IBM vs. Dell: Lessons for Australian Global Business Strategy
This paper examines two high-profile business events and their implications for Australian government, local business, and international commerce. The first case involves IBM's troubled implementation of a payroll and financial management system for Queensland Health, illustrating how inadequate change management and poor stakeholder engagement can derail large-scale IT projects. The second case analyzes Dell's privatization bid, demonstrating how effective stakeholder management and strategic awareness can facilitate complex corporate transactions. Using Porter's Five Forces framework, the paper evaluates both organizations' competitive positioning, contrasting IBM's failure to address stakeholder requirements with Dell's systematic approach to managing suppliers, buyers, and market entrants during a critical business transformation.
- Introduction: Two Business Events with Global Implications: Introduces IBM Queensland Health and Dell privatization cases
- Implications for Australian Government and Global Business: IT planning failures and privatization effects on Australian business
- Stakeholder Management: Contrasting Approaches: IBM ignores stakeholders; Dell engages them strategically
- Analysis Using Porter's Five Forces Model: Porter's framework applied to Dell's industry transformation
- Applying Five Forces to the PC Industry and Dell's Strategy: PC industry consolidation, new entrants, and buyer power shifts
- IBM and Queensland Health: A Five Forces Perspective: IBM's failure to manage suppliers, buyers, and change management
- Conclusion: Lessons on stakeholder management and strategic frameworks
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What makes this paper effective
- The paper uses a consistent analytical framework — Porter's Five Forces — to evaluate both case studies, giving the argument structural coherence and making comparisons direct and meaningful.
- It draws on a range of peer-reviewed sources alongside news articles, anchoring real-world events in established business theory and lending academic credibility to the analysis.
- The contrasting cases (a public-sector IT failure versus a well-managed private-sector transaction) create a clear comparative structure that highlights key lessons without requiring lengthy exposition.
Key academic technique demonstrated
The paper demonstrates applied theoretical analysis: it takes a recognized business model (Porter's Five Forces) and applies it concretely to two distinct organizational contexts. Rather than describing the framework abstractly, the author uses it as a diagnostic tool, identifying specific competitive pressures — bargaining power of suppliers, threat of new entrants, buyer power — as explanatory factors for each organization's success or failure. This technique shows how theoretical frameworks can generate practical, actionable insights.
Structure breakdown
The paper opens by introducing both news events and their relevance to Australian business. It then explores implications for government and global business before contrasting the stakeholder management approaches of IBM and Dell. The analytical core applies Porter's Five Forces to the PC industry and then to the Queensland Health IT project separately. A brief conclusion synthesizes the lessons drawn from both cases. This structure moves logically from description to implication to theoretical analysis to synthesis.
Introduction: Two Business Events with Global Implications
Two recent business events and their analysis have significant implications for the Australian government and businesses operating both domestically and internationally. The first concerns the ongoing struggle to get an IBM payroll and financial management system functioning correctly as part of Queensland Health's payroll infrastructure. The article Contract Signed Before Payroll System Proven to Work (Paull, 2013) illustrates how difficult it is to implement an enterprise-wide healthcare IT system with accuracy and precision. The second article, Dell Sparks Bidding War as New Offers Emerge (Sydney Morning Herald, 2013), illustrates how challenging the privatization of a publicly held multinational corporation can be.
Implications for Australian Government and Global Business
The article Contract Signed Before Payroll System Proven to Work (Paull, 2013) provides insight into how difficult this problem continues to be, and how much time and financial resources are being wasted in attempting to find a resolution. There are many lessons for Australian government and businesses, with reverberating effects throughout international business. At the center of Queensland Health's payroll system challenges is the lack of effective strategic IT planning and an effective change management strategy that can be audited for performance. Both of these elements — strategic IT planning encompassing the broader objectives of the organization, and an effective change management strategy — are essential for any IT system's success (Fickenscher & Bakerman, 2011). The need for effective change management is particularly critical when process and system integration is prevalent in the design (Ball, 2000).
The second article, Dell Sparks Bidding War as New Offers Emerge (Sydney Morning Herald, 2013), discusses the strategies that CEO and founder Michael Dell is employing to sell his company to private investors. The situation has major implications for the Australian government, as the Dell case will set a precedent in international business with regard to the sale of a multinational corporation. The privatization aspects of Dell are already reshaping elements of Australian business strategy, with manufacturers considering how they might rely on comparable strategies to gain greater freedom of financing and operations, removed from the pressures of pleasing shareholders and reporting all significant financial events.
