1. THE REBIRTH OF IBM

2. THE HISTORY
International Business Machines, abbreviated IBM
and nicknamed "Big Blue", is a multinational
computer technology and IT consulting corporation
headquartered in Armonk, New York, United States.
The company is one of the few information
technology companies with a continuous history
dating back to the 19th century. IBM manufactures
and sells computer hardware and software (with a
focus on the latter), and offers infrastructure
services, hosting services, and consulting services in
areas ranging from mainframe computers to
nanotechnology. Samuel J. Palmisano is the
chairman and CEO of IBM.

3. IBM has been well known through most of its recent
history as one of the world's largest computer
companies and systems integrators. With over
388,000 employees worldwide, IBM is one of the
largest and most profitable information technology
employers in the world. IBM holds more patents
than any other U.S. based technology company and
has eight research laboratories worldwide. The
company has scientists, engineers, consultants, and
sales professionals in over 170 countries. IBM
employees have earned five Nobel Prizes, four
Turing Awards, five National Medals of Technology,
and five National Medals of Science.

5. DEVELOPMENT AND GROWTH
In April 1993, IBM hired Louis V. Gerstner, Jr. as its
new CEO. For the first time since 1914 IBM had
recruited a leader from outside its ranks. Gerstner
had been chairman and CEO of RJR Nabisco for four
years, and had previously spent 11 years as a top
executive at American Express. Gerstner brought
with him a customer-oriented sensibility and the
strategic-thinking expertise that he had honed
through years as a management consultant at
McKinsey & Co.. Recognizing that his first priority
was to stabilize the company, he adopted a triage

6. Louis V. Gerstner

7. mind set and took quick, dramatic action. His early
decisions included recommitting to the mainframe,
selling the Federal Systems Division to Loral in order
to replenish the company's cash , continuing to
shrink the workforce 405,535 to 220,000
employees in 1994, and driving significant cost
reductions within the company. Most importantly,
Gerstner decided to reverse the move to spin off
IBM business units into separate companies. He
recognized that one of IBM's enduring strengths
was its ability to provide integrated solutions for
customers . Splitting the company would have
destroyed that unique IBM advantage.

8. These initial steps worked. IBM was in the black by
1994, turning profits of $3 billion. But stabilization
was not Gerstner's endgame – the restoration of
IBM's once great reputation was. To do that, he
needed to come up with a winning business
strategy. Over the next decade, Gerstner crafted a
business model that shed commodity businesses
and focused on high-margin opportunities. IBM
divested itself of low margin industries (DRAM, IBM
Network, personal printers, and hard drives). The
company regained the business initiative by
building upon the decision to keep the company
whole – it unleashed a global services business that

9. rapidly rose to became a leading technology
integrator. Crucial to this success was the decision
to become brand agnostic – IBM integrated
whatever technologies the client required, even if
they were from an IBM competitor . IBM
augmented this services business with the 2002
acquisition of the consultancy division of
PricewaterhouseCoopers for $3.5 billion US.
Another high margin opportunity IBM
invested heavily in was software, a strategic move
that proved equally visionary. Starting in 1995 with
its acquisition of Lotus Development Corp

10. Lotus Development Corp

11. IBM's software strategy focused on middleware –
the vital software that connects operating systems
to applications. The middleware business played to
IBM's strengths, and its higher margins improved
the company's bottom line significantly as the
century came to an end. Not all software that IBM
developed was successful. While OS/2 was arguable
technically superior to Microsoft Windows 95, OS/2
sales were largely concentrated in networked
computing used by corporate professionals. OS/2
failed to develop much penetration in the consumer
and stand-alone desktop PC segments; there were
reports that it could not be installed properly on
IBM's own Aptiva

12. IBM's own Aptiva series of home PCs. Microsoft made
an offer in 1994 where if IBM ended development of
OS/2 completely, then it would receive the same terms
as Compaq for a license of Windows 95. IBM however
refused and instead went with an "IBM First" strategy
of promoting OS/2 Warp and disparaging Windows, as
IBM aimed to drive sales of its own software as well as
hardware. IBM designed chips are currently used in
PlayStation 3, Xbox 360, and Wii game consoles. IBM
also regained the lead in supercomputing with high end
machines based upon scalable parallel processor
technology.

13. Company’s internal strength and
weakness

14. Strength:
• Development of new advanced microprocessor
chips which other company was not having.
• IBM focused on customer based product.
• IBM had been the largest seller of computer
software in the world.
• IBM was that the company would build such a
broad and sophisticated range of computer
hardware and software,backed by the best
consulting and service competencies in the
industry,that it would overwhelm it’s competitors
in the future.for ex:think pad

15. • Gerstner’s strong focus on being close to
clients had the additional advantage of
occurring innovation throughout the
organization.
• IBM coined the term e-business and Gerstner
established an internet division in IBM in 1995
before most other computer companies.
• IBM’s early move to the internet was that it
also helped with its own cost cutting efforts.

