International Business Machines Corporation - Case Study Example

? Case Study: IBM Table of Contents Table of Contents 2 IBM 3 Tushman-O-Reilly Congruence Model 4 4 Strategy Frame Work 11 References 14 Appendix A 15 Force Field Analysis 15 IBM International Business Machines Corporation or IBM is an USA based multinational technology and consulting company. IBM offers various services such as hardware, software and technology solution to customers. The company was established by Charles Ranlett Flint in the year 1911. IBM is headquartered at Armonk, New York, U.S.A. In the initial years IBM was founded as CTR or Computing Tabulating Recording Company owing to merger and acquisition of three companies. Three participants for merger activity were the international time recording company, computing Scale Company and the tabulating machine company. On the other hand in the year 1924, CTR or Computing Tabulating Recording Company changed its name to IBM (International Business Machines Corporation, 2012). In accordance with Fortune 500 list published in the year 2012, the company is ranked at the 19th position. Major competitors of IBM are Hewlett Packard, Accenture, Toshiba, Microsoft, Xerox and Dell among others (Yahoo Finance, 2012). Tushman-O-Reilly Congruence Model (Source: Tushman & O'Reilly, 2002, p. 59) In 2002, Tushman and O’Reilly proposed congruence model in order to set a sustainable strategy to solve change management issues. IBM needs to use the congruence model in order to solve perplexity of the situation. Stepwise congruence model for IBM can be explained in the following manner using organizational problem solving model proposed by Tushman and O’Reilly. (Source: Tushman & O'Reilly, 2002, p. 59) Opportunity Gaps The computing business has become commodity affair due to hyper competitiveness. IBM is facing challenge from various competitors such as Dell, HP, Toshiba and Apple hence market leadership position of the company gets perturbed over the course of the time. For example, business growth rate (approximately 30%) of Dell is much higher in comparison to single digit growth rate of IBM. Palmisano is planning an escape strategy of moving into new business such as consulting instead of battling in hypercompetitive computer industry. IBM will face competition from various companies such as Wipro, CTS and Accenture Ltd in consulting business. They will face major threat from Accenture Ltd due to its strong presence in business process outsourcing. Problem for IBM deepens due to the fact industry knowledge and service expertise of Accenture is far superior to their non technical expertise. Opportunities for business consulting seem lucrative enough for the company to change their strategy. Market researcher IDC has estimated a market volume of half trillion for IBM. Experts have predicted that consulting business will grow at an annual rate of 8% to 11% for coming years. Merrill Lynch's Milunovich has figured out growth potential of almost 9% for IBM global services. Critical Tasks Gaining expertise in the field of business consulting can be termed as major challenge for IBM. IBM is genetically built for providing technology solution but they need something more than technical expertise in order to break the ice in consulting business. Mayo is the strategic partner (read bio medicine section) for the company in the field of business consulting but matter of the fact is that existing engineers of IBM need skill re integration in order to create valuable impact. The company needs to design robust knowledge session for their engineers in order to recapitulate them with knowledge of business consulting. Strategic tie ups with universities are needed in plenty of number in order to design sustainable skill transfer model. Organizational Congruence In this section IBM needs to examine congruence of the organization in terms of structure, culture and people. Organizational structure of IBM is more focused on research of development of new technology but in consulting industry they need to be multidimensional. Top down approach of management is needed in order to create strong leadership example in front of staff. Learning organization concept is needed to be implemented in order to fillip the change process (Garvin, 1993, p. 81). Transparent communication between engineers and top management can decrease the complexity of business consulting project. Engineers should be encouraged to develop new ideas for particular problem which in turn can change delivery aspect of business consulting. People of IBM are engineers accustomed with engineering projects. IBM needs to focus on redesigning job responsibilities for existing engineers and staff rather than hiring new ones for business consulting. Case study shows that IBM has designed new job responsibility for research manager William Pulleyblank in order to use skill set of the person in a productive manner. The