Like any and every sector in the competitive world, the Information Technology sector has become highly competitive. There are primarily two reasons behind it. The first reason is the effects of the rapidly increasing globalization. This has triggered a sharp wave of raging competition in the corporate sector and organizations are trying to perfect the art of their marketing, management, human resource, production, supply chain and a lot of other functions all at the same time with a single objective of achieving a sustainable competitive advantage. The second reason, which makes the Information Technology sector much more competitive, is the rapid progression and development in this field. Technology gets updated at a rapid rate that calls for excessive research and development. With newer players entering the Information Technology market with much more creative ideas than ever before, the existing firms are forced not only to focus on conventional business function such as marketing and human resource management but also have to invest all their energies in becoming as innovative as they could get.
The success or failure of any business entity is greatly dependent on how well align its goals and management systems are with its strategic plans. There have been cases reported where businesses failed to make it big despite of having excellent strategic plans. This was because they failed to keep their management systems and activities in line with their strategic plans. While management in itself is a small term, it covers various dimensions of business activity that include both internal and external influences. These include management of business processes, financial management, customer satisfaction, human resource management and the internal and external communications pertaining to the business. All these management aspects must be integrated into a well balanced management system such that it keeps the overall business activity in line with the strategic plans of the business. Many businesses get on the road to decline only because they fail to keep their business activities in line with their strategic plans.
Though in general, all organizations, with the exception of nonprofit organizations, work towards maximization of profits, there are other strategic goals that an organization sets for certain time intervals that it aspires to achieve. In order to ensure meeting those targets, the organization is required to set a road map, following which, it can reach its strategic goals. In order to outline an appropriate road map, it is essential that the organization identifies the key elements that will contribute to achieve the set targets smoothly. Such contributing elements are known as the Critical Success Factors (CSF). This paper aims at evaluating the SWOT, Critical Success Factors and the strategic management systems of IBM (International Business Machines), a renowned name in the field of Information Technology.
International Business Machines, more popularly known as IBM, or the Big Blue, came into being in 1911 with the merger of three companies and was then known as CTR Corporation (Computing Tabulating Recording). Later in 1924, the company was renamed as the International Business Machines Corporation (IBM) and since that time the company had been on a continuous road to growth. Today it is one of the top giants in the Information Technology sector. Since the day it was established, IBM has invested extensively into research and development and is a major contributor in providing the business solutions that has made the international business what it is today. The efficiency that IBM brought into the entire corporate world with its technological innovations, changed the way how organizations would be run in future. It is inevitable that a company that pioneers in making the entire corporate world work with efficiency, would compromise on the lines of efficiency and strategic management itself. The company that started off by making business punch cards, was now expanded in other dimensions including space exploration, war equipment, medical equipment and energy saving equipment. In short, IBM was everywhere and almost every field seemed to be incomplete without an IBM presence. Today, IBM is present in more than 70 countries across the globe and is still expanding. However, the external environment for IBM is not as much the same as what it was before. Back in 1970s, the company is said to be controlling the 70% market share of the computer industry (Pugh, 1995). Today there are many other strong players in the industry namely Compaq, Apple, Acer, Dell, and Hewlett Packard. However, IBM has still managed to sustain its competitiveness by adopting flexible management strategies that had evolved with time.
Innovation and Research & Development
Mergers and Takeovers
B2B customer loyalty
Most advanced technology and wide range of services for e.g super computers.
Rising costs of value chain.
Shortage of suppliers in value chain
High operating costs
Stronger marketing strategies of newer competitors
New markets to explore with the increasing demand of internet service and wireless technology
Can increase profitability by strengthening Supply Chain system.
The new "Green Strategy" has resulted in saving energy costs
High operating costs
A detailed analysis of the firm's SWOT is discussed under the following sections;
IBM's biggest strength is the company's pioneering in the field of Information technology. Ever since the company established itself, it kept its focus on the research and development and fixated on constant innovation (Watson, 2003). This has helped the company to stay way ahead of other competing firms. IBM has diversified itself and had explored and created various new dimensions in the field of Information Technology. These include space exploration equipment, medical equipments, business continuity and snap services, end user services, integrated subject services, IT strategy and architecture services. This has allowed the company to diversify its risks and have an edge on its competitors. None of IBM's competitor, whether old or new, has been able to enjoy the level of B2B customer loyalty that IBM enjoys. This has given the organization a competitive advantage. The fact that IBM has developed the world's most efficient super computer has contributed to create goodwill for the organization that is practically difficult for the competing firms to achieve. IBM can easily use this goodwill and edge of exceptionally advances technology as its marketing tool. The merger of IBM and Lenovo has made the organization stronger than ever before which will help in a further sustainable competitive advantage.
One of the firm's major weaknesses is the increasing costs of its value chain system. While IBM has an efficient out sourcing system in place, the shortage of suppliers in the value chain system that firm experiences has resulted in increased cost for the company. Moreover, the newer competing firms have proved to have much lower marketing costs as compared to that of the IBM. Although competing firms that are newer such as Compaq and Apple are way behind IBM as far as technology is concerned, yet their marketing strategy is much stronger than IBM, which is allowing these firms to snatch away IBM's market share. IBM hires specialist and skilled workforce, however its employees are very high salaried as compared to other firms and as a result IBM experiences increasing operating costs.
Over a period of time the demand for wireless services and the internet have increased among non-business consumers as well. While IBM is more popular in the B2B circle and has more business oriented clients, but this increasing demand of wireless and internet services can allow IBM to explore new markets in the B2C sector. As mentioned earlier, IBM's primary weaknesses lies in its supply chain system. By strengthening its supply chain system, IBM can sustain its market leadership over other competitors. IBM's innovative 'Green Stratey' has helped the company to reduce on its energy costs.
The current state of the Information Technology industry has little barriers to entry for new entrants. Any company that is innovative and has a strong marketing strategy can easily bite away IBMs market share. Companies such as Compaq and Apple are much smaller in size as compared to IBM but are giving IBM a tough competition. IBM exists in a perfectly competitive market. This means customers can easily switch between brands, which call for ensuring strong brand loyalty among the customers. The firm's operating costs are rising and at the same time the economic crunch is hitting the global economy. Rising Inflation and Unemployment would mean lower affordability of customers and at the same time a further rise in the company's operating costs. Charging higher prices under such circumstances will result in losing customers therefore IBM will have to ensure cost efficiency.
A good way to ensure the alignment of management activities with strategic plans is to use the Balanced Scorecard system. A balanced scorecard is a matrix that works on four perspectives, which are amalgamated together to form a balanced management system. These perspectives include learning and growth of employees, customer care, internal management…