16. Weakness:
• IBM just focussed on their Mainframe product
• Low range PC’s and low range servers that be
sold under the IBM name which was sold to
lenovo
• There were in its slow moving culture based
on consensus decision making.
• They do not adapt new technologies soon to
face competitors like HP, Dell

18. SWOT ANALYSIS
IBM SWOT ANALYSIS COMPARE WITH DELL
Strengths of IBM
 IBM leads the world in technological success with patents in the
United States for 17 straight years. In 2008 IBM earned 4186
patents and in 2009 they increased that amount to 4,914. It
published almost 4,000 technical inventions and products without
patent protection in 2009; this is a valuable intellectual property.
 IBM is one of the largest and most profitable companies in the
world, with a value of $155 billion. They have over 319,000
employees worldwide.
 IBM strength is the weakness of dell and its vice versa .

19. Strengths of Dell
Dell is the World's largest PC maker. Profits for the 3 months
to July 2005 were in excess of $1 billion US, representing a
growth of around 28%. For the last couple of years it has held its
position as market leader (it took it from rivals Hewlett-
Packard). The Dell brand is one of the best known and
renowned computer brands in the World.

20. Weaknesses
of IBM
• IBM’s size is also its weakness. IBM’s goliath size can make it
slower to react to customer’s needs and wants as well as to
the industry’s fluctuations. And it’s more than 400,000
employees can make it difficult to find the support and
services needed.
• Transferring jobs oversees has been an option IBM is using
more and more. At the end of 2009, IBM USA had a
workforce of 105,000 down 30,000 in just a few years. In
2009, there were rumors that IBM wants to get the US
workforce down to 70,000. This is not a weakness for other
countries that are absorbing many of these US jobs.

21. WEAKNESS OF DELL
• The company has such a huge range of products and
components from many suppliers from a plethora of
countries, that there is the occasional product recall
that can cause Dell some embarrassment. In 2004
Dell had to recall 4.4 million laptop adapters because
of a fear that they could overheat, causing electric
shocks or fires.
• Dell is a computer maker, not a compute
manufacturer. It buys from a group of concentrated
hi-tech components and its weakness is the
strength of the IBM.

22. Opportunities.
OF IBM
• Increased globalization is an important opportunity that can be exploited by IBM in order to balance the
fluctuations in different economies.
• Their brand image is synonymous with “big” and “old” they need to create products appealing to a
younger generation and reposition their company.
• IBM needs to maintain a competitive edge in the marketplace and innovation is key and working with IT-
related companies to create new products in the ever changing market; use patents to generate revenue.
• There business sector is expanding with many future opportunity for success.
• Now it is customer oriented .
• Customized on demand hardware .
• Soft ware offering .
•

23. Threats OF IBM
• The fact that they are completely dependent on Microsoft (in their
computer services division) could be a huge problem if anything ever
happened to them.
• HP, Sun Microsystems are all competitors and are all threats to IBM’s
bottom line. Their competitors are able to create cheaper products and
make more a considerable profit. Smaller companies that can move faster
and provide less expensive products and services than IBM can become
very costly to IBM’s more lucrative bundles focusing more on larger
companies with big budgets.
• The supply chain has very few suppliers, leaving IBM very little to
negotiate with or switch to
• Its Threats side IBM realized that competitors are infoysis , cap geimini ,
EDS, Accenture, HP had stronger brand name , which puts IBM weaker
position in dealers.
• HP COMPAQ merger.
• Microsoft- SAP merger .

24. IBM-BUSINESS &CORPORATE
LEVEL STRATEGY

25. • In 1994 LOU GERSTNER became chief executive of IBM
and he reviewed all past strategies and the reason for their
failure. The top executive brought about many strategic
changes, which are discussed below:
Corporate level Strategy
- Corporate goals and objectives:
- The new corporate level strategy of IBM was to become one of the leading
e-business service providers and to develop new-commerce engineering,
software and consulting services.

26. Steps taken for the development of corporate level strategy:
• Following are the steps that were taken at corporate level.
• Re-focus on the mission.
• De-emphasizing the manufacture of high tech hardware.
• Increasing emphasis on providing customer with e-business
engineering, design and service.
• Converting old data bases into new online system.
• Improving efficiency by introducing web technology into their internal
business.
• Corporate expanded scope of its new service as well as old hardware
business to serve smaller customer that were previously neglected.
• They focussed on services and software packages tailoring unique
needs of specific industries i.e., banks and hospital.

27. • Results of steps taken by corporate level
• New corporate level strategy helped to c up
to 14%

28. Business level strategies
Previous business unit objective:
Previously firm differentiate itself from competitors on basis of
superior quality and charging premium price for its quality.
New business unit objective:
Re-organized and re-allocated the internal resources
Half of the company budget was allocated to solve business problems
rather than improving technical performance of hardware. For this
team was created involving:
• Sales executive in charge of account
• Representative from service division
• Person in software unit
• Someone from research lab

29. Results of new Business level
strategies
• Helped IBM to ride out the storm in good way.
• Firms revenues increased more than 7 % over previous years.
• Able to gain market share against competitors like ORACLE ,SUN, in
nearly every service and software package.
• Earnings per share increased in 2003 which was less profitable year
for other.

