Mission Statement (2004)At IBM we strive to lead in the creation development and manufacture of the industrys most advanced information technologies including computer systems software networking systems storage devices and microelectronics We translate these advanced technologies into value for our customers through our professional solutions and services businesses worldwide
12Data Source IBM Corporate httpwwwibmcomus
Case Analysis MissionComponents IBM Remarks
Customer No Mentioned but unspecified Clarified in 2005rsquos IBMrsquos Business Value
ProductsServices Yes
Yes
Yes
No
No
Yes
No
No
ldquoCreation development and manufacturerdquo
Markets ldquoWorldwiderdquo or global
Technology Specified as ldquoInformation Technologyrdquo
Survival Growth Profitability
Mentioned in IBMrsquos Principal Goals ldquolong-term value to shareholdersrdquo
Philosophy Based on IBMrsquos Guiding Principles
Self-Concept Presumed by word ldquoleadrdquo Based on IBMrsquos New Industry Model
Concern for Public Image Mentioned in 2005rsquos IBMrsquos Business Model
Concern for Employees Mentioned in 2005rsquos IBMrsquos Business Model and Business Conduct Guidelines
13Data Source IBM Corporate httpwwwibmcomus
Proposed Mission StatementAt IBM we strive to lead in the creation innovation development and manufacture of the industrys most advanced information technologies including computer systems software networking systems storage devices and microelectronicsWe translate these advanced technologies into competitive value for our individual and corporatecustomers through our professional on-demandsolutions and dedicated business services while consistently generating high returns for our shareholders and a shared commitment to our employees and the world
14Data Source IBM Corporate httpwwwibmcomus
Business Values
Dedication to every clients successInnovation that matters for our company and for the worldTrust and personal responsibility in all relationships
15Data Source IBM Corporate httpwwwibmcomus
Principal Goals circa 2005Help our clients succeed in delivering business value by becoming more efficient and competitive through the use of business insight and information technology solutions Provide long-term value to our shareholders
ldquosmall s and big Erdquo (Less focus on strategic development maximum push on EXECUTION)
16Data Source IBM Corporate httpwwwibmcomus
The New Model circa 2001The New Industry Model
Innovate or IntegrateThe New Business Model
Services-LedThe New Computing Model
Infrastructure + UbiquityThe New Marketplace Model
An Open Playing Field(excerpts from 2001 Annual Report)
17Data Source IBM Corporate httpwwwibmcomus
Business Model circa 2005IBMrsquos business model developed over time is through
Strategic investments in services and technologies that have the best long-term growth and profitability prospects based on the value they deliver to clients A commitment to employees and the communities in which it operate
3Data Source IBM Corporate httpwwwibmcomus
On Demand Business 2005IBMrsquos on demand business model based on 2003rsquos e-business on demand model considers four essential characteristics
Responsive mdash intuitively responsive to dynamic unpredictable changes in demand supply pricing labor and competitionVariable mdash flexible in adapting to variable cost structures and processes associated with productivity capital and financeFocused mdash concentrated on core competency differentiated tasks and assets with tightly integrated strategic partnersResilient mdash capable of managing changes and threats with consistent availability and security
18Data Source IBM Corporate httpwwwibmcomus
On Demand Business 2005IBMrsquos on demand business model based on 2003rsquos e-business on demand model considers four essential characteristics
Responsive mdash intuitively responsive to dynamic unpredictable changes in demand supply pricing labor and competitionVariable mdash flexible in adapting to variable cost structures and processes associated with productivity capital and financeFocused mdash concentrated on core competency differentiated tasks and assets with tightly integrated strategic partnersResilient mdash capable of managing changes and threats with consistent availability and security
4Data Source IBM Corporate httpwwwibmcomus
On Demand Business 2005The on demand operating environment has its own four characteristics
Integrated mdashintegration of core processes and systems so that business can flow inside companies and across multiple enterprisesOpen mdash As the basis for integration open technical interfaces and agreed upon standards are essentialVirtualized mdash Grid computing will allow distributed computing resources to be shared and managed as a single large virtual computerAutonomic mdash The enormous complexity of tomorrowrsquos computing systems must rely on technology that manages itself