organization needs to use same strategy for junior engineers in order to give them opportunity to adjust with changing situation. Developing Solution IBM needs to deliver solution after going through first three stages of congruence model. Merger and acquisition of small companies having expertise in business consulting can be a useful way to develop solution set for IBM. Selecting right company is vital because small it has been observed that lifecycle period for newfangled service deals is ridiculously short. Although exceptions are there such as Nextel. IBM has acquired Nextel’s customer service operations in order to improve customer satisfaction ratings and they achieved satisfactory result. The company has already established profitable deal with P&G and other big players hence they can deploy profit earned by successful deals in acquiring small companies having expertise in business consulting. The company can establish strategic business units in foreign shore by establishing partnership with local consulting firm not only to decrease outsourcing cost but to increase market penetration also. Assessing Congruence Next few years will be critical for IBM due to various reasons such as examining the efficacy of congruence model, developing proper human resource strategy to fillip outcome of deployed strategy. Financial auditing is needed in order to cost benefit analysis of the change. Synchronizing formal organization, culture and people in one line will be a critical challenge for Samuel J. Palmisano. For example HSBC uses five filter framework complemented by economic benefit connectivity, profit margin, cost efficiency and liquidity to assess their congruence model. IBM needs to develop such parameters in order to analyze critical issues regarding the congruence model. Strategy Frame Work IBM needs to use force field analysis in the initial phase in order to measure the potentiality of change (Daft & Marcic, 2010, pp. 277-278). Top level management of the company needs to establish congruence among building blocks in order to develop sustainable growth strategy. Following model can be used in order to usher congruency model of IBM. Fit Issues People/Formal Organization IBM work force is complemented by talented workforce and the company is doing their best to re skill their work force by sending them to universities to learn key aspects of business consulting. The company is assigning new job responsibility to existing employees in order to help them to adjust their skill in accordance with requirement of the situation. People/Critical Task Engineers of the company do not have the skill set to deliver business solution due to lack of knowledge. IBM has designed specialized knowledge session for employees on the other hand they are focusing on merger and acquisition of small firms having expertise in business consulting in order to replenish skill inventory. People/Culture The company needs to follow learning organization culture in order to transfer knowledge to various building blocks. Critical Task/Formal Organization IBM needs to create more flexible organizational structure to deploy congruence model. Critical Task/Culture IBM strive for innovation hence culture of the company also supports the multidimensionality of congruence model. Formal Organization/Culture IBM uses balance scorecard as a tool for measuring performance of employees (Kaplan & Norton, 2006, p. 101). Balance scorecard model can be used to boost the culture in favor of change. References Daft, R. L., & Marcic, D. (2010). Understanding management. Stamford, Connecticut: Cengage Learning. Garvin, D. A. (1993). Building a learning organization. Harvard: Harvard Business Review. International Business Machines Corporation. (2012). IBM: 2011 annual report. Retrieved from http://www.ibm.com/investor/pdf/2011_ibm_annual.pdf. Kaplan, R. S., & Norton, D. P. (2006). Alignment: Using the balanced scorecard to create corporate synergies. Harvard: Harvard Business Press. Tushman, M. L., & O'Reilly, C. A. (2002). Winning through innovation: A practical guide to leading organizational change and renewal. Harvard: Harvard Business Press. Yahoo Finance. (2012). International business machines corporation (IBM). Retrieved from http://in.finance.yahoo.com/q/co?s=IBM. Appendix A Force Field Analysis Following force field analysis shows that driving force for change> restraining force for IBM. Strength Scale Driving Forces Restraining Forces Strength Scale 4 out of 5 Computer business has become saturated and IBM desperately needs business diversification Lack of knowledge in the field of business consulting 4 out of 5 4 out of 5 Lucrative growth opportunity of business consulting service Capital investment 3 out of 5 3 out of 5 Strong strategic partnership with big players such as P&G Lack of knowledge among engineers about dynamics of business consulting 3 out of 5 Total Score 11 out of 15 10 out of 15 Read More