IBM's Rise, Fall, and Transformation - Essay Example

? IBM CASE STUDY IBM – Case Study What competencies has IBM had to invest in arising from its transformation from a‘product centric’ to a ‘service-centric’ organisation? IBM realised that the lost legacy of profitability and market leadership had far reaching implications which culminated in their extra focus on being product centric rather than being ‘service centric’. Hence, IBM changed its value proposition from being a hardware provider to a software solution provider focusing on increased customer satisfaction by providing integrated solutions to people. To emphasize on the competitive advantage under its new vision, firm’s core competencies were strengthened by highlighting on the concept of employee experience and knowledge rather than technical product development. Business processes were reengineered by changing reward criteria and performance matrices as well as marketing activities. The idea of providing custom built solutions for the customers proved to be a handy tool for reaching customer satisfaction. Company’s emphasis also shifted to the global market where it tried to provide the business services by divesting itself on low margin industries. This enabled it to capture new markets and work towards customer satisfaction through different venues using different marketing techniques by adapting to cultural changes in different countries. Perhaps the most important competency that the company inculcated was that of becoming a brand worker ensuring to provide customized and integrated technologies to the customers even if that meant using a rival company’s product. This led to pervasive customer loyalty. IBM also bolstered its services division by acquiring a management consultancy firm that helped it to increase its business consultants worldwide. This led to the communication of company’s vision in a much effective way. 2. How would you describe Louis Gerstner’s implementation style of IBM’s competitive strategy in the early 1990’s? The strategic thinking expertise and prolific experience of Louis Gerstner helped him gauge the severity of the business situation and competitive advantage of the company sufficiently. This helped him in innovating new strategic plans and methodology to foster the company’s new Vision that had been formulated. He did thorough research on the business units of the company and tried to integrate them into one so that they may follow standard procedures to create enhanced value for the customers. This move was an audacious decision as it was a contra act of the policy made by his predecessors. He also seemed to follow an adaptive approach in formulating new plans of action. This was evident when he tried to grab the opportunities to make profitable initiatives. Louis’s proactive approach towards business environment led him to gain advantage over his competitors in all respects. Louis also was apt at making bold decisions such as that of exiting the consumer market and playing in the larger business market only. Louis also viewed that IBM was a social entity at large and therefore employees and the workforce played a major role in the organisational success. That is why he took steps to reengineer the human resource management practices of the company making them more employee-centric at the basic level. In order to align the organisational performance with the proposed goals, Louis tried to focus on developing the brand concept. This later helped it to create loyal customers. He also redesigned the marketing campaigns of the firm in order to ensure that the all promotion activities boasted the same value proposition of the firm. All this shows that he was keen to follow a rigorous decision making process. In a nut shell, Louis’s style of implementation is analogous to that of a capable leader. He took bold decisions based on extensive research and tried to retain their viability. He also looked for new avenues to approach and cater through his judicious work style. 3. What are the implications of the globally integrated enterprise model for marketing managers in the Australia and New Zealand subsidiary of IBM? The globally integrated enterprise model had created a lot of favourable and unfavourable situations for the marketing managers of the subsidiaries. Through this model, they will have to follow the same procedural setup as specified by the CEO in the home country which might lead to loss of marketing opportunities for the managers in some countries. The marketing managers in countries like Australia and New Zealand have to think of Customer satisfaction rather than product development and also try to maintain a link with the policies of the home company to some extent. They would have to consider avenues to cater customer demand and other marketing niches to expand the business field of the company. The focal point should be that the marketing campaigns should foster the same value proposition as set by the parent company. Communicating a consistent and integrated vision of the company should be the main aim of the company’s representatives in these countries. Conversely, the globally integrated enterprise model will also help the subsidiary companies to create different methodologies towards profitability and business growth. They would be able to cater the demands of the customers in much better way and formulate a wholesome experience for the target market. 4. Discuss the elements of the marketing strategy that makes IBM successful in today’s global marketplace? Perhaps the magic wand that IBM has used all this while to retain its competitive edge in the business arena is that of proactive policy making and adaptive approach to changing business environments. These two methodologies will not only help the company in retaining its position globally but will also help it to maximize its profits. IBM has moved towards an integrated marketing campaign for all its units in different countries. This helps convert IBM into a brand that has its own reputation. IBM’s policy to integrate and standardise the value chain of the company helps to create a similar customer experience throughout the globe. This also helps the company in standardising its efforts globally. IBM’s policy to approach markets in different counties differently also creates a huge difference in the country’s performance on the global scale. Each country unit approaches its target market differently and results in a maximum customer satisfaction for IBM’s products in each country. Another element of IBM’s strategy that makes its efforts auspicious in the global market is that of a thorough trend analysis and tapping of upcoming markets. Just like IBM did in India, Russia, Brazil and China, IBM would continue to tap upcoming markets and gain a competitive advantage in those countries. 5. Highlight some of the challenges that IBM will face in the future and suggest how it would respond to these challenges. In the contemporary era, not only IBM but also all companies are going global, so IBM has to realize that there will be a time when the present competitors of the company will grow strong enough to pose a tough challenge to the company. In order to avoid this challenge, the company will only have to follow its current policy of looking for competitive advantage and working towards the competitive advantage. The company will also face a tough challenge to keep up its pace with the technological changes in the world as a whole. Consumer demand for technology is upgraded constantly with time and gadgets get old with each passing second. This poses a major threat to the company as it would have to constantly change the product line to achieve customer satisfaction. The company would be able to tackle this challenge by constantly focussing on Reasearch and develpment. Another possible threat to the company can be that of employee over complacence. Just like it happend in the 1990’s, the employee’s of the company may again become over confident about the company’s performance and stop the process of value addition. This would have a huge detrimental effect on the company. The company would have to emphasise on constant performance checks and keep constant track of employee efforts. Company might also face a problem of incoherence in the processes of the business units of the different countries if it does not maintain a strong link between the units.The company would have to keep a constant linkage amoung its business unit and work towards standardised decision making processes. Company might also face market saturation in some countries that might lower the profit prospects of the company. This could easily be overcome by the company’s approach of diversification and market penetration. Through this approach the company would be able to find new products for the customers or might even find new markets because it always focuses on a proactive methodology. In some cases the advertising campaigns of the company may come out as being ineffective. This too would lead to a reduction in the sales of the company. In this case, the company might focus on extensive consumer research in order to find the right marketing mix and the right product appeal for the customers. Bibliography Jain, Haley, Voola & Wickham. 2012. IBM's rise, fall and transformation: Perspectives on marketing strategy p.366-369 Read More