19Data Source IBM Corporate httpwwwibmcomus
On Demand Business 2005The on demand operating environment has its own four characteristics
Integrated mdashintegration of core processes and systems so that business can flow inside companies and across multiple enterprisesOpen mdash As the basis for integration open technical interfaces and agreed upon standards are essentialVirtualized mdash Grid computing will allow distributed computing resources to be shared and managed as a single large virtual computerAutonomic mdash The enormous complexity of tomorrowrsquos computing systems must rely on technology that manages itself
20Data Source IBM Corporate httpwwwibmcomus
IBM Investment Cycle
5Data Source IBM Corporate httpwwwibmcomus
Long-Term Objectives
21Data Source IBM Corporate httpwwwibmcomus
Long-Term Objectives
22Data Source IBM Corporate httpwwwibmcomus
Corporate CultureRespect for the Individual for his rights and dignity Service to the CustomerExcellence Must be a Way of LifeManagers Must Lead EffectivelyObligations to StockholdersFair Deal for the SupplierGood Corporate Citizenship
Ibmswf
Graphics are courtesy of IBM Corporate web site httpwwwibmcomus
Case AnalysisCorporation
Corporate Strategy
7Data Source IBM Corporate httpwwwibmcomus
Case Analysis StrategyConcentric Diversification eg Ascential in 2005 Candle and MaerskData in 2004 and Rational in 2003 to focus more on enterprise and middleware software[Acsential provider of enterprise data integration software for 114Bn plus 5 service- and 9 software-related companies]
24Data Source IBM Corporate httpwwwibmcomus
Case Analysis StrategyDivestiture eg On December 31 2002 IBM sold its HDD business to Hitachi for approximately $2Bn Divested its Personal Computing business to Lenovo on April 30 2005 for 175Bn Strategy employed to focus more on high-end hardware such as servers
6Data Source IBM Corporate httpwwwibmcomus
Case Analysis StrategyConcentric Diversification eg Ascential in 2005 Candle and MaerskData in 2004 and Rational in 2003 to focus more on enterprise and middleware software[Acsential provider of enterprise data integration software for 114Bn plus 5 service- and 9 software-related companies]
25Data Source IBM Corporate httpwwwibmcomus
Case Analysis StrategyConcentric Diversification eg Ascential in 2005 Candle and MaerskData in 2004 and Rational in 2003 to focus more on enterprise and middleware software[Acsential provider of enterprise data integration software for 114Bn plus 5 service- and 9 software-related companies]
26Data Source IBM Corporate httpwwwibmcomus
Joint Venture ldquoCellrdquo microprocessor with Sony and Toshiba in 2005 for a 4GHz supercomputerldquoWirelessrdquo chip with Chartered Semiconductor Infineon and Samsung created its first silicon-functional circuits using a 45 nm production process on 300 mm wafers
Product Development eg open technologyMarket Development eg Business Transformation Services Service-Oriented Architecture
Case Analysis Strategy
Graphics are courtesy of IBM Corporate web site httpwwwibmcomus
Case AnalysisCorporation
Problem Statement
28Data Source IBM Corporate httpwwwibmcomus
Statement of the ProblemBased on the existing Corporate Profile Competitive Profile External Factor Evaluation and Internal Factor EvaluationMatrices what specific strategies and long-term objectives should be recommended to sustain growth increase profitability and maintain its competitive advantage
Graphics are courtesy of IBM Corporate web site httpwwwibmcomus
Case AnalysisCorporation
Competitive Profile Matrix
30Data Source IBM Corporate httpwwwibmcomus
Competitive Profile MatrixMarket ShareFinancial PositionQuality Research amp DevelopmentCustomer Loyalty CRMTechnology LeaderGlobal Innovation ForerunnerKnowledge Management
31Data Source IBM Corporate httpwwwibmcomus
CP Matrix Market ShareSystems and Financing World leader in server sales Software World leader in middleware and the second-largest software business overall Services World leader in IT services and consulting
8Data Source IBM Corporate httpwwwibmcomus
CP Matrix Market ShareLeader in Middleware
32Data Source IBM Corporate httpwwwibmcomus
CP Matrix Market ShareLeader in Middleware
33Data Source IBM Corporate httpwwwibmcomus
Financial StatementsCP Matrix Financial Position
9Data Source IBM Corporate httpwwwibmcomus
IBM Worldwide FactsBy 2005 IBM is the worlds largest information technology company
Measured by revenue the biggest provider of IT services ($46B) hardware ($31B) and financing ($26B) and second in software ($15B)
2004 revenues were $962B
CP Matrix Financial Position
10Data Source IBM Corporate httpwwwibmcomus
