particular organization and to help the said organizations also manage their assets and cash flow as they carry on the process of improving and enhancing their IT systems.
The Company does not merely offer Its equipment at attractive financing rates, it also offers strategic financing for corporations to be able to survive in the current harsh economic climate that has plagued almost every region of the globe. The Company provides invaluable assistance to corporations in IT leveraging, commencing right from the beginning of the process when the decision is made to implement improved IT solutions. The corporations in question are offered options to maximize their purchasing power, offered financial incentives and concessions as they implement and use the said systems, and also in the disposal of IT systems when they are no longer effective or when they are upgraded by better systems.