30. Strengths of new business strategy
• Knowledge and expertise of its personnel.
• Ability to develop beneficial relationship with customers.
• Training of their sale person by utilizing sufficient resources.
• Formation of price water house Coopers consulting , helped IBM
focus more on executive level business problems.

32. • Louis Gerstern made strategies for reengineering the way
of business.
• He decided not to break up IBM into 13 different
divisions. He favoured centralization
• He focused on providing customized pc to its clients to
gain competitive advantage.
• To manage IBM’s expenses he laid off many employees
whom he felt unfit for the company
• He create the new leadership team and searched
employees within organization who had unique expertise.
• He introduced report based meeting and decision making
which reduced lots of wastage of time and money which
used to happen earlier.
• He brought into autocratic leadership into the company
to develop better strategies

33. • Witnessing the changing IT needs Gerstern
instructed all his divisional managers to make flexible
and updated initiatives towards the demand
• IBM bought many companies that possessed unique
network software that could provide the clients with
valuable new applications
• To encourage managers, consultants and salespeople
to focus on the customers, Gerstern introduced a
new pay for performance evaluation system that
rewarded employees at all level
• Gerstern along with his new co partner Palmisano
decided to divide the company into six major groups
to cater better to the industry specific needs. These
groups were financial services, public, industrial,
distribution, communication and small and medium
size business.

36. Company structures
• International Business Machines Corporation (IBM, or, colloquially,
Big Blue; NYSE: IBM) is a multinational computer technology
corporation headquartered in Armonk, New York, USA. The
company is one of the few information technology companies with
a continuous history dating back to the 19th century; it was
founded in 1888 and incorporated (as Computing-Tabulating-
Recording Company (C-T-R)) on June 15, 1911, and listed on the
New York Stock Exchange in 1916. IBM manufactures and sells
computer hardware, software, infrastructure services, hosting
services, and consulting services in areas ranging from mainframe
computers to Nano technology.With almost 330,000 employees
worldwide and revenues of $US91 billion annually (figures from
2005), IBM is the largest information technology company in the
world, and holds more patents than any other technology company.

37. Cont……….
• The WebSphere Commerce organization structure
provides a framework for the actors, or entities, in your
business scenario. This framework is organized in a
hierarchical structure, which mimics typical
organizational hierarchies with entries for organizations
and organizational units and users. The organizations
and organizational units in the framework act as
owners for the parts of your business. All parts of your
business, including customers, administrators, stores,
catalogs and distributors, must be owned by an
organization or organizational unit.

38. ORGANIZATIONAL STRUCTURE
• IBM Global Business Services is organized into six
service lines:
• Strategy & Transformation
• Enterprise Applications - SAP
• Enterprise Applications - Oracle
• Business Analytics and Optimization
• Application Innovation Services
• Application Management Services
• Enterprise Resource Planning

39. Cont……..
• In order to allow customers or buyers to access
your site, browse your catalog, and place orders;
or to allow employees to administer the site,
including updating the catalog, creating new
promotions, or managing orders; or to allow
resellers or other business partners to complete
transactions on your site, all actors in your
business scenario must be assigned a position in
the Web Sphere Commerce organization
structure.

40. Cont……….
• The company established the integrated system
solution corporation (issc), which was a self- contained
division separate from ibm corporate headquarters and
whose employee were service and customer oriented.
• IBM quickly succeeded in lowering the cost of
mainframe computing and had a clear cost advantage
over competitors in the market.
• Another bright spot in its PC division was popularity of
IBM sophisticated problem- solving Thinkpad
computing devices among corporate customer .

41. Cont………….
• WebSphere Commerce provides sample organizations structures for
each supported business model. These sample organization
structures are available on their own (as component store archives)
allowing you to use the sample organization structure as starting
point for your own site, or as part of the sample business.
• IBM coined the term e- business and Rerstner established an
internet division in IBM in 1995 before most other computer
companies.
• His business model was the that IBM should provide a complete
package of state of art computing solution ( hardware, software
,service and consultancy) that could be customized to a particular
clients need and to take advantage of the possibilities created by
the internet to create by the internet to create new market for IBM
products and services.

42. Recommendation

43. •“You have to know (and love) your business”.
•“Steely-eyed strategies” at the end a successful
enterprise is one that has developed deep
understanding of it’s customer’s.
•“Proper implementation of strategy”.
•“Intelligence wins wars”.
•“Good strategy can change the whole scenario”.
•“Allocating Resources properly”.
•“Survival of the fittest”.

44. • First of all it can be recommended that u have to
understand the know how of the business , so effected
strategies can be formulated.
• To run a business efficiently in the market you have to
keep in mind the needs and wants of the customers , it
would be suggestive for the company to keep a deep
understanding with the customers that will help them
to achieve their objectives
• Proper utilization of time and resources will help the
company to do their work quickly , as result it would be
advisable to the company to make their plants which
will arrange the resources quickly.

45. • Continuous up gradation of the technology is very
much essential because where “Change Stops
Stagnation Starts”.
• In this competitive market the main concept is “
Survival Of The Fittest “ so to compete in this market
continuous innovation and change is required.
• Company should have market driven and customer
oriented strategy, not only having proper strategy is
enough, the proper implementation of the strategy is
also equally important.