IBM Worldwide FactsBy 2005 IBM is the worlds largest information technology company
Measured by revenue the biggest provider of IT services ($46B) hardware ($31B) and financing ($26B) and second in software ($15B)
2004 revenues were $962B
CP Matrix Financial Position
34Data Source IBM Corporate httpwwwibmcomus
IBM Worldwide FactsBy 2005 IBM is the worlds largest information technology company
Measured by revenue the biggest provider of IT services ($46B) hardware ($31B) and financing ($26B) and second in software ($15B)
2004 revenues were $962B
CP Matrix Financial Position
11Data Source IBM Corporate httpwwwibmcomus
Consistent Earnings per Share
CP Matrix Financial Position
Source CNN Money
35Data Source IBM Corporate httpwwwibmcomus
Consistent Earnings per Share
CP Matrix Financial Position
Source CNN Money
36Data Source IBM Corporate httpwwwibmcomus
Consistent Credit Ratings
Ratings remained unchanged over the past five years
CP Matrix Financial Position
Standard and
Poorrsquos
Moodyrsquos Investor Service
Fitch Ratings
Senior long-term debt
Commercial paperA1A+
A-1 Prime-1AA-F1
37Data Source IBM Corporate httpwwwibmcomus
Sources of Funds
CP Matrix Financial Position
For the Year ended Dec 31 2005 2004 2003
Client finance External $ 12249 $ 12433 $ 13279 Internal 1167 1185 1150Commercial amp finance 27032 25566 24291
Total $ 40448 $ 39184 $ 38720
38Data Source IBM Corporate httpwwwibmcomus
Versus Competitors Versus Industry
CP Matrix Financial Position
310Moodyrsquos (1856)22nd266Return on Equity90Thomas (694)77th82Return on Assets169RGAm (1096)56th121Return on Investment
5(33)2nd10EPS pa(1995-2005)
2838(8272)2nd4129Gross Margin69RACK(352)5th1050LT Growth (5 ndashyear)
84747M(8889B)2nd8850BRevenue (2005)
0250B1st5842BIT RampD (2005)
(24602B)Leader
7871st341750Employees
54253M2nd11490BMarket CapitalizationIndustryRankParticulars
12Data Source IBM Corporate httpwwwibmcomus
CP Matrix Quality RampDWorlds largest IT research organization
With more than 3000 scientists and engineers working at eight labs in six countries RDampE expense was $5842B in 2005 (MSFT 62B) $5874B in 2004 and $5314B in 2003
More US patents than any other companyfor the thirteenth consecutive year in 2005
With 3248 patents earned in 20042000-2005 received more than 13000 patents --approximately 5400 more than any other patent recipient
39Data Source IBM Corporate httpwwwibmcomus
CP Matrix Quality RampDWorlds largest IT research organization
With more than 3000 scientists and engineers working at eight labs in six countries RDampE expense was $5842B in 2005 (MSFT 62B) $5874B in 2004 and $5314B in 2003
More US patents than any other companyfor the thirteenth consecutive year in 2005
With 3248 patents earned in 20042000-2005 received more than 13000 patents --approximately 5400 more than any other patent recipient
40Data Source IBM Corporate httpwwwibmcomus
IBM Worldwide FactsSoftware accounted
for more than 40 of the 3415 US patents awarded to IBM in 2003 Nearly three times as many patents as Microsoft Twice the combined total awarded to its four closest software industry competitors
Intelrsquos Preferred Quality Supplier of 2006
CP Matrix Product QualityCP Matrix Quality RampD
41Data Source IBM Corporate httpwwwibmcomus
Leader in Brand Recognition
CP Matrix Customer Loyalty
42Data Source IBM Corporate httpwwwibmcomus
Commercial Campaign History1925 ndash1994 ndash2003 ndash2004 ndash
CP Matrix Customer Loyalty
43Data Source IBM Corporate httpwwwibmcomus
Competitorrsquos PitchInvention that makes a difference
Invent
Direct the World OverValue and Customized Technology
Where do you want to go todayYour Potential Our Passion
Information on DemandBusiness on Demand
44Data Source IBM Corporate httpwwwibmcomus
Customer Relationship Management IBM
CP Matrix CRM Model
Source Steve LaBelle and Brian Scheld (2004) ldquoCRM done right executive handbook for realizing the value of CRMrdquo IBM Business Consulting Services IBM Corporation pp 1-34
45Data Source IBM Corporate httpwwwibmcomus
Deeper Customer Insight
CP Matrix CRM Model
46Data Source IBM Corporate httpwwwibmcomus
CP Matrix Technology LeaderExcept for 1995 and 1996 an annual average of five (5) advanced technologies were pursued and completed by IBM thereby abiding with its own guiding principle of ldquoInnovation that matters for our company and for the worldrdquoThe adoption of the New Models in 2001 positively turned the company around in terms of revenues and technological advancement
47Data Source IBM Corporate httpwwwibmcomus
CDocuments and ettingsdel AyreDELA
1990 RISC System60001991 Magnetoresistive heads1992 ThinkPad1993 IBM on space (SSEndeavor Hubble)1994 Supercomputing 1995 elementary particle ldquoglueballrdquo1996 Network Computers for e-Business1997 e-Business Deep Blue1998 1 GHz microprocessor (experimental)1999 system-on-a-chip
