IBM Business Strategy - Case Study Example

The contributing key success factors were : However, in 2002, with the achievement and success of its business model and the introduction of the new computing architecture like grid and utility computing, IBM made a high-profile announcement about its new corporate strategy centered on the concept of "on demand business". Unluckily, IBM's stock price plunged down and hit the lowest after the disappointing financial results in the first quarter of 2005 with sales increased by merely 3% from the previous year, far lower than many industry analysts' forecast of a 6% increase.

It was some years after Sam Palmisano took over as chief executive officer (CEO) in March 2002. As a precautionary measure, the company announced an immense restructuring in its European operations. Even though there were improvements in the second quarter, some began to express their uncertainties and doubts whether the "on demand business" strategy would deliver the promised results. More distinctively, many started to question how and why such a strategy was accepted and justified in the first place.

In order for IBM to remain competitive and ahead of its competitors in the increasingly crowded marketplace, a new corporate strategy called the "On Demand Business," was conceived. . In an interview, Ginni Rometty, the global head of IBM's Business Consulting Services, talks about the on demand era and on demand business. "The on demand era is primarily characterized by change. Companies are being challenged to respond with speed to an increasingly fast paced and complex environment. Because the rate of change in this environment will become constant and unpredictable, adaptability and flexibility will be critical.

Successful companies will have the ability to nimbly adapt to changes in their environment, from sensing and responding to the needs of customers in realtime to adjusting spending around market fluctuations. An on demand business is one whose business processes -- integrated end-to-end across the company and with key partners, suppliers and customers -- can respond with speed to any customer demand, market opportunity or external threat. In our research into the long-term business and technology trends affecting companies, IBM has identified four essential attributes of an on demand business: responsive, variable, focused and resilient.

As companies move along the continuum between traditional and on demand business, they will more strongly exhibit these characteristics." On the other hand, we might wonder if this new strategy really works If this makeover is a success, why did the stocks of IBM plummet in the recent years Perhaps, there are loopholes in the process of implementation with this new corporate strategy. The result of my thorough investigation, analysis, and research showed that the critical issues involve here are Industry Development and Strategic Development.

Industry Development. An Industry