IBM Strategic Management: Mission, Competitive Forces & Advantages

IBM's Corporate Mission and Stakeholder Analysis

International Business Machines Corporation, commonly known as IBM, is committed to strengthening its leading position by offering customers the highest-quality products that incorporate the latest innovations. As stated in the company's mission: "At IBM, we strive to lead in the invention, development and manufacture of the industry's most advanced information technologies, including computer systems, software, storage systems and microelectronics. We translate these advanced technologies into value for our customers through our professional solutions, services and consulting businesses worldwide" (Man on Mission, 2005).

The corporate mission of IBM is highly appropriate for the industry in which it operates and is relevant to the nature of the organization's activities. It emphasizes both the incorporation of the latest technologies and the desire to fully satisfy customers' needs and wants. Given that a mission statement is only a general presentation of a company's goals, it is normal for it to contain limited information. However, one could also note a relative lack of focus on personnel. In this regard, IBM's mission statement could be expanded to address the company's efforts to integrate employees into the corporate culture and the measures it takes to train, motivate, and reward its workforce. Furthermore, in the social context of growing attention to reducing the negative environmental impact of business operations, IBM could also express its dedication to developing environment-friendly procedures and techniques that reduce waste and pollution.

IBM has a diverse range of stakeholders, including customers, employees, shareholders, business partners, and public organizations. IBM employees are offered continuous opportunities for professional development and integration into the global context (IBM 2007 Annual Report). The company also places emphasis on its customers and continuously conducts market research to identify and best serve their needs. To satisfy the demands of shareholders, IBM develops investment plans aimed at increasing the company's revenues and, consequently, earnings per share, which are relevant to stockholders in the payment of dividends. With respect to business partners, the corporation establishes and develops strategic partnerships that benefit both parties. Finally, regarding public institutions and organizations, IBM complies with all legal requirements and human rights standards, and works to develop more environment-friendly technologies.

Competitive Forces in the IT Industry

Due to market liberalization and growing globalization, the need for qualitatively superior technologies, and the high revenues generated by companies operating in the IT industry, competition has increased significantly over the past decade. Porter's Five Forces framework provides a useful lens for analyzing the competitive environment IBM faces.

Developing cutting-edge technology does not necessarily require massive resources and can be achieved by virtually any IT-oriented individual with access to the internet, computers, and a strong commitment to their goals. Setting the foundation for a large company capable of competing in the global context, however, is considerably more difficult. Reaching a position from which to challenge established international leaders would require years of sustained effort and significant resources.

Suppliers in the IT industry have considerable power to influence corporations, in the sense that a potential conflict could result in major financial losses, and any modification in the price of commodities would translate into changes in IBM's retail pricing. A reduction of supplier power has been achieved through the outsourcing of services to less developed countries that offer high-quality inputs, lower labor costs, and generally comply with the contractual terms set by IT corporations.

Buyer power is extremely important in this industry because customers no longer simply purchase whatever companies produce; instead, they have come to influence the production process by clearly stating their demands. As a result, companies have had to shift from supply management to demand management.

There are relatively few products that can substitute those commercialized by the IT industry. The largest competitive threat comes from rival products rather than from true substitutes.

Intense rivalry among competing firms is a defining characteristic of the IT industry. It forces all companies to remain alert to market changes, continually strengthen their competitive advantages, and differentiate their products and services.

Macro-environmental changes affecting the IT industry include increasing globalization, which intensifies competition in both domestic and international markets. Attention is also being directed toward the way corporations operate facilities in foreign countries. Regulatory controls could require IBM and other organizations to improve labor standards and raise wages paid to foreign workers, which would increase operational expenditures and ultimately the retail prices of IBM's products.

The formation of strategic groups represents a relatively new development within the IT industry, but its importance is growing rapidly. Strategic groups are formed to help two or more companies work together toward common goals, such as achieving a leading market position. Some such groups are formed explicitly to outmaneuver a competitor. A notable example is the ongoing discussion at that time about Microsoft's proposed acquisition of Yahoo! as a means of gaining competitive advantages over Google.

The formation of strategic groups, development of strategic partnerships, pursuit of lower-cost resources (including human resources), and the increased focus on fully satisfying customer needs are all results of intensifying global competition driven by market liberalization. Corporate efforts to consolidate leading positions and further increase market share are likely to intensify as globalization continues.