CP Matrix Technology Leader
48Data Source IBM Corporate httpwwwibmcomus
2000 Advanced TechnologiesIBM eServer a new generation of servers for managing the e-Business needsCommercial version of ASCI White (RS6000 SP) -- the most powerful supercomputer in the world A joint project of IBM and Microsoft using Windows 2000NetVista brand of new PC devices Internet access devices and thin clientsThinkPad X series the ultra-portable (slimmer and lighter) full-featured notebook computer Storage Tank a universal storage system capable of sharing data across any storage hardware platform or operating system ViaVoice for Windows Release 80 a family of voice recognition software
49Data Source IBM Corporate httpwwwibmcomus
2001 Advanced TechnologieseServer p690 (ldquoRegattardquo) as the worldrsquos most powerful UNIX server T220 the worldrsquos highest resolution flat panel monitor with a 222-inch screen that shows 12-times more detail than current monitors Ruthenium magnetic coating quadruples the data density of current HDD products WebSphere Translation Server software enabling businesses to provide real-time Web pages e-mail and chat in multiple languages
50Data Source IBM Corporate httpwwwibmcomus
2001 Advanced TechnologiesIBM Director a SMS solution automatically reduces server downtime by predicting and repairing software failures before they happen ldquoBlue Skyrdquo at the US National Center for Atmospheric Research for predicting climate changes ldquoStrained Siliconrdquo a breakthrough method to alter silicon to boost chip speeds by up to 35 percent Project eLiza initiative a multi-billion dollar program to create a realm of self-managing servers requiring little or no human interaction
51Data Source IBM Corporate httpwwwibmcomus
2002 Advanced TechnologiesldquoThinkVantage Technologiesrdquo PC solutions to help customers drive down IT support costsGrid Computing enhances Web services by coordinating global applications and resources at various locations regardless of the underlying implementations and services BlueSpace of IBM and Steelcase Inc -- an interactive and personalized office of the future Worldrsquos smallest working silicon transistor (6nm in length and at least 10X smaller than the state-of-the-art production transistors)
52Data Source IBM Corporate httpwwwibmcomus
2003 Advanced TechnologiesEnterprise Privacy Authorization Language(EPAL) provides enterprises automation of the enforcement of privacy policies among IT applications and systems The worldrsquos first smallest solid-state single-molecule light emitter a molecular research breakthroughThinkCentre S50 desktop a redesigned PC with easy access tool-free chassis design simple maintenance upgrades and customer serviceDB2 Information Integrator software to instantly access integrate manage and analyze all forms of info on any platform across amp beyond the enterprise
53Data Source IBM Corporate httpwwwibmcomus
2004 Advanced TechnologiesldquoMareNostrumrdquo based in Spain the most powerful supercomputer in Europe at a sustained performance of 2053 to 4000 teraflops High-speed photodetector to increase the speed at which information travels to and from microchipsSurePOS 500 point-of-sale systems for the demanding food service and hospitality industriesTotalStorage integrates storage server and software retention components into a single securable cabinet Infoprint multifunction printer enables customers to print copy fax and scan from a single machine
54Data Source IBM Corporate httpwwwibmcomus
2005 Advanced TechnologiesldquoCellrdquo microprocessor (jointly with Sony and Toshiba) with supercomputer-like floating point performance with observed clock speeds greater than 4 Ghz Grid and Grow a packaged set of software hardware and services to deliver the benefits of Grid computing to businesses of all sizes Watson Blue Gene (BGW) the worldrsquos largest privately owned supercomputer installed at the IBM TJ Watson Research Center in Yorktown Heights NY With a processing speed of 9129 teraflopsldquoViperrdquo next-generation DB2 database designed to help customers manage and access data across a service oriented architecture (SOA)
55Data Source IBM Corporate httpwwwibmcomus
2006 Advanced TechnologiesService oriented architecture (SOA)
56Data Source IBM Corporate httpwwwibmcomus
2006 Advanced TechnologiesBladeCenter LS41 server using AMDrsquos Opteron-based chips offering 25 greater memory throughput (01 Aug)System z9 Business Class special-purpose mainframe with starting price to $100000 for search regulatory compliance and security growth (28 Aug)On Demand Innovation Services (ODIS) toprovide customers any sort of strategic view possible for 20 years into the future (01 Sep)