Stakeholder Management: Contrasting Approaches
Both articles illustrate how the expectations of government stakeholders must be taken into account for any enterprise-wide strategy to succeed. The first article shows what happens when stakeholder needs are ignored and confused within the context of a system structure. The lack of change management planning integrated with business process management (BPM) and business process re-engineering (BPR) is critically important for any global IT strategy to succeed (Fickenscher & Bakerman, 2011). IBM's failure at Queensland Health underscores how critical it is to account for the needs and requirements of government stakeholders. The lack of insight into these requirements led to the creation of a system that is practically unusable with any degree of reliability (Paull, 2013). This failure also demonstrates what happens when a change management strategy has not been established as a unifying element across the entire enterprise (Fickenscher & Bakerman, 2011). Queensland Health becomes an iconic example of what happens when an IT strategy goes completely wrong and fails to account for the needs of government and business stakeholders. The implications for global business include diminished trust in IT, and locally, it causes chaotic financial transactions within the healthcare facility — disrupting transactions, trading, and trust, three core components of a growing economy.
The second article illustrates the contrasting approach of keeping government stakeholders actively involved, as Dell strives to maintain open communication with the United States Securities and Exchange Commission (SEC) and other government entities that hold significant influence over the transaction. In Dell Sparks Bidding War as New Offers Emerge (Sydney Morning Herald, 2013), it is apparent that Michael Dell is excelling at stakeholder management while simultaneously seeking the best possible price for his company. By doing so, he is ensuring the transaction will be approved and that he will gain the freedom necessary to grow the business into a more services-oriented model. Dell's exceptional expertise in supply chain management (Kapuscinski, Zhang, Carbonneau, et al., 2004) and its continued investment in collaborative systems (Walters & Rainbird, 2007) are world-recognized. The lessons for global businesses in general, and Australian businesses specifically, are that effective stakeholder management delivers exceptional return on investment (ROI). Dell is also demonstrating that all of these factors can be orchestrated to ensure consistency across government and business sectors through well-executed stakeholder management.
Analysis Using Porter's Five Forces Model
Both articles offer a glimpse into how organizations can either choose to remain cognizant of their industries — defining how they set and achieve customer expectations — or allow those expectations to languish and be ignored. The latter decision leads to chaos, confusion, and market failure. Dell has chosen to remain cognizant of and actively influence the forces shaping its business model as it transitions from a public to a private company (Sydney Morning Herald, 2013). Dell has also worked to brief suppliers, created barriers to market entrants by avoiding sweeping changes to its existing product and service strategies, and briefed its largest enterprise customers on the transition. Dell has even devised a strategy for dealing with the rise of substitute products and services, creating a series of low-end PCs running the Microsoft Windows 8 operating system. What Dell is doing is following the framework of Porter's Five Forces model (Porter, 2008).
An analysis of Dell's supply chain (Gunasekaran & Ngai, 2005), build-to-order product strategies (Gunasekaran & Ngai, 2009), and approach to inventory management (Kapuscinski et al., 2004) — used in conjunction with information gathered from Dell's filings with the U.S. Securities and Exchange Commission — indicates that the PC industry is growing through rapid consolidation. The effects of low-cost production are not only driving down prices and profitability; the entire nature of competition in the industry is also changing quickly. Entirely new form factors are emerging and driving down barriers to entry for competitors in adjacent markets. All of these factors together are leading to much greater levels of competitive rivalry in the market.
Conclusion
Both articles — Contract Signed Before Payroll System Proven to Work (Paull, 2013) and Dell Sparks Bidding War as New Offers Emerge (Sydney Morning Herald, 2013) — provide examples of how stakeholder requirements could have been more effectively managed. Both cases also demonstrate how critical it is to account for compliance requirements from the Australian government, local businesses, and the global business community. The IBM example shows how the absence of a strategic framework leads to chaos, while the Dell case shows how well-orchestrated a privatization effort can be when such a framework is in place. Both also reflect the need to manage expectations across governments and local and global business communities through the effective use of information.
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