57Data Source IBM Corporate httpwwwibmcomus
CP Matrix Global InnovationGlobal Innovation Outlook
Global Multidisciplinary Collaborative and open2004 GIO 10 focused on 3 broad societal themes Healthcare Government and its Citizens and the Business of Work and Life2005 GIO 20 focused on the Future of the Enterprise Transportation and the Environment
Ecosystem participants included representatives from academia governments nongovernmental organizations (NGOs) major multinational corporations venture capital firms think tanks and other leading organizations
58Data Source IBM Corporate httpwwwibmcomus
CP Matrix Global InnovationInnovation Enablers
Smart objectsThe connectedness of every thingSupercomputing for everyoneInformation put to workCollaboration and co-creationThe marketplace for expertiseThe virtual corporation
59Data Source IBM Corporate httpwwwibmcomus
CP Matrix Knowledge MgtEarly adopter in 1994 IBMrsquos four KM Portals
Asset management (BCSrsquos KnowledgeView Global Servicesrsquo Worldwide Asset Reuse Software Divisionrsquos Xtreme Leverage)Expertise Location (BluePages a corporate-wide directory Knowledge Point for consultants with research and expertise location) Collaboration (Collaboration Central for collaboration guidance tools and best practices Jams to collaborate and share knowledge on a particular topic ThinkPlace is focused on innovation) On-demand Learning (On Demand Workplace portals focus on critical job roles within IBM LearningIBM an application that streams profile-driven learning right to learners desktops)
IBM earned KMWorlds KM Reality Award for 2005
Graphics are courtesy of IBM Corporate web site httpwwwibmcomus
Case AnalysisCorporation
External Factor Evaluation Matrix
14Data Source IBM Corporate httpwwwibmcomus
Globalization is accelerating
The Global Environment
13Data Source IBM Corporate httpwwwibmcomus
Globalization is accelerating
The Global Environment
61Data Source IBM Corporate httpwwwibmcomus
Globalization is accelerating
The Global Environment
15Data Source IBM Corporate httpwwwibmcomus
The Changing IT Infrastructure
62Data Source IBM Corporate httpwwwibmcomus
The Changing IT Infrastructure
63Data Source IBM Corporate httpwwwibmcomus
Key Issues amp Significant Trends
Sources Yahoo Financials Reuters Industry Profiles Fortune
Sector Key Issues Significant Trends
Business Services
LegislationDeclining Professionals SectorWeakened Dollar
ConsolidationOnline Development Overseas Expansion
Computer Hardware
Internet PenetrationCommoditizationTechnological Development
ConsolidationMultimedia GrowthProduction Outsourcing
Computer Services
Transformational ServicesGrowing Security ThreatData Protection
Operational RelocationPortfolio ExpansionCommoditization
64Data Source IBM Corporate httpwwwibmcomus
1 Shift from commodity to annuity and transactionals from products to solution-based segments
2 Seizing future high-growth opportunities3 Forerunner in ITrsquos shift to Open Computing4 Emphasis on Corporate Data Security5 Resolution of Antitrust Lawsuit
EFE Matrix Opportunities
16Data Source IBM Corporate httpwwwibmcomus
1 Shift of Business and Revenue Mix
EFE Matrix Opportunities
65Data Source IBM Corporate httpwwwibmcomus
1 Shift of Business and Revenue Mix
EFE Matrix Opportunities
17Data Source IBM Corporate httpwwwibmcomus
2a Seizing future high-growth opportunities
EFE Matrix Opportunities
66Data Source IBM Corporate httpwwwibmcomus
2a Seizing future high-growth opportunities
EFE Matrix Opportunities
18Data Source IBM Corporate httpwwwibmcomus
2b Seizing future high-growth opportunities
EFE Matrix Opportunities
67Data Source IBM Corporate httpwwwibmcomus
2b Seizing future high-growth opportunities
EFE Matrix Opportunities
20Data Source IBM Corporate httpwwwibmcomus
2c Seizing future high-growth opportunities
EFE Matrix Opportunities
19Data Source IBM Corporate httpwwwibmcomus
2c Seizing future high-growth opportunities
EFE Matrix Opportunities
68Data Source IBM Corporate httpwwwibmcomus
2c Seizing future high-growth opportunities
EFE Matrix Opportunities
21Data Source IBM Corporate httpwwwibmcomus
2d Seizing future high-growth opportunities
EFE Matrix Opportunities
69Data Source IBM Corporate httpwwwibmcomus
2d Seizing future high-growth opportunities
EFE Matrix Opportunities
70Data Source IBM Corporate httpwwwibmcomus
3 Forerunner in Open ComputingOpen StandardsOpen Source Software Open Architecture
EFE Matrix Opportunities
71Data Source IBM Corporate httpwwwibmcomus
4 Emphasis on Corporate Data SecurityEduCause 2006 Survey ldquoSecurity and Identity Management edges out Funding IT as the top challengerdquoGartner Compliance security and mobility for Midsize Enterprise will affect 2006 IT decisionsSarbanes-Oxley compliance requirements
EFE Matrix Opportunities
72Data Source IBM Corporate httpwwwibmcomus
5 Resolution of Antitrust Lawsuit
EFE Matrix Opportunities
73Data Source IBM Corporate httpwwwibmcomus
1 Increased marketing efforts of competitors2 Weakened Dollar and Market Risks3 Aftermath of 911 to foreign marketsrsquo
access4 Influx of Offshore Outsourcing5 Revival of IT Venture Capitalists and
Startup Companies
EFE Matrix Threats
23Data Source IBM Corporate httpwwwibmcomus
1 Increased market share of competitors
EFE Matrix Threats
24Data Source IBM Corporate httpwwwibmcomus
1 Increased market share of competitors
EFE Matrix Threats
74Data Source IBM Corporate httpwwwibmcomus
1 Increased market share of competitors
EFE Matrix Threats
75
76Data Source IBM Corporate httpwwwibmcomus
2 Weakened Dollar and Market Risks
EFE Matrix Threats
77Data Source IBM Corporate httpwwwibmcomus
3 The aftermath of 911
EFE Matrix Threats
25Data Source IBM Corporate httpwwwibmcomus
4 Influx of Offshore OutsourcingBy 2010 IDC predicts the offshore outsourcing market will reach $294 billion annually annually driven primarily by US demand India alone racked up $3 billion in outsourcing revenue in 2005 accounting for 70 of the worlds offshore outsourcing deals
EFE Matrix Threats
27Data Source IBM Corporate httpwwwibmcomus
4 Influx of Offshore OutsourcingBy 2010 IDC predicts the offshore outsourcing market will reach $294 billion annually annually driven primarily by US demand India alone racked up $3 billion in outsourcing revenue in 2005 accounting for 70 of the worlds offshore outsourcing deals
EFE Matrix Threats
5Data Source IBM Corporate httpwwwibmcomus
4 Influx of Offshore OutsourcingBy 2010 IDC predicts the offshore outsourcing market will reach $294 billion annually annually driven primarily by US demand India alone racked up $3 billion in outsourcing revenue in 2005 accounting for 70 of the worlds offshore outsourcing deals
EFE Matrix Threats
79Data Source IBM Corporate httpwwwibmcomus
5 Revival of IT Venture Capitalists and Startup Companies
AreasEnterprise TechnologySecurityComplianceVirtualizationOpen Source
New TechnologyPervasive ComputingKnowledge ManagementReal TimeDeep ComputingEase-of-use
EFE Matrix Threats
Graphics are courtesy of IBM Corporate web site httpwwwibmcomus
Case AnalysisCorporation
Internal Factor Evaluation Matrix
81Data Source IBM Corporate httpwwwibmcomus
1 Professional technical amp managerial staff2 Global Integration3 A Flatter Organization4 Greater Operational Efficiency5 Internal Competitive Advantage
IFE Matrix Strengths
82Data Source IBM Corporate httpwwwibmcomus
IFE Matrix Strengths1 Professional technical and managerial staff
IBM has approximately 329000 employees in 75 countries and serving clients in 174countries IBM has one of the most highly educated workforces in the world More than 200000 college graduates nearly 54000 with post-graduate degrees
83Data Source IBM Corporate httpwwwibmcomus
Samuel J Palmisano ($166M pa)Chairman of the Board President amp Chief Executive Officer
Michael E Daniels Senior VP Global Technology Services IBM Global Services
Nicholas M DonofrioExecutive Vice President Innovation and Technology
IFE Matrix Strengths
84Data Source IBM Corporate httpwwwibmcomus
Legacies of CEOrsquosThomas J Watson 1914-1956
Consolidated corporate assets and created IBMldquoPioneering must never ceaserdquo
Thomas J Watson Jr 1956-1971codifies 3 IBM basic beliefs respect for the individual customer service and excellenceHourly workers on salary Stock Purchase PlanldquoIBMrsquos future is in the hands of its peoplerdquo
T Vincent Learson 1971-1973Speech recognitionldquoTake some risksrdquo
IFE Matrix Strengths
85Data Source IBM Corporate httpwwwibmcomus
Legacies of CEOrsquosFrank T Cary 1973-1981
IBM diskette Server Network Architecture Energy ConservationldquoOur business has to undergo changes constantlyrdquo
John R Opel 1981-1985Goals growth product leadership efficiency profitability Focus Mainframe Lease-to-OwnEngineered minority interest in IntelldquoTechnological leadership is the very lifeblood of this businessrdquo
IFE Matrix Strengths
86Data Source IBM Corporate httpwwwibmcomus
Legacies of CEOrsquosJohn F Akers 1985-1993
Reorganization of US operations Token Ring LANldquoRespect for the individual commitment to excellence in all we do providing the best service in the worldndash these are IBMrsquos compassrdquo
Louis V Gerstner Jr 1993-2002Reinventing EducationRestructuring The New ModelldquoWin Execute Team They are personal commitmentsrdquo
IFE Matrix Strengths
87Data Source IBM Corporate httpwwwibmcomus
IFE Matrix StrengthsCurrent CEOrsquos Focus
Samuel J Palmisano 2003- present
Finalized IBMrsquos Mission StatementCreated IBMrsquos Global ServicesPioneered the ldquoGlobal Innovation OutlookrdquoStarted e-Business on Demand campaign transformed to ldquoOn Demand Businessrdquo in 2004Emphasized on ldquoOpen Computingrdquo and ldquoInnovationrdquo
28Data Source IBM Corporate httpwwwibmcomus
2 Global Integration ndash a single global systemGlobal Delivery CentersGlobally Integrated ManufacturingGlobally Integrated Corporate FunctionsGlobal Skills Marketplace
IFE Matrix Strengths
29Data Source IBM Corporate httpwwwibmcomus
2 Global Integration ndash a single global systemGlobal Delivery CentersGlobally Integrated ManufacturingGlobally Integrated Corporate FunctionsGlobal Skills Marketplace
IFE Matrix Strengths
90Data Source IBM Corporate httpwwwibmcomus
21 Global Delivery CentersIBM garnered clients from countries with the biggest population considered as ldquoall potential customersrdquo China India Brazil and Russia
Selected GDPs 1999-2008
00
10
20
30
40
50
60
70
80
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Year
GDPRP ASEAN USA OECD World
Source World Bank CRU Forecast
IBMs Four Country Target
(20)
00
20
40
60
80
100
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
GDP China India Brazil Russia
Source World Bank CRU Forecast
89Data Source IBM Corporate httpwwwibmcomus
21 Global Delivery CentersWorldwide 45000 business partners and 33000 suppliers connected to IBM through the Web IBM clients include
the five largest companies in India and five of the top 15 companies in China 2004 revenue growth
in Russia was 75 percent in Brazil 15 percent 45 percent in India and 25 percent in China
31Data Source IBM Corporate httpwwwibmcomus
22 Integrated Manufacturing
North AmericaRochester MN USA Poughkeepsie NY USA San Jose CA USA Guadalajara Mexico
32Data Source IBM Corporate httpwwwibmcomus
22 Integrated Manufacturing
EuropeDublin Ireland Vac Hungary Montpellier France
33Data Source IBM Corporate httpwwwibmcomus
22 Integrated Manufacturing
Asia PacificShenzhen China Singapore
91Data Source IBM Corporate httpwwwibmcomus
22 Integrated Manufacturing
North AmericaRochester MN USA Poughkeepsie NY USA San Jose CA USA Guadalajara Mexico
Asia PacificShenzhen China Singapore
EuropeDublin Ireland Vac Hungary Montpellier France
92Data Source IBM Corporate httpwwwibmcomus
23 Corporate FunctionsLegal ndash Corporate LegalHuman Resources ndash handled by Global Skills MarketplaceFinance ndash handled by Global FinancingInformation Technology ndash handled by in-house Services BusinessReal Estate Site Operations
34Data Source IBM Corporate httpwwwibmcomus
24 Global Skills MarketplaceIBMrsquos Global Services is the worlds largest information technology services and consulting provider Approximately190000 professionals in some 160countries revenues totaled $462B in 2004
93Data Source IBM Corporate httpwwwibmcomus
24 Global Skills MarketplaceIBMrsquos Global Services is the worlds largest information technology services and consulting provider Approximately190000 professionals in some 160countries revenues totaled $462B in 2004
94Data Source IBM Corporate httpwwwibmcomus
3 Flatter OrganizationSales Support Center ldquoDeal HubsrdquoRestructured operations in EuropeNew lead-management process
IFE Matrix Strengths
95Data Source IBM Corporate httpwwwibmcomus
4 Greater Operational EfficiencyReduced CostsDecreased inventorySpeedier procurement
IFE Matrix Strengths
Navi Radjou (2005) ldquoIBM Transforms Its Supply Chain To Drive Growthrdquo March 24 2005
96Data Source IBM Corporate httpwwwibmcomus
1 Older and Aging Technical Personnel2 Non-acceptance of international
agreements and standards proposed by international bodies
3 IP and Copyright Infringement4 Merger and Acquisitions Issues5 Diversity and Workforce Issues
IFE Matrix Weaknesses
35Data Source IBM Corporate httpwwwibmcomus
1 Older and Aging Technical PersonnelShortage of developers with mainframe skillsTight labor market for experienced audit professionals
IFE Matrix Weaknesses
97Data Source IBM Corporate httpwwwibmcomus
1 Older and Aging Technical PersonnelShortage of developers with mainframe skillsTight labor market for experienced audit professionals
IFE Matrix Weaknesses
98Data Source IBM Corporate httpwwwibmcomus
2 Non-acceptance of international agreements (CSR Global Compact of UN) standards proposed by international bodies (ISO GR Initiative IncoTerms)
IFE Matrix Weaknesses
98Data Source IBM Corporate httpwwwibmcomus
2 Non-acceptance of international agreements (CSR Global Compact of UN) standards proposed by international bodies (ISO GR Initiative IncoTerms)
IFE Matrix Weaknesses
39Data Source IBM Corporate httpwwwibmcomus
3 IP and Copyright InfringementIBMrsquos Strategy made 500 of its software patents freely available to anyone working on open-source projects In 2004IBM collected $1B or more from licensing its invention
IFE Matrix Weaknesses
Source New York Times 11 Jan 2005
99Data Source IBM Corporate httpwwwibmcomus
3 IP and Copyright InfringementIBMrsquos Strategy made 500 of its software patents freely available to anyone working on open-source projects In 2004IBM collected $1B or more from licensing its invention
IFE Matrix Weaknesses
Source New York Times 11 Jan 2005
40Data Source IBM Corporate httpwwwibmcomus
4 Merger and Acquisition IssuesCultural BiasesDifferent Managerial StylesDiverse Industrial Policies
IFE Matrix Weaknesses
100Data Source IBM Corporate httpwwwibmcomus
4 Merger and Acquisition IssuesCultural BiasesDifferent Managerial StylesDiverse Industrial Policies
IFE Matrix Weaknesses
101Data Source IBM Corporate httpwwwibmcomus
5 Diversity and Workforce IssuesJuly 31 2003 Cooper et al v IBM Personal Pension Plan and IBM Corp Agreement to pay $314293B to class members finalized May 2005May 2005 the Louisiana Supreme Court denied a motion to review and reverse a Louisiana state courtrsquos certification of a nationwide class suit filed in 1995 No date has been set for trialJanuary 24 2006 Rosenburg et al v IBM alleges the company failed to pay overtime wages pursuant to Fair Labor Standards Act
IFE Matrix Weaknesses
Graphics are courtesy of IBM Corporate web site httpwwwibmcomus
Case AnalysisCorporation
Matching Key FactorsAlternatives and Recommendations
103Data Source IBM Corporate httpwwwibmcomus
TOWS MatrixS-O StrategiesW-O StrategiesS-T StrategiesW-T Strategies
SPACE MatrixBCG MatrixIE MatrixGS Matrix
Matching Stage
104Data Source IBM Corporate httpwwwibmcomus
TOWSSWOT Matrix
105Data Source IBM Corporate httpwwwibmcomus
SWOT Matrix S-O Strategies
106Data Source IBM Corporate httpwwwibmcomus
SWOT Matrix W-O Strategies
107Data Source IBM Corporate httpwwwibmcomus
SWOT Matrix S-T Strategies
108Data Source IBM Corporate httpwwwibmcomus
SWOT Matrix W-T Strategies
41Data Source IBM Corporate httpwwwibmcomus
Based on various readings
IBMrsquos SPACE Matrix
109Data Source IBM Corporate httpwwwibmcomus
Based on various readings
IBMrsquos SPACE Matrix
42Data Source IBM Corporate httpwwwibmcomus
Industry Data based on Reuters CNN Money Yahoo Financials MarketWatch websites
Industry Sales Growth Rate three-year average IBM Data based on 2005 Annual Report
IBMrsquos BCG Matrix
110Data Source IBM Corporate httpwwwibmcomus
Industry Data based on Reuters CNN Money Yahoo Financials MarketWatch websites
Industry Sales Growth Rate three-year average IBM Data based on 2005 Annual Report
IBMrsquos BCG Matrix
43Data Source IBM Corporate httpwwwibmcomus
IE Matrix per IBMrsquos Segments
Note IFE and EFE weighted scores per segment are based on respective ie different factors than IBM as a firm
IBMrsquos IE Matrix
44Data Source IBM Corporate httpwwwibmcomus
IE Matrix per IBMrsquos Segments
Note IFE and EFE weighted scores per segment are based on respective ie different factors than IBM as a firm
IBMrsquos IE Matrix
111Data Source IBM Corporate httpwwwibmcomus
IE Matrix per IBMrsquos Segments
Note IFE and EFE weighted scores per segment are based on respective ie different factors than IBM as a firm
IBMrsquos IE Matrix
45Data Source IBM Corporate httpwwwibmcomus
Based on Porterrsquos Value Chain
IBMrsquos Summary of StrategiesIBMrsquos Summary of Strategies
112Data Source IBM Corporate httpwwwibmcomus
Based on Porterrsquos Value Chain
IBMrsquos Summary of StrategiesIBMrsquos Summary of Strategies
113Data Source IBM Corporate httpwwwibmcomus
Capitalize on technological business and social trends and the need of enterprises to innovate in addressing those trendsMaintain market-share leadership in systems middleware software and services as a platform to drive growthFocus investment and resources on emerging growth areas including Business Performance Transformation Services and emerging countries
Short-Term Recommendations
114Data Source IBM Corporate httpwwwibmcomus
Continue IBMrsquos global integration for productivity gains and higher value in service deliveryFurther IBMrsquos leadership in innovation initiatives advanced semiconductor design and development collaborative intellectual capital business process expertise and integration and advanced supercomputing systemsAcquire businesses that contribute strategically to its portfolio and exit those that no longer support its strategy for innovation and higher value
Short-Term Recommendations
115Data Source IBM Corporate httpwwwibmcomus
Monitor economic environment and corporate spending budgetsLeverage internal business transformation and global integration initiativesSpearhead innovation initiativesPush for open standardsContinue investing in growth opportunities
Long-Term